BN66 - Court of Appeal and beyond

[AtW]

Perhaps if the government had felt so strongly about what we did they shouldn't have waited 6 years to deal with us.

I don't think you make your argument strong by saying that - there are so many good reasons why they would not act sooner (none of which will be counted against them as recent judgement suggests).

Just think about it for a moment, you run massive HMRC department and you've got lots various problems, with some super smart people running rings around you. It's slow inherently and has been for a long time, to counter that they reserve the right to look back at 6 years of tax affairs hoping that would be good enough to deter people.

I appreciate that in a desperate situation (which it certainly is for some or even many people who joined that scheme) one would be clutching at all straws, but I just can't see how it would help to clutch that particular one: someone at HMRC might deserve to get a slap for not dealing with this earlier rather than later, but that's internal admin issue.

The tax rate seems a bit low, but the 'take home' was around 85% including fees. I am sure a well known retailer manages better than that!

Look, forget about other people getting away with it - in that particular case you (in my view) totally wrong because if you can trust your wife to own most of your business whilst living in offshore and receive all dividends then you found the right one for sure! That company you probably refer to provides thousands of jobs all of which pay tax, I can't see how it can be changed anyway - just forget it, it has no bearing on your case whatsoever.

I don't think current Govt like the idea of retro taxes, however even if Martians take over Govt tomorrow they won't change general direction of things. Get a settlement and soon ...

[bananarepublic]

I don't think you make your argument strong by saying that - there are so many good reasons why they would not act sooner (none of which will be counted against them as recent judgement suggests).

Just think about it for a moment, you run massive HMRC department and you've got lots various problems, with some super smart people running rings around you. It's slow inherently and has been for a long time, to counter that they reserve the right to look back at 6 years of tax affairs hoping that would be good enough to deter people.

I appreciate that in a desperate situation (which it certainly is for some or even many people who joined that scheme) one would be clutching at all straws, but I just can't see how it would help to clutch that particular one: someone at HMRC might deserve to get a slap for not dealing with this earlier rather than later, but that's internal admin issue.

Seems a pretty extreme failure to me. Anyway let's see what the SC says about this all. To be honest I am fed up with the whole thing....

[AtW]

Seems a pretty extreme failure to me.

They had no obligation to catch such cases at nano-second notice, the whole point of 6 years period is to be able to look back and deal with it: this is meant to serve as deterrent.

Clearly they had to consider their position carefully and I reckon they would have preferred to avoid doing what they did if tax revenue loses were not huge, but wtf you expect HMRC to do when they see such scheme growing and growing? It reached the treshold at which they could no longer stay passive, so they had to act - sooner or later it had to happen. I've read most of comments in this thread and anyone with brain can see clear increase in numbers who took part in the scheme, so they had to act at some point.

[AtW]

Last word tonight:


SETTLE!!!

[OnYourBikeGB]

This sounds like a reasonable position until you check facts of the case: just how many businesses are resident in UK, do work in UK for UK based client, yet expect offshore entity to get the money and pay 3.5% effective tax (in words of the recent judgement), how many small UK businesses can relate to it? I reckon most of those who can are in this thread because they are directly affected by this specific judgement.

As I said I hope HMRC will be sensible enough to offer reasonable settlements once the issue settled by courts.

Good luck.

Doubt they will, but who knows? My point though is though that while many have a view of the 3.5% tax (i.e. we were taking the proverbial), that's not what the verdict is about. Their victory is much more broad that simply tackling our tax planning, their argument, which so far has the ascendancy and is likely to remain so, is that they have the right to use punitive retrospective taxation. There are plenty of small businesses using aggressive tax planning, both onshore and off. Have a look at some of the adverts on this very site - not as aggressive, but I can see one at the top of the page saying I could take home 80% - not much less than under the MP scheme once tax and charges were deducted. Don't kid yourself, there's plenty more than us that could have been targeted by retrospective legislation. What about companies paying minimum wage? Perfectly legal, suppose HMRC decide at a later date that this is a justifiable target and step round the new guidelines? That'd catch a lot of people, and the general public would also feel that they were getting what they deserved too, getting paid less than a McDonalds burger flipper (good people as they are) and working in the city in those fancy offices and saying they earn less than the cleaners. I'm not making a judgement, obviously, I'm seeing how they must seem through the public's eyes. Google a few major companies with the words 'offshore tax avoidance' and there's plenty of them too - but of course they have nothing to fear. We're far from unique, other than for being singled out.

That's why it is a broader problem, because what will come out of this is not that the HMRC have won the right to retrospectively tackle a legal avoidance scheme that was offshore, and that resulted in a 3.5% tax charge. They've won the right to retrospectively tackle any legal avoidance scheme that they don't like, and they don't like any of them, the only thing in their way is some guidelines. Not only that, but they can backdate it for many years with interest and destroy people and families and they have no duty of care. That's the facts if not of the case, then of the verdict.

[AtW]

That's why it is a broader problem, because what will come out of this is not that the HMRC have won the right to retrospectively tackle a legal avoidance scheme that was offshore, and that resulted in a 3.5% tax charge.

If you paid 35% of tax vs 40% expected, then your argument would have made sense.

The problem is that the different is SO MASSIVE that no matter what you say can only be viewed by others who pay "full whack" as attempt to justify unjustifiable. That's the job that lawyers often have to do, the problem is that when they lose their argument it's their client (you) who loses.

No matter what you say your argument will always be totally undermined by that 3.5% figure - there is no "broader problem" that you are referring to because very few people manage to get such low tax figure and even less get away with it. Which is the whole point of what HMRC is doing - it's not the tax you did not pay they are interested in (my view here obviously), it's strategically making sure that any such schemes do not succeed.

They ain't afraid of SC, in fact they'd probably welcome it.

[d000hg]

AtW has a point in basically saying "what did you expect?" - clearly people entering the scheme knew it was a loophole and not what HMRC wanted.

BUT

What people entering the scheme - the ones who knew their stuff and weren't naive enough to think it was going to last - presumably thought was that HMRC would stomp on it at some point, killing the scheme but not until they'd made some benefit from it.

Closing a loop-hole is what you expect. People taking advantage of a loop-hole is also what you expect.

[OnYourBikeGB]

No matter what you say your argument will always be totally undermined by that 3.5% figure - there is no "broader problem" that you are referring to because very few people manage to get such low tax figure and even less get away with it. Which is the whole point of what HMRC is doing - it's not the tax you did not pay they are interested in (my view here obviously), it's strategically making sure that any such schemes do not succeed.

They ain't afraid of SC, in fact they'd probably welcome it.

I agree we are being made an example of and the longer it goes on, the better as far as they're concerned. I think we'll have to agree to disagree on the rest. But retrospection is wrong. I will never be convinced otherwise having seen first-hand what it does to people and their families.

Where does the take home of 80% (i don't know how much is tax of the 20) lie on your scale of unfairness? Does it just deserve a bit of retrospection? How much? Or none at all? I think you may be more focussed on the 3.5% than they are.

[DonkeyRhubarb]

Like Huitson, I paid around 3.5% tax.

But it is not as unusual as you think.

Most schemes marketed to contractors, of which there have been countless over the past 10 years, net around 85%. In fact they've even be coined the "85% schemes".

Scheme promoters typically charge 10% in fees, so that leaves 5% to the Exchequer.

As I write, I'm looking at an advert on this very site from a firm called Choice Premier which claims 80% retention. On the face of it that doesn't sound too aggressive, that is until you factor in the 10% fee. Their users will be paying around 10% tax.

You can argue that 3.5% is taking the piss but what about 5% or 10%? A lot of tax avoidance schemes avoid tax altogether ie. 0%. Surely that's even worse than 3.5%?

So, where do you draw the line?

I'm not claiming that any of this is right, or trying to take the moral high ground, but I utterly refute the notion that what we did was somehow exceptional.

If we deserve to be taxed retrospectively, then what about all these others?

Do you still think it's fair?

[centurian]

AtW has a point in basically saying "what did you expect?" - clearly people entering the scheme knew it was a loophole and not what HMRC wanted.

There is a reason why people don't admit that. HMRC have used posts on this board in court to "prove" that people knew it was a dodgy scheme, hence no-one will own up to it here.

But some appear to be believing their own hype. The folks on here are smart, well-clued up individuals. The notion that they had the intelligence to buy into this scheme, yet were utterly clueless to even the slightest possibility that HMRC might bite back - is frankly bonkers.