BN66 - Court of Appeal and beyond

[Tax_shouldnt_be_taxing]

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??

They can make retrospective changes to the law. And they can do so under A1P1, but BN66 is not a change according to how it was pushed through Parliament yet it must be. It clarifies incorrectly, retrospection. It claimed "as Parliament had always intended". Yet what Parliament specifically intended as per the IR Board evidence was also not to tax anyone with retrospection.

Hansard commentary states that 1987 was the signal that defeats our claim to legitimate expectation. But if so, then we were put on notice of the type of retrospection to expect or more accurately, the type NOT to expect.

Yet the A1P1 argument in the courts seems to focus on whether BN66 is fair and proportionate. It would appear that MP are agahst that the CoA ruled that Padmore is retrospective. I agree. For it it is proved is was not then the whole clarification angle, reference to Padmore being retrospective to allow BN66 retrospection and the "what Parliament had always intended" is on very dodgy ground.

[Fireship]

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.

Agree with you 100% DR!!!

[screwthis]

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.
....

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.

Can you be our QC at the SC?

Agree.... Ask the right questions!

[normalbloke]

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?

Point 2. I thought that's exactly what HMRC are doing. Classing all our income as SE income and asking us to pay the full whack on it? ... or have I got it totally wrong?

[Tax_shouldnt_be_taxing]

Can you be our QC at the SC?

Agree.... Ask the right questions!

It may not just be the SC where and more gets aired. If HMRC are reading this Forum they will probably be having fun with some of the infighting and attacks on MP. So enjoy. But aside from that, what was posted about the IR Board on Padmore and retrospection is fact and documented in the post Padmore legislation and confirmed in Hansard minutes at the debating stages.

I will say it again - the then IR and Parliamentary debate on the revised Padmore II Finance Bill 15th July 1987 states with total certainty that:

THIS IS A DIFFERENT KIND OF RETROSPECTION TO ENSURE OTHERS COULD NOT BENEFIT FROM THE PREVIOUS 6 YEARS TO OBTAIN A WINDFALL TAX BREAK THAT THEY WOULD NOT HAVE KNOWN ABOUT YET WITHOUT INTERFERING WITH THE COURT PROCESS. IT WAS DESIGNED TO CATAGORICALLY PREVENT ANYONE GETTING TAXED RETROSPECTIVLEY. BN66 DOES THE TOTAL OPPOSITE AND ITS REASONING IS IN DIRECT CONFLICT WITH THE ACTUAL EVIDENCE.

[screwthis]

Point 2. I thought that's exactly what HMRC are doing. Classing all our income as SE income and asking us to pay the full whack on it? ... or have I got it totally wrong?

They are treating us as PAYE.
Self employed would mean not being caught by IR35.

[DonkeyRhubarb]

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

I have got a 2003 seminar presentation open in front of me. I also checked my contract agreement.

1) Montpelier should have been more open about the fact that the scheme was being investigated by HMRC, but they were not alone in this respect. Every promoter I know of has kept this hidden from prospective clients.

2) I have never heard anyone else mention being told they'd be able to resubmit their tax returns if the scheme failed.

3) The presentation mentions the 4% loan. If you got a discovery notice after the loan was repaid, then Montpelier have stated that they will refund this if you end up having to pay the tax. You should count yourself lucky if this happened to you because it gives you an extra chance to challenge the CN at a tax tribunal on the basis that the COP8 enquiry was out of time.

I wish I'd got discovery notices and had to repay the loans.

[Tax_shouldnt_be_taxing]

Public Policy & Public Interest

I put it that based on what I've said earlier that neither Timms nor Kennedy who pushed for retrospection on BN66 either fully understood or had been fully briefed on the evidence of the retrospection of Padmore. Whether this was an oversight or deliberate makes no difference.

I'm sure there is plenty of Public Interest in finding that Parliament has enacted a retrospective peice of legislation based on incorrect information and I'm pretty sure it's not Public Policy to do so.

The word retrospection was used many times by these folks and describe all manner of conditions that it applied to in Padmore. But the evidence and facts are that there is only one condition and it's not the one applied in BN66.

[DonkeyRhubarb]

I am starting to wonder if we've got the right brief.

Is he ramming the point home hard enough because the courts don't seem to be getting it.

The plain and simple fact is that the Padmore legislation was specifically drafted not to do what BN66 does ie. tax anyone.

[bananarepublic]

Sh1te happens!

To be honest I have not been following this thread too closely. However, I am shocked by the naivety of some people. It seems as if some people always believe what they are told (or think they were told)! Whether it is some comment about not expecting to be investigated or being told not to buy a CTD or whatever.

The simple fact is that you signed your earnings over to an offshore company in the hope of getting a tax advantage. What were you expecting?

Whatever Montpeliers faults they did not run for the hills at the first sign of trouble. I believe that they have always operated on the basis of QC advice and in good faith. I don't believe that anybody could reasonably have anticipated the retrospection. I believe that Montpelier were always open and honest to the fact that the scheme may fail.

In so far as there is hope our best bet is sticking it out with Montpelier.