BN66 - Court of Appeal and beyond

[OnYourBikeGB]

Happy New Year to everyone and their families.

Let's hope 2012 will be the year HMRC dies on their sword.

You too Santa, and everyone else on the forum apart from the HMRC trolls of course. A Happy, Prosperous and Peaceful New Year to all.

[BrilloPad]

A Happy, Prosperous and Peaceful New Year to all.

Except HMRC.

[centurian]

The 2 scenarios are quite different

Yes, but at the level of detail Hodge and the committee are focusing on, they just won't see much difference. Argue the technicalities until the sky turns green - all the committee will see is the quoted £100m figure of "underpaid" tax.

The implication that these situations are the same is a tad insensitive.

Given the time of the year, sorry if it appears to be insensitive.

My point is that Hodge is not on your side. Seeing her beat up HMRC was fun, but don't expect to see the same grilling over BN66.

[DonkeyRhubarb]

My point is that Hodge is not on your side.

You're not wrong there. She was in the Labour government who introduced this.

Seeing her beat up HMRC was fun, but don't expect to see the same grilling over BN66.

On the other hand, her committee might be interested in this:

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

[Disgusted of Coventry]

Given the time of the year, sorry if it appears to be insensitive.

My fault! I misunderstood what you were saying

It's difficult not to get angry about all this.

[DonkeyRhubarb]

Timelines

May 2001

Montpelier scheme starts operating. Users register their Trusts with HMRC.

July 2002

HMRC issues a bulletin to all tax offices advising them to report any use of the scheme to a central office. They say they "are considering how best to challenge the scheme".

Technical Exchange 63

March 2003

Promoters of the "Suo Motu" version of the scheme decide, for whatever reason, to approach HMRC to negotiate a settlement. A deal is agreed whereby the users are let off from paying any interest or national insurance, and income tax is discounted.

May 2003

4 test case users of the Montpelier scheme receive enquiry notices for tax year 2001/2. HMRC states its intention to pursue the cases through the Special Commissioners.

2003 - 2006

Users continue to receive enquiry letters. HMRC cites various arguments as to why it believes the scheme does not work. However, there is never any mention of Padmore, 1987 or retrospective legislation.

March 2006

HMRC issues Closure Notices to the 4 test cases.

April 2006

Montpelier appeals the Closure Notices.

May 2006

HMRC replies saying they will be listing the cases for hearing at the Special Commissioners.

May 2007

HMRC writes to all users saying cases are being taken to the Special Commissioners and asking if we agree to be bound by the outcome.

1st November 2007

A meeting takes place in HMRC where the topic of retrospective legislation is first broached.

It is believed that this was a meeting with an external QC from a Tax Chambers, and that it was this QC who suggested the "Padmore/1987/retro clarification" solution.

HMRC Meeting

12th March 2008

BN66 is announced.

Budget Note 66

[bve534]

[QUOTE=DonkeyRhubarb;1453032]

Timelines

May 2001

Montpelier scheme starts operating. HMRC are notified about the Trusts.

DR - there is a very important timeline prior to this with IR35 first mooted in pre-Budget 1999 and formally introduced in 2001. If IR35 had never existed it is extremely unlikely any contractor with a PSC would have joined the scheme. The Scheme was marketed as an IR35 solution. At that time thousands of contractors were totally unsure of their tax position and it was this uncertainty that attracted so many people to seek an alternative. On the one hand the Govt spin doctors introduced the term "disguised employees" for contractors and we had Dim Prawn banging on about a fair amount of tax, although she never understood contracting. We also learnt that the Govt was introducing words to the effect of "are you caught by IR35?" in the SA return form, which was disgraceful because until cases went before the Commissioners some time later no-one knew their position. In hindsight we now know that IR35 was an iniquitous tax that did not succeed but between 1999 and probably 2004/5 no contractor could be sure of that. Every individual must know their tax position otherwise thay cannot plan their life and the scheme gave us that opportunity.

[DonkeyRhubarb]

I certainly joined the scheme in 2001 because of IR35 but I'm wary about playing the IR35 card.

To most people, it will simply look like a case of Parliament introducing a new tax (IR35) and us not wanting to pay it.

Is it really any different to say Stamp Duty Land Tax avoidance?

[Disgusted of Coventry]

To most people, it will simply look like a case of Parliament introducing a new tax (IR35) and us not wanting to pay it.

Are you sure? Many people would understand the visceral reaction to the effects of an iniquitous tax. Lay your timeline next to the IR35 stuff and it becomes pretