BN66 - Court of Appeal and beyond

[bananarepublic]

One more thing

I don't think anybody, least of all MP expected the scheme to last from 2001 to 2008. When I spoke to people at MP at the outset they expected it to last a few years top. In the end it was HMRC/HMG incompetence that strung it out for so long which they then had to cover up by acting retrospectively.

[bananarepublic]

NB: There is no advantage of (1). It would be better to buy a Certificate of Tax Deposit instead. This should be for the amount of Income Tax (and possibly NI) that HMRC claim is owed. Once bought the interest is suspended. Should MP/us finally win, you will get your money back. If MP/us finally lose, you will only have the interest part (from due date to date you bought certificate) left to pay.

If you "settle and move on", and MP/the rest of us finally win, then you will get nothing back as you will have accepted that HMRC were right.

Note that HMRC are currently claiming we'll have to pay Income Tax, National Insurance and Interest - there are arguments that each of these should not apply.

Interest is about 23% of total, NI about 15% and IT 61% - each is worth playing for. These numbers depend on when you entered the scheme and turnover during the time.

If one cannot afford the full bill, HMRC suggest that whatever amount can be managed should be "paid on account". I am shocked by this financial advice. What's the point of paying anything if HMRC are going to bankrupt you?

The NI is an interesting one as they slapped this on the trust income. They wrote to me, circa 2004 "inviting" me to pay on account. No mention of NI on the trust income, although it was due (and paid) on the income from the contract with the partnership. I hadn't budgeted for this and with interest has probably added 10k onto my overall bill. Small in relation to my total liability but a tidy sum in its own right.

[DonkeyRhubarb]

The NI is an interesting one as they slapped this on the trust income.

One promoter has queried this with a tax QC and they believe there are strong arguments why this shouldn't apply to the money from the trust. (NB. the folks who settled with Suo Motu didn't pay this.)

This is one of the reasons I hope all the promoters join forces so every possible avenue is covered through the tribunal appeals.

[bananarepublic]

One promoter has queried this with a tax QC and they believe there are strong arguments why this shouldn't apply to the money from the trust. (NB. the folks who settled with Suo Motu didn't pay this.)

This is one of the reasons I hope all the promoters join forces so every possible avenue is covered through the tribunal appeals.

Yes and for at least one year I will have paid the full wack on two sets of incomes, if/when we have to actually pay up. When I raised this with my tax office they invited me to apply to the NI contributions office for a refund, although they helpfully pointed out that I would almost certainly be outside their time window. Also presumably a nice little earner because if I do get a refund I've lost the differential between the interest rate HMRC pay me and what I pay them on outstanding debts (3% versus 0-0.5% I think).

So a bit ridiculous then. They collect the NI but are unable to offset what I've already paid where it is over the max.

[SantaClaus]

NB: There is no advantage of (1). It would be better to buy a Certificate of Tax Deposit instead. This should be for the amount of Income Tax (and possibly NI) that HMRC claim is owed. Once bought the interest is suspended. Should MP/us finally win, you will get your money back. If MP/us finally lose, you will only have the interest part (from due date to date you bought certificate) left to pay.

If you "settle and move on", and MP/the rest of us finally win, then you will get nothing back as you will have accepted that HMRC were right.

Note that HMRC are currently claiming we'll have to pay Income Tax, National Insurance and Interest - there are arguments that each of these should not apply.

Interest is about 23% of total, NI about 15% and IT 61% - each is worth playing for. These numbers depend on when you entered the scheme and turnover during the time.

If one cannot afford the full bill, HMRC suggest that whatever amount can be managed should be "paid on account". I am shocked by this financial advice. What's the point of paying anything if HMRC are going to bankrupt you?

There must surely be an argument that interest isn't due.

I mean, think about it, interest on a tax that HMRC have admitted is retrospective. How can interest be charged on something that didn't exist at the time?

It has the makings of a Monty Python sketch. Oh hang on.... here comes another tardis.

[nick4notax]

Could this become our new angle???

DR, some salient truths here. The HC ruling and CoA ruling show that we're not likely to get anywhere on an HR footing with this. Even if this ends up in the SC, I really doubt a win on HR grounds given the CoA ruling especially - I stand by my views from last year that the CoA was the first test. IMO the HR route on evidence has been defeated thus far 2-0. So rather than hedge my bets on what the SC route or even the Strasbourg route offers (the latter taking longer than Brussels to realise Greece needs to dip out of the Euro), I consider the following:

Winning on HR gounds thus far has failed - A better defence in the Courts may have helped but what is done is done.
Winning on HR grounds at the next level or the one after that does not have a good track record.

So park for now whether HR gives a case or not. Take a point raised here earlier and last year and numerous times before - EVIDENCE.

Now I'm not going to try and get hopes up or suggest a line of redress that trumps all and actually part of me considers that the "establishment" will get its way. And you know what? From the outside looking in and perhaps without a deep understanding of this and the facts and history I might think "well just pay up like the rest of us". But I like others do have history and facts on this.

Not going to bang the same old drum (again), but HR aside and win-lose aside, if the day of reckoning comes, then my position based on evidence (not least from the then IR and Hansard) is this. Will it work? Don't know. Is is true? 100%

Case for:
S58 is law and on HR grounds has been supported by the HC and CoA (and SC?)
S58 is a clarification (Hansard) and is retrospective as was Clause 62 (Hansard)
S58 clarifies the bebeficiaries affected by the Padmore legislation to include persons beyond Partners of a foreign Partnership and was always intended.
Padmore retrospection ensured that the Exchequer was protected from an unexpected loss for the previous 6 years

Case against:
Padmore legislation applied retrospection to ensure that 15,000 partners in a foreign partnership (Hansard) could not claim tax deducations not already made for the previous 6 years.
Padmore identified a specific group of taxpayer (quote Seadog and Hansard) as being affected by retrospection so they could not claim relief not yet claimed for.
Hansard clearly states that this limitation was to prevent Partners claiming relief from the Treasury not yet applied for rather than BN66 which prevents relief already claimed for being allowed.
Clarification of Padmore via S58 is in conflict since the latter does the opposite of the former for the purposes of taxation - A first in UK tax law. Written evidence from the then IR and Hansard (Parliament) in 1987 confirms this when compared to the current case and the passing of S58 in Parliament.
S58 retrospection can only apply to Partners in a foreign partnership and that is not the Scheme unless you choose to look through the arrangement yet Parker is on the fence on this point.

I'm staying off the wires on all of this since I have found that a life outside of the worries of BN66 is rather good. But if push comes to shove and the HR angle is lost, then using only the text of IR documents and Parliament from 1987 to contrast to the claimed clarification of S58 of the same, if the brown envelope arrrives, then these facts will be entered as to why S58 does not apply to me anymore than it should apply to anyone else in this Scheme.

Outsiders may smirk at such a notion, that is their choice. If found against then the law says I pay or go bankrupt. But whilst HMRC may be applying statute as DR rightly says, IMO, they are as their website states "sitting at the knee of Ministers" in terms of their legal folks in London so cannot be free of any involvement.

I'm not making this personal. The law is the law. But for me at least, there is a story and a journey from Padmore to BN66 that has not been told to those who rule and decide. It's the elephant in the room if you will. Win or lose on HR or pure legal grounds in the Tax Courts is less the point for me personally. But the story needs to be told and the journey taken. After which, closure one way or the other.

As for outsiders, I have no interest. All my financial affairs were 100% declared. If illegal then I pay. If immoral then set rules on morality. If "unfair" then set the rules on "fair". A wholly irrelevant set of points. So until we have a system that converts these intangbles into rules or directives, I take pride in never taking a handout from the State, using hospitals or taking up GP time on a cough or waiting for the Council to clean up the leaves on my road etc.. No saint folks and I do pay into the system.

This debacle will be resolved soon one way or another and everyone will move on, one way or another. But to go down if that is what happens without making the obvious statement that BN66 is not Padmore by way of clarification or even mild ammendment and to use the evidence of Parliament and the IR in 1987 to prove it compared to Parliament and HMRC in 2008 will be a victory in itself. By all means, say you're bringing in new legislation to replace the old one which was faulty and had loopholes and be open and say yep, this is tough stuff and sorry, you're getting hit with retro even though you may not have seen it coming becuase what you are doing is not acceptable. But that is far different from hiding behind 20 year old legislation that aimed to achieve the exact opposite of what S58 claims. That's worse than unacceptable (transparent)avoidance - it's abject denial of systemic failure and evasion of responsibility shrouded by misrepresentation of existing law purported to be for the common and collective good.

Is this the way forward now?

[BrilloPad]

I remember back in the good old days when View Profile: Bernard - Contractor UK Bulletin Board would occasionally post here before he left MP. It would be nice if someone from MP let us know a little of what is happening - especially as some of them have known since 7th Feb.

Very frustrating. Still, as DR has said, its better to take time and get the right result.

[CanPayButWouldRatherNot]

One promoter has queried this with a tax QC and they believe there are strong arguments why this shouldn't apply to the money from the trust. (NB. the folks who settled with Suo Motu didn't pay this.)

I for one will be arguing that the suomotu settlement I used once before is the precendent when dragged through the tribunal.

[ALMAC]

SOU MOTO

I for one will be arguing that the suomotu settlement I used once before is the precendent when dragged through the tribunal.

Does anyone have any firm details of the Sou Moto settlement?

Surely HMRC must offer this deal at worst case in the interest of fairness?

Sorry I forgot that the word "fairness" has been stricken from their code of conduct.

[DonkeyRhubarb]

Montpelier have full details of the Suo Motu deal.

We know the users paid a discounted rate of tax on the trust income. No NIC. No interest.

I tried to get HMRC to publicly disclose the terms of the deal under FOI but they refused.

The Suo Motu deal - a Freedom of Information request to HM Revenue and Customs - WhatDoTheyKnow