EBT's etc

[pastalista]

Hi Pastalist,

What you say is quite correct however the point I made earlier in the thread is that the two (small sample yes but they're two companies quite widely used here and had colleagues working via them) EBT providers I looked at had a completely contrived setup - and not contrived in what I believe was/is a legal sense - they where saying one thing and writing another - i.e. the written contract details where not reflected to what was verbally written...I believe if the ebt provider is guaranteeing you will receive say x% of your income as a loan each month and you never have to repay it then its a sham setup - the HMRC bods can upick this as far back as they like -i.e. prior to dec 9th 2010 - as what these schemes are doing may prove to be illegal. Again - I'm not a lawyer so could be wrong - but just looked too dodgy to me.

Well, clearly an EBT setup for a UK based contractor who works in the UK is somewhat "contrived" but was legal. If a scheme provider is saying one thing and doing another then obviously members of that scheme are likely to be in trouble.

The point I have been trying to make on a couple of areas of this forum is that legal or not, HMRC takes the view that all of this comes under the banner of "aggressive avoidance" and is therefore challengable by them as far back as they want (but in practice, 20 years).

Pastalista

[NotAllThere]

... looking for ways to ... break the spirit of the law in tax avoidance is wrong...

If HMRC worked in the same way you might have had a point. But they review tax law to find new ways to apply it. The whole income splitting debacle came about because of that. Despite the FACT that the spirit of the law HMRC were trying to apply was stated in the Commons to not affect married couples.

As far as HMRC doing what they like, IR35 was mooted to the Tories several times before 1997, and was knocked back. It was only when New Labour took power, that it came into being - it fitting nicely into their politics of greed, and their naivity in thinking the the civil service worked for them.

[pastalista]

Do you live in London by any chance and Drive a car by any chance? If so, do you go out of London regularly to fill up your car tank with the cheapest possible petrol? If your car uses Diesel, do you use the Red Diesel (or whatever its called)? I'd be surprised if you don't attempt to get the VAT and fuel tax taken off the petrol cost when you go and pay. I also wouldn't be surprised if you don't have insurance, tax or MOT on your car. I mean using your logic, why bother having them, right? Not having any of these doesn't pose any danger to other road users, right?

Back to the point. Shopping around is one thing, looking for ways to evade tax or ways to break the spirit of the law in tax avoidance is wrong. I don't mind paying Corp Tax. If I have to pay Income Tax and National Insurance, then I don't see the problem. I don't look for ways of avoiding my responsibilities. There is nothing immorral in paying ones dues. If you want to bury your head in the sand and hope the issue goes away without paying a penny to the Taxman, good luck to you. (And if you want to live the imorral lifestyle supported by Lord Clyde, then go for it. I just hope you get caught).

Wow.

I'm totally unclear what point your are trying to make, but I think you have actually made mine.

No, I don't live in London but if I did, what would be wrong with filling my car up at whatever the cheapest petrol station was? There's nothing wrong with that - if you want to try to take a moral line on it then surely it is immoral of a petrol company to uplift the charges at one station over another?

In terms of your other comments, I think this is where you make my point rather than your own. Using red diesel on the road is illegal. Driving without insurance, tax and MOT is illegal. Not having them poses a massive risk to other people and it would be reckless and irresponsible not to have them. Fuel tax and VAT are legal taxes charged at the point of sale and there is no avoiding them. To do so, or to attempt to so do would be illegal. My car is insured, taxed, has an MOT, I fill up with diesel from a pump at a fuel station, not from a stash on a farm, I wouldn't dream of trying to argue that VAT should be deducted from a bill and so on. I am completely unclear how you can extrapolate from the post that you quote that I am some kind of irrepsonsible person that simply doesn't care about anyone or anything else.

I am not a law breaker. There is no such thing as the "spirit" of a law. Something is either legal or it is not. Lawyers of course make their money arguing over the grey areas which laws inevitably create. The tax authorities would of course like people to make the moral case regarding taxation by constantly talking about fairness but laws are created for a reason. Tax avoidance is not illegal, tax evasion is. Avoidance is about structuring one's affairs to pay the least amount of tax possible and by nature it tends to be the preserve of the better off.

Further still there is the argument that the more disposable income one has, the more tax is ultimately paid because of things like VAT, sales tax on vehicles, stamp duty on more expensive homes and so on. This is not a line I would use as a defence, I'm merely pointing it out.

If you "choose" to pay the maximum amount of tax that you can out of some sense of "fair play" then good luck to you. I'm sure you are aware that you can make voluntary payments to HMRC if you wish, just because you want to help out more. I presume also that you contract via PAYE rather than limited company - wouldn't want to pay lower NI rates by paying yourself dividends and under £6400 per year in salary would you?

There is nothing immoral about Lord Clyde's statement. He is stating the law, not an opinion. You may not agree with the law that is of course your right. What is not your right is to accuse me of illegal acts when you know nothing about me, my life or my approach to the world.

Finally, as to your "I hope you get caught" - rest easy - I did. I was investigated by HMRC for 4 years and it financially ruined me. Not in terms of the outstanding tax which was not significant because nothing I had done was illegal but in the hideous accountancy and legal bills that I had to pay to defend myself. My life changed beyond all recognition and the consequences were (and continue to be) devastating. I'm glad that you will feel better knowing that.

Thanks for your understanding and support. It's attitudes like your's that are making this country great.