Loans from EBTs and other Trusts

[Vallah]

It doesn't sound like that much of a stretch to retrospectively clarify the DRL so it catches the self-employed.

A lot depends on the amount of revenue at stake. HMRC seem to have a magic number of £200M, and obviously if they sit on these schemes for a few more years then that should easily have been surpassed.

The DTA scheme was relatively slow to take off but, at their peak in 2007, they were costing the Exchequer £50M/year.

From the little research I've done, the self-employed loan schemes are far more prevalent. I wouldn't be surprised if they're already costing the Exchequer £100M/year.

That's an awful lot of money that HMRC will be keen to get their hands on.

I think it would be a huge step, seeing as the legislation specifically mentions employment income. That wouldn't require clarification, it would need a complete rewrite of the income tax legislation.

[captainham]

I think it would be a huge step, seeing as the legislation specifically mentions employment income. That wouldn't require clarification, it would need a complete rewrite of the income tax legislation.

Says the unbiased and impartial "offshore service provider"

[DonkeyRhubarb]

I think it would be a huge step, seeing as the legislation specifically mentions employment income. That wouldn't require clarification, it would need a complete rewrite of the income tax legislation.

Are you saying that this scheme cannot be closed through legislation? Because if it can be closed prospectively, it can be closed retrospectively.

Huitson has demonstrated that Parliament is supreme in this regard.

In a couple of years HMRC will be faced with a stark choice. Litigate, almost certainly lose and right off several hundred £million. Or...

The longer the scheme operates, the more likely it is HMRC will opt for the nuclear option.

[Vallah]

Are you saying that this scheme cannot be closed through legislation? Because if it can be closed prospectively, it can be closed retrospectively.

Huitson has demonstrated that Parliament is supreme in this regard.

In a couple of years HMRC will be faced with a stark choice. Litigate, almost certainly lose and right off several hundred £million. Or...

The longer the scheme operates, the more likely it is HMRC will opt for the nuclear option.

No, I am not arguing that self-employed schemes cannot be closed by legislation. I am arguing against your assertion that they could be retrospectively included in the legislation that shut down EBTs. Just as I am arguing that it would be extremely unlikely that EBTs will be attacked retrospectively. Lots of schemes are rendered obsolete by changes in legislation, but so far not many have been challenged retrospectively. Not much comfort for those caught up in the nightmare of Huitson of course, but that doesn't mean that all schemes are the same.

[DonkeyRhubarb]

No, I am not arguing that self-employed schemes cannot be closed by legislation. I am arguing against your assertion that they could be retrospectively included in the legislation that shut down EBTs. Just as I am arguing that it would be extremely unlikely that EBTs will be attacked retrospectively. Lots of schemes are rendered obsolete by changes in legislation, but so far not many have been challenged retrospectively. Not much comfort for those caught up in the nightmare of Huitson of course, but that doesn't mean that all schemes are the same.

I agree that it's very unlikely that the pre-Dec 2010 schemes will be targeted retrospectively. If they were going to do that, they would have included retrospective provisions in the DRL.

However, the post-Dec 2010 self-employed schemes are clearly designed to frustrate the DRL and that, in my opinion, puts them at significant risk.

If I was in one of these self-employed schemes, and under enquiry, I would be seriously thinking about demanding closure notices from HMRC and forcing them to either accept my SARs, with no amendment, OR take me to a tax tribunal.

Parliament would be highly unlikely to legislate with retrospective effect while a taxpayer was appealing to the tax courts.

[captainham]

...and HMRC would find it impossible to attack EBTs retrospectively.

Pardon?

http://forums.contractoruk.com/accou...ospection.html

[DonkeyRhubarb]

I know of 5 promoters offering self-employed loan schemes, and there are probably more. I know one has around 1000 users, and the other two have at least another 1000 between them.

If there were say 3000 users in total, and the average tax saving was £30k/year, then that would be £90M/year in lost tax revenue. Call it £100M.

The schemes have already been running 2 years, so that's £200M.

If HMRC sit on this another 3 years, then we're talking £½Bn.

Now tell me that they wouldn't consider dusting off the time machine for that amount, especially when they can justify retro on the basis that the new schemes were clearly designed to flout the disguised remuneration regulations. They've also got the BN66 Huitson court judgments on their side.

Don't get me wrong. I am totally against retro in all circumstances and I don't seek to scaremonger but there are things people can do to safeguard against this eg. asking HMRC to put up or shut up (litigate or close their enquiries).

[DonkeyRhubarb]

EBT Ruling Hits Thousands of Banking Staff

I'm not sure why JPM have caved in.

EBT Ruling Hits Thousands of Banking Staff

[Incognito]

I'm not sure why JPM have caved in.

EBT Ruling Hits Thousands of Banking Staff

I would suspect that the Rangers EBT decision is imminent and that JPM maybe recognise that their structure of the scheme is not watertight.

[AtW]

I'm not sure why JPM have caved in.

It's not their fight - they make money from banking customers rather than from people who want to avoid paying tax that everybody else would be expected to pay.