BN66 - Court of Appeal and beyond

[screwthis]

It doesn't actually say that it should be retrospective.

Convicted London rioters should loose all benefits. - e-petitions

By the way, what does it mean to loose all benefits?

It means they should set all their benefits free

[johnnyguitar]

a 6 year retrospective tax measure can be applied[/B]"...

Only in our case, it can be claimed that we (Monpelier, not me personally which is another matter) were warned by HMRC that they weren't happy with the scheme and that monies should be put aside.
Which is a slightly different scenario than HMRC introducing a retrospective law completely out of the blue with no reasonable expectation, notice or warning.
This is what the courst seem to be saying, in my view. That retrospection in this case is allowed because a) we were warned and b) it was clearly artificial and we should have expected it.
Not that I neccessarily agree with those statements.
so the case law set would be more like: =..."a 6 year retrospective tax measure can be applied, - where there has been notice given or it could be expected"
or something like that.

[DonkeyRhubarb]

Only in our case, it can be claimed that we (Monpelier, not me personally which is another matter) were warned by HMRC that they weren't happy with the scheme and that monies should be put aside.
Which is a slightly different scenario than HMRC introducing a retrospective law completely out of the blue with no reasonable expectation, notice or warning.
This is what the courst seem to be saying, in my view. That retrospection in this case is allowed because a) we were warned and b) it was clearly artificial and we should have expected it.
Not that I neccessarily agree with those statements.
so the case law set would be more like: =..."a 6 year retrospective tax measure can be applied, - where there has been notice given or it could be expected"
or something like that.

These days, every scheme has to be notified to HMRC under the disclosure regime.

All users of a scheme have to put the scheme reference number (SRN) on their tax return.

It is virtually automatic these days that if you put an SRN on your return, HMRC will open a COP 8 enquiry.

So everyone gets warned that HMRC are disputing their return.

All HMRC has to do is sit back for a few years and then fire up the Time Machine.


PS. last year I submitted an FOI request to see how many people HMRC had under COP 8 enquiry - the answer was approximately 30,000

[DonkeyRhubarb]

You have been warned!

Dear Mr johnnyguitar,

I am writing to inform you that I am opening an enquiry into your 2009/10 self-assessment return under Code of Practice 8.

HMRC is challenging your claim to tax relief. I hereby advise you to make payments on account or set aside money to cover any liability.

Please note that in light of the Supreme Court ruling in "Huitson -v- HMRC", the Government is entitled to legislate with retrospective effect where HMRC have given taxpayers adequate warning.

This letter constitutes said warning.

Yours sincerely

A Bastard
HMRC

[Tax_shouldnt_be_taxing]

Only in our case, it can be claimed that we (Monpelier, not me personally which is another matter) were warned by HMRC that they weren't happy with the scheme and that monies should be put aside.
Which is a slightly different scenario than HMRC introducing a retrospective law completely out of the blue with no reasonable expectation, notice or warning.
This is what the courst seem to be saying, in my view. That retrospection in this case is allowed because a) we were warned and b) it was clearly artificial and we should have expected it.
Not that I neccessarily agree with those statements.
so the case law set would be more like: =..."a 6 year retrospective tax measure can be applied, - where there has been notice given or it could be expected"
or something like that.

Mindful not to start a whole new debate, I think it's worth considering what the above means in future litigation terms. S.58 would not be applied or even need referring to. Case law determined by the highest court in the land would deem that 6 years of retrospective taxation is permitted and not even HR can protect you. Of course in any future litigation there would have to be arguments on both sides. But consider this. HMRC open COP 8 enquiries on something legal and declared for 6 years in a row and do no more than state they don't agree with you (sound familiar?). Then in year 6 they litigate. They can claim you were warned, they can claim that the law allows you to be taxed retrospectively and they can claim that they never agreed with you without having to say why. Applying s.58 as case law trumps the lot.

So with 30,000 COP 8 enquries under way, you can see why HMRC would be chuffed to win this battle since the arguments for it are:
We told you we didn't agree
We opened enquiries for each year
You were doing something "unacceptable" (note, nothing about legal)
We waited 6 years before acting
The scale has shot up (of course it will if left to its own devices. Makes doing nothing helpful)
You were warned as a result of "Huitson -v- HMRC" that we would act retrospectively.

They don't even have to start with the "abusive", "artificial" and "aggressive" arguments. Happy days for HMRC.

You'd end up needing to get Parliament to legislate a few dozen times a year to get a carve out!

What s.58 will do if it is allowed to stand is remove Parliament from the loop for applying retrospection in limited cases and for only specific purposes and add HMRC in its place. But with 30,000 COP 8 enquiries in the loop, I think you can see how they can use case law to trump any defence in litigation. They must be frothing at the mouth in anticipation.

If these 30,000 folks knew this, I doubt they would be looking to support it.

As an aside, when you look at the facts of the years between 2001 and 2008 and especially late 2007, I could apply "abusive", "artificial" and "aggressive" to what ended up as BN66. What's good for the goose and all...

[Tax_shouldnt_be_taxing]

Dear Mr johnnyguitar,

I am writing to inform you that I am opening an enquiry into your 2009/10 self-assessment return under Code of Practice 8.

HMRC is challenging your claim to tax relief. I hereby advise you to make payments on account or set aside money to cover any liability.

Please note that in light of the Supreme Court ruling in "Huitson -v- HMRC", the Government is entitled to legislate with retrospective effect where HMRC have given taxpayers adequate warning.

This letter constitutes said warning.

Yours sincerely

A Bastard
HMRC

DR, the underlined above should read "HMRC is entitled to litigate". And if that was in said letter, you'd be bricking yourself. It would make what we've seen on the streets over the last few days look like a casual outing of the Variety Club by comparison.

The only thing standing between you and HMRC's global nuclear option would be Parliament. The very same ones that put you in the cross hairs in the first place!

[Tax_shouldnt_be_taxing]

Dear Mr DR,

I am writing to inform you that I am opening an enquiry into your 2009/10 self-assessment return under Code of Practice 8. I am further advising you that we will make enquiries into your business accounts for the same year filed with Companies House under Donkey Rhubarb Ltd. Your annual turnover net VAT was 100K. From your SAR, we see that you paid yourself a Dividend of 60K. We do not accept that claim. We advise you to provide an updated SAR showing as per the attached Tax Calculation that your income was 100K which is liable to tax, employee NI and employers NI. Your revised tax liability is therefore 60K.

HMRC is challenging your claim to tax relief on the basis but not limited to your claim being abusive and wholly artificial. I hereby advise you to make payments on account or set aside money to cover any liability.

Please note that in light of the Supreme Court ruling in "Huitson -v- HMRC", HMRC is entitled to litigate with retrospective effect where HMRC have given taxpayers adequate warning and with full complaince to A1P1 of the ECHR.

This letter constitutes said warning.

Yours insincerely

A Bastard
HMRC


Or as with the Scheme, you're doing something legal and transparent. IR35 might not catch you. You should be paying the same tax as anyone who is employed. You're not and we don't accept that. Forget 30,000 COP 8's. This could be applied to EVERY self employed, LTD, Partnership etc. Or anyone who does not pay full tax as though they were employed. Bye bye, the IT Contractor base, Property Developers and anyone else who is not an employee. Not just in the UK, but anywhere in Europe. Why? because SC rulings and case law are referred to in other countries as they are in ours.

Of course those of a different persuasion woul say "don't be daft, HMRC would never try that". Really? Well their making a damned good effort with us.

[screwthis]

If these 30,000 folks knew this, I doubt they would be looking to support it.

30,000 plus a couple of family members each would take us pretty close to the 100,000 needed to trigger a parliamentary debate.
If and it's a big IF, these people could be reached via a campaign. Long shot still I know.

[Tax_shouldnt_be_taxing]

30,000 plus a couple of family members each would take us pretty close to the 100,000 needed to trigger a parliamentary debate.
If and it's a big IF, these people could be reached via a campaign. Long shot still I know.

If someone wanted to take out a full page ad in the press and was wondering what to say that would make every taxpayer and business sit up and take note, something like the "letter" I posted would not be a bad thing.

I mean, your business is legal and transparent but the tax you pay is less than if you were the "virtual employee" IR35 and HMRC themselves would want you to be. I think I now understand what HMRC mean by "fair share" and this is one damned good way to make sure you pay it, retrospectivley of course.

And if that was to be allowed to stand, think about how it was achieved. By a slight of hand that through a mere clarification CHANGED inversly what Parliament had always intended when enacting the 1987 legislation. I feel a book coming on "The Tax Machine".

[smalldog]

Only in our case, it can be claimed that we (Monpelier, not me personally which is another matter) were warned by HMRC that they weren't happy with the scheme and that monies should be put aside.
Which is a slightly different scenario than HMRC introducing a retrospective law completely out of the blue with no reasonable expectation, notice or warning.
This is what the courst seem to be saying, in my view. That retrospection in this case is allowed because a) we were warned and b) it was clearly artificial and we should have expected it.
Not that I neccessarily agree with those statements.
so the case law set would be more like: =..."a 6 year retrospective tax measure can be applied, - where there has been notice given or it could be expected"
or something like that.

Its one thing introducing a retrospective law, I can almost cope with that, what I cant cope with is "oh and by the way you now owe us an additional 60% in interest because we sat round and did F all for 6 years". That for a lot of people is the difference between ability to pay and bankruptcy, granted that is a whole argument to be had during the tax appeal process should we eventually lose but that is the bit that particularly sticks in my throat.

what was a £100k debt overnight becomes a £160k debt. When we go to the SC we should request if nothing else the interest is struck out.