BN66 - Court of Appeal and beyond

[ContractIn]

I am not going to defend everything MP have done. Some of their practices have been sharp to say the least, especially on the sales side.

Once the scheme was under investigation in mid-2003, they should have told anyone new who joined.

Other promoters like Steed and deGraaf didn't even start their schemes until after it was being investigated. Did they tell anyone? Nope. What about all the property developers, were they told? Nope.

It's the same with all the EBT/Loan schemes. HMRC started investigating these years ago. Did any promoters tell prospective clients? Of course not.

This practice of shall we say being enconomical with the truth is widespread in the industry.

I also think MP should not have been so quick to recall the 4% loans as soon as the 12-month enquiry deadline had passed. And, arguably they should have refunded this when discovery notices were issued.

On the other hand, unlike Consulting Overseas, Norla etc, they didn't shut up shop at the first sign of trouble.

So far, they have honoured their commitment to defend the scheme up to the House of Lords (now Supreme Court).

It is not just HMRC who are guilty of retrospective rewriting of history.

Some people on this forum are totally disingenuous - "if only I'd been told this or that at the time, I wouldn't have joined".

How much due diligence did people really do? It was an Isle of Man offshore tax avoidance scheme for god sake. What did you think, you were joining a pension scheme covered by the FSA?

Some people are now trying to claim that they were led to believe it was 100% cast-iron guaranteed. Bollocks!

MP made it absolutely clear that, if the scheme was challenged, they would defend it up to the HoL. That was the only guarantee you were given. If you chose to believe that this meant it was 100% assured, then that was pure wishful thinking.

Should they have expected retrospective legislation? Maybe.

Should they have kept the numbers low? Probably but then others who jumped on the bandwagon, like Steed and deGraaf, would have simply filled the gap. Were they greedy? Sure but coming from us that would be like the pot calling the kettle black.

Yes, MP have been crap at communicating. Yes, they've been a bit economical with the truth at times.

But we are where we are.

If some people want to go off and sue MP or try and cut a deal with HMRC, then fine. I no longer have the energy to argue why I feel this is folly.

To my mind the best bargaining chip we may have is if we all stick together. But if that's not going to happen, so be it.

Good post as always DR.

Whilst we are sharing our grievousness, I joined in 2005 after a presentation in Knightsbridge where the group I sat with was told that the scheme would not exceed 500. I would imagine that this number had already been surpassed at this stage.

I was weighing the scheme up against going Ltd and the accountant who gave me MTM's details suggested it was no brainer, go with MTM! However I subsequently left in 07 as their admin was poor and I nearly lost what turned into a lucrative 22 month gig as the client would not sign MTM's contract, which meant I had to find an alternative mechanism to provide my services, which ended up being a Ltd company.

So as you can imagine since 2008 I wish I had never listened to the accountant or MTM!

That said I again am having to stick with MTM, which I am not comfortable with but have no alternative.

I've yet to receive the letter I assume it follows WG statement on the first page. Do we have timeline for when an appeal to SC will be put in or when it needs to be submitted by?

[smalldog]

what i dont quite understand is the amount of people who are whinging about MP when they committed to take it to HoL and it seems are doing such. This isnt over yet and until it is then I for one am going to wait it out. I feel the SC will be a different ball game all together, the CoA had to rubber stamp Parkers verdict which they did. I would hope that we can hit the SC with a broader argument than just HR as we all know thats a tough one to crack.

Also remember the COA judges said this is a very unusual case which gives at least me some hope that a higher court could look at things differently. We also have the PWC angle too plus KPMG have gone straight to europe I understand.

As ive said already if we eventually lose then maybe there could be some legal recourse to MP for selling a product that didnt work but we havent reached that point yet. DR your point is noted about liability however my agreement is very explicit on who I had an agreement with and its not some backstreet shell of a company.

[DonkeyRhubarb]

Do we have timeline for when an appeal to SC will be put in or when it needs to be submitted by?

This my understanding.

First MP have to ask the Court of Appeal for leave to appeal. Don't ask me why because this is nearly always refused.

They have to get this in by tomorrow.

Assuming it is refused, they will then have 30 days to apply to the Supreme Court.

