BN66 - Round 2 (Court of Appeal)

[Tax_shouldnt_be_taxing]

apologies if this has been discussed already - couldnt see it in forums.. in govmt/hmrc doc on tax avoidence it seems to state that:

"Second, the Government will consult this summer on proposals to remove the cash flow advantage that tax avoiders can get by using high risk avoidance schemes. At present, a minority exploit the cash flow advantage of retaining tax during a dispute over liability, in some cases, even where the Courts have already ruled against similar transactions. The Government is
6
determined to address this systemic advantage to reduce the appeal of participating in high risk avoidance. Consultation will ensure that changes are properly targeted."

-- if this gets passed it means we're guilty until we prove we're innocent and we have to pay full amount to revenue before any court case... hopefully I'm misinterpreting this..?!

http://cdn.hm-treasury.gov.uk/2011bu...xavoidance.pdf

Read that document too and arrived at the same conclusion. If true then it's rather sinister. However, there is nothing that states this notion would be applied to current disputes and we would need clarity on when such actions would take affect. I cannot imagine that such an idea would get applied with retro...

However, also in the document there are coded references to the fact that the tax system is uncertain. Evidence of what we and the likes of the CIOT have been saying. This supports our case of Legitimate Expectation (not yet ruled on). There are also quotes that state "Where necessary, HMRC does not hesitate to litigate...". Oh come on! 6 years? What is their definition of "hesitate"?

Box 4.A is worthy of some note. It's the only reference to legislation taking effect before the announcement. Yet it also goes on to state that "a change in HMRC's interpretation of the law (unless prompted by a Court ruling) will not be regarded as 'significant new information'". The latter phrase applies to legislation introduced on any day other than Budget Day.

Now, what was BN66 all about? Does this not imply that BN66 which is formed on a change of interpretation is therefore not significant? If so, then how does it merit retrospection? So it comes down to what HMRC said about the need for BN66 retro. Yes there is the BS about the Exchequer risk (already known to them for years), but given the facts of TN63 and the HMRC testimony of HMRC looking at this in Autumn 2007, I rather get the feeling that BN66 can be so catagorised as HMRC changed their interpretation and even the wording of BN66 suggests this. So as a result of FA2011 would it be right to use the above retrospectively and say that the change in the law that BN66 creates and was not applied with effect from Budget Day 2008 is not significant new information and should therefore only apply from Budget Day 2008 using the current thinking?

[Tax_shouldnt_be_taxing]

FA2011

Looking a little closer at some of the supporting docs, on the matter of IR35, the OTS proposed 4 ways to deal with IR35, one of which was the restructuring of Income Tax and NIC's. Well we now know how IR35 will be dealt with. Except it will take years. So it looks like IR35 is here to stay for a while.

Also, the new Tax Avoidance protocols show clearly the difference between Ozzy & Co and the last mob. The new HMRC anti-avoidance strategy shows just what was broken this the previous version that got us BN66. I've read similar diatribe before though. But taking this document as a whole, it infers that what we had in the past was crap. And as we all know, why BN66 had to be retrospective. If wonder if the LJ's are reading these documents?

I can say that I smile at the statement about the focus of the new rules. "HMRC aims to resolve disputes with customers as quickly as possible, but if necessary, will take them through to litigation." I'm sure Parker suggested it should have been us that did that. Anyways, I don't recall that quote every getting applied to us. LJ's take note.

[DonkeyRhubarb]

So how's this going to work then?

HMRC writes to you saying they don't agree with the amount of tax you've paid, and demanding that you pay up now and you can have it back when enquiries are completed.

I don't know if any of you have been following the Chiltern/Sandfield thread but basically it looks like some of the users of the scheme have been duped by HMRC. As far as I can tell, this scheme operated between 2002 and 2003.

A few years ago HMRC offered a deal whereby, if people settled, they could get a refund if the courts found the scheme lawful. Some people settled, others chose not to.

Guess what? HMRC have done nothing since and appear to have no intention of ever doing anything.

Basically the people who cooperated with HMRC have been well and truly shafted.

[smalldog]

Ive read the document and to me it reads, it was all cocked up before and here is the plan in simple english on how we will act in future. It will be interesting to see how the LJ's view this as supporting our case. Using terms such as "as early as possible" etc is trying to introduce some element of certainty, unlike our case which has been totally uncertain for all this time.

I would have thought this would be a must read for the LJ's!! It infers that the system was previously broken, and in that case should we be held to account when the current administration admits it was broken?

[Tax_shouldnt_be_taxing]

So how's this going to work then?

HMRC writes to you saying they don't agree with the amount of tax you've paid, and demanding that you pay up now and you can have it back when enquiries are completed.

I don't know if any of you have been following the Chiltern/Sandfield thread but basically it looks like some of the users of the scheme have been duped by HMRC. As far as I can tell, this scheme operated between 2002 and 2003.

A few years ago HMRC offered a deal whereby, if people settled, they could get a refund if the courts found the scheme lawful. Some people settled, others chose not to.

Guess what? HMRC have done nothing since and appear to have no intention of ever doing anything.

Basically the people who cooperated with HMRC have been well and truly shafted.

DR, the scary part of this notion is that it gives remit for HMRC to reject any SA that relieves any tax if they so choose and they get the money anyway and then YOU have to take up the legal challenge or review. I would prefer to think that this is a statement of sabre rattling to put people off using anything that comes onto the HMRC radar. But at this stage the doc only states that they will consult in the Summer. Can I get my opinion in?

BTW, how will they get it? It would end up with a Court Order or they gain access to your bank account. It seems a daft idea designed to remove any legal process which begs the question in the doc of HMRC litigating. After all, if they have the dosh up front, why bother?

[DonkeyRhubarb]

DR, the scary part of this notion is that it gives remit for HMRC to reject any SA that relieves any tax if they so choose and they get the money anyway and then YOU have to take up the legal challenge or review. I would prefer to think that this is a statement of sabre rattling to put people off using anything that comes onto the HMRC radar. But at this stage the doc only states that they will consult in the Summer. Can I get my opinion in?

BTW, how will they get it? It would end up with a Court Order or they gain access to your bank account. It seems a daft idea designed to remove any legal process which begs the question in the doc of HMRC litigating. After all, if they have the dosh up front, why bother?

I may have got this wrong but I think the rules on VAT have always been "pay up now, argue later", so maybe they'll do the same thing with other taxes.

I know they changed the rules last April so, if you lose in litigation, you have to pay up immediately even if you appeal.

HM Revenue & Customs: Enforcement of judgements in litigation

[DonkeyRhubarb]

Protocol on unscheduled announcements of changes in tax law

Have a read of pages 19 & 20.

http://cdn.hm-treasury.gov.uk/2011bu...xavoidance.pdf

It beggars belief that they come up with this but leave our fate in the hands of the courts.

Surely this is also a time to correct past mistakes?

[slogger]

Have a read of pages 19 & 20.

http://cdn.hm-treasury.gov.uk/2011bu...xavoidance.pdf

It beggars belief that they come up with this but leave our fate in the hands of the courts.

Surely this is also a time to correct past mistakes?

/bitter-on
I just get the feeling that the courts/process is all a facade - essentially just a desperate succession of thugs trying to get their hands on as much cash as they can, however they can ... if the laws not in their favour - they change it (retrospectively!) - if they 'think' you may be wrong in your tax calc - take the money off you - no need for a trial/process..

/bitter-off

[portseven]

Thought these bits in 4.3 were interesting, especially in light of our case.

the Protocol will explicitly recognise that changes to tax legislation where the change is effective from a date earlier than the date of announcement will be wholly exceptional (this will not prevent such announcements if their effect is solely to reduce tax liabilities);

and

a change in HMRC’s interpretation of the law (unless prompted by a Court ruling) will not be regarded as ‘significant new information’ in the terms of the Protocol;

[DonkeyRhubarb]

[DRIPPING WITH IRONY]

I suppose we can take comfort from the fact that, under the new Protocol, what has befallen us is extremely unlikely to ever happen again to anyone else.

We were just unlucky to be standing where the lightning struck.

But perhaps all has not been in vain if our sacrifice has been a catalyst for change.

[/DRIPPING WITH IRONY]