Major Tax Avoidance Scheme Closed Down

[tim522004@yahoo.co.uk]

Dont get involved in any complex avoidance schemes

I have already mentioned in other areas of this site that the government set up the 'registration of avoidance schemes' to specifically legislate against them later on.

In this day and age it would be mad to sign up to any 'tax schemes'. They may work today but they certainly won't work tomorrow! The Revenue is out to fill up the HUGE hole created by Mr Brown.

Any tax saving scheme (including VAT, NI etc) that is registered with the Revenue won't last long.

[ChimpMaster]

Any tax saving scheme (including VAT, NI etc) that is registered with the Revenue won't last long.

Yes, these schemes won't last forever, but it will take some time for HMRC to get through all of them one-by-one. By then a lot of contractors would have stripped out much of their income via these schemes and would have "avoided" paying the same level of tax as us Ltd Co owners.

Apparently HMRC can't back-tax so the contractors using these arrangements are probably maxing out the opportunity while it lasts.

[malvolio]

Wrong - deeply, dangerously wrong in fact.

Any re-application of tax regulations can be backdated to December 2004 - Dim Prawn reserved this right at the 2004 PBR, specifically to allow HMG time to effect the rules to prevent tax avoidance (which remains legal, BTW, but let's not worry about that little detail) that they are now working through. So if you're in a scheme and get out now, you'll still be liable for 14 months worth of back tax.

[tim522004@yahoo.co.uk]

There are less riskier ways of saving tax?

Yes there is a period of time when these schemes will work. However, do you want to take the risk with your money. Just becuase they approved schemes doesn't mean the Revenue won't attack.

There are better ways of saving tax without the threat of the taxman knocking on your door one day.

[ChimpMaster]

Wrong - deeply, dangerously wrong in fact.

Any re-application of tax regulations can be backdated to December 2004 - Dim Prawn reserved this right at the 2004 PBR, specifically to allow HMG time to effect the rules to prevent tax avoidance (which remains legal, BTW, but let's not worry about that little detail) that they are now working through. So if you're in a scheme and get out now, you'll still be liable for 14 months worth of back tax.

I'm not so sure, after all there have been numerous discussions regarding this subject indicating that this would be a breach of basic common law and legal rights. For example, how can something that is legal today -- and it is legal -- be deemed illegal 5 years down the line? What leg does the individual then have to stand on? It's like hanging someone and then in the future retrospectively claiming the judgement was too harsh!

Oh yes, I agree that HMRC have "reserved the right" so to day, but that just wouldn't hold up in any court of law.

Don't get me wrong, I don't purport to these schemes being good for anyone. In fact some of them are just so elaborate they must be illegal. I just can't stand the way HMRC operate in "stealth" mode, heck they might as well be communists.

[ChimpMaster]

Yes there is a period of time when these schemes will work. However, do you want to take the risk with your money. Just becuase they approved schemes doesn't mean the Revenue won't attack.

There are better ways of saving tax without the threat of the taxman knocking on your door one day.

Tim

perhaps you can enlighten me on some ways to save tax in this manner?

I'm assuming this doesn't involve the Rebecca Loos school of thought on running back to Oz to escape Gordon Brownose!

Cheers

Chimp.

[malvolio]

I'm not so sure, after all there have been numerous discussions regarding this subject indicating that this would be a breach of basic common law and legal rights. For example, how can something that is legal today -- and it is legal -- be deemed illegal 5 years down the line? What leg does the individual then have to stand on? It's like hanging someone and then in the future retrospectively claiming the judgement was too harsh

I've said this before - it's not about legality, it's about scope of regulations. Currently regulations say that people can own shares in composite companies and be paid dividends. There is nothing to stop Hector decreeing that, on consideration, such dividends should attract an extra 25% windfall tax, for example. If he does, that would be back-dated. Similarly, things that are out of scope could be brought into scope - like expenses paid to members of umbrella companies could suddenly become BIKs

There's a hundred ways to do this, and with £10bn to find and no love for anyone not employed by the state or one of half a dozen NL crony companies, it will come about. Pretending it won't happen is naive.

Core advice is ignore all the silly schemes, run your own company, low-ish but not silly salary, divis as and when possible. That is IMHO the optimum risk/reward ratio, but it's your money you're risking, you make your own decision.

[threaded]

which get around the intention of Parliament

Hmm, when did "intention of Parliament" get into English Law?

[helen7]

Does anybody know which scheme this was and, if any back tax was charged.

I am currently with the MTM scheme in the Isle of Man and the Inland Revenue are preparing their attack.

[malvolio]

I'm not sure but I think this was one of the clever and complicated schemes banks use to step around paying tax on bonuses, so probably not a widely used one.

In your case, though - ermm, oops! Do you have an escape plan?