So, we're looking at a deadline of roughly end of August.

[normalbloke]

I am not going to defend everything MP have done. Some of their practices have been sharp to say the least, especially on the sales side.

Once the scheme was under investigation in mid-2003, they should have told anyone new who joined.

Other promoters like Steed and deGraaf didn't even start their schemes until after it was being investigated. Did they tell anyone? Nope. What about all the property developers, were they told? Nope.

It's the same with all the EBT/Loan schemes. HMRC started investigating these years ago. Did any promoters tell prospective clients? Of course not.

This practice of shall we say being enconomical with the truth is widespread in the industry.

I also think MP should not have been so quick to recall the 4% loans as soon as the 12-month enquiry deadline had passed. And, arguably they should have refunded this when discovery notices were issued.

On the other hand, unlike Consulting Overseas, Norla etc, they didn't shut up shop at the first sign of trouble.

So far, they have honoured their commitment to defend the scheme up to the House of Lords (now Supreme Court).

It is not just HMRC who are guilty of retrospective rewriting of history.

Some people on this forum are totally disingenuous - "if only I'd been told this or that at the time, I wouldn't have joined".

How much due diligence did people really do? It was an Isle of Man offshore tax avoidance scheme for god sake. What did you think, you were joining a pension scheme covered by the FSA?

Some people are now trying to claim that they were led to believe it was 100% cast-iron guaranteed. Bollocks!

MP made it absolutely clear that, if the scheme was challenged, they would defend it up to the HoL. That was the only guarantee you were given. If you chose to believe that this meant it was 100% assured, then that was pure wishful thinking.

Should they have expected retrospective legislation? Maybe.

Should they have kept the numbers low? Probably but then others who jumped on the bandwagon, like Steed and deGraaf, would have simply filled the gap. Were they greedy? Sure but coming from us that would be like the pot calling the kettle black.

Yes, MP have been crap at communicating. Yes, they've been a bit economical with the truth at times.

But we are where we are.

If some people want to go off and sue MP or try and cut a deal with HMRC, then fine. I no longer have the energy to argue why I feel this is folly.

To my mind the best bargaining chip we may have is if we all stick together. But if that's not going to happen, so be it.

Totally agree with you. Bring on the SC - it's the only realistic chance at the moment, however slim you perceive the chance to be.

We all went into this with our eyes open - most of it seems to escape the initial massive uncertainty concerning IR35 (and what a fsck up that proved to be - well done HMRC, another stunning piece of efficiency).

I'm convinced the scheme was legal until the duplicious spiteful, unelected (insert abusive word of choice) at HMRC realised they hadn't a cat in hell's chance of arguing it in a court and decided on retrospective change to win their flimsy argument.

If anyone wants to cut a deal - let me know how you get on with that, HMRC will laugh in your face (again). Sue MP? Good luck with that as well at the moment. DR is right - direct your anger at HMRC and the politicians. They are responsible for this mess.

[sjw]

Look at the date on this HMRC internal document. It was published before any tax returns had even been filed.

http://www.whatdotheyknow.com/reques...Issue%2063.pdf

The scheme was known to HMRC right from the very start. It did not need to be detected by any radar.

This is why the whole thing stinks and why our anger should be 100% directed at HMRC.

I agree something stinks.

There were 3 main reasons why I joined this scheme :

1) I understood it to be under the HMRC radar at the time
2) I understood that even it did get hit we would be able to restate our returns as self-employed
3) I understood that I would only pay the full fees if it suceeded

So forget whether or not I thought it was cast iron, forget Due Diligence on Montpelier, forget whether or not HMRC should be able to apply retrospective measures, forget how far Montpelier are preapred to fight. The last two conditions for me were key - and turned out to be false. And that is why I am so p+ssed off.

Actually MP must have thought about retrospection otherwise why include point 2?

[DonkeyRhubarb]

DR your point is noted about liability however my agreement is very explicit on who I had an agreement with and its not some backstreet shell of a company.

Well, it may not have been at the time. (joke)

Seriously though, I don't know whether or not there would be any mileage in pursuing MP. However, if large numbers of people did this there would be little chance of getting compensation. It would just bankrupt the company.

On the other hand, as AJ found out to his cost, you don't want to go up against them on your own. I think I recall him saying he's facing a legal bill in region of £200k.

Montpelier don't use cheap lawyers and if you lose you would be liable for their costs.

You would have to be fully prepared for lengthy and costly litigation if you went down this route.

[OnYourBikeGB]

Me too. I'm with the donkey.

[Tax_shouldnt_be_taxing]

More ways to skin a cat

It is worth remembering that on the subject of retrospection a key factor in BN66 being passed into law is that the 1987 legislation (FA 2 1987) is itself retrospective.

If you consult Hansard and commentary by Stephen Timms and Jane Kennedy they use this apparent fact to justify the retrospection of BN66.

However, the evidence is this and I quote from the then IR Board:

"Nobody would propose retrospection lightlyand the Government do not propose it lightly. But the particular kind of retrospection which the House has normally regarded with disfavour is that where a taxpayer has arranged his affairs on the basis of exiting law as generally understoodand the law is then changed with retrospective effect so that he finds himself faced with unexpected - and unprovided for - liability for past years. Such retrospection would be open to objection.

This legislation is quite clearly different. The retrospection in this clause is to prevent taxpayers such a windfall tax advantage. It is not to inflict an unexpected tax charge on the unwary."

Yet when you read EVERY commentary by the then Government to support the retrospective element of BN66 there is not a SINGLE mention to the evidence that there are 2 types of retrospection and that they via clarification have applied the one that the 1987 legislation specifically PREVENTS.

In other words, the retrospective nature as justified is the opposite of what it says justifies it. Or for us, Padmore was not retrospective.

In Hansard (Legislative Scrutiny: Finance Bill; Government Response to the Committee's Sixteenth Report of Session 2008-09, Coroners and Justice Bill (certified inquests) - Human Rights Joint Committee) it states that for HR compatability that:

"Such a [retrospective] tax would require very careful scrutiny for compatibility with the requirement of accessibility and foreseeability."

Given the first passage, where is the evidence of any scrutiny? JK and Co pushed for retrospection on a number of reasons of which that BN66 needs only to be a clarification since Padmore was already retrospective. Yet the IR Board state that there are 2 kinds of retrospection and the one used in Padmore is not the one applied in BN66.

So you see, there is a case but as I alluded to earlier, has the right question been asked yet? I don't believe it has. For how BN66 impacts us via retrospection is the inverse of what the BN66 clarification achieves. If BN66 is indeed a clarification then it must include the evidence definition from the IR that it was to prevent a tax windfall for *other* taxpayers being possible as a result of the HoL ruling. Indeed, the specific ammendments to the Padmore legislation were done for this reason so as not to interfer with the then Court process.

So as BN66 was drafted to allow us to be taxed and supported by the existing retrospective claim of Padmore, it is flawed 100% since it does the exact opposite of Padmore and the retrospection it defined.

I'm sure this point of evidence and more are being carefully looked through. Speak softly and carry a big stick.

What is the big stick? We'll have to wait and see. But if you take the above as just the starter, then it could be argued that Parliament was misled to get an incorrectly interpreted piece of retrospective legislation through whilst failing to conduct the very scrutiny that A1P1 requires.

[Fireship]

This might well be worth exploring, especially since Jane Kennedy's 'clarification' has now been described by the LJs as an 'amendment'. Big difference there I would have thought?

I’ve been thinking much the same, in fact can’t we challenge this in the courts???

As far as I’m aware it is not possible to make any retrospective/retroactive change to legislation under UK law and the courts have confirmed this is an amendment rather than a clarification therefore should it not be stuck off with immediate effect??

Would MP be able to comment??

[ONO]

SC

This my understanding.

First MP have to ask the Court of Appeal for leave to appeal. Don't ask me why because this is nearly always refused.

They have to get this in by tomorrow.

Assuming it is refused, they will then have 30 days to apply to the Supreme Court.

So, we're looking at a deadline of roughly end of August.

Thanks for the info, so around the end of August will be the next time we hear anything I suppose.

Does anyone know if the SC is able to do anything other then rubber stamp the initial ruling which has happened so far, or is the objective to force this through to ECHR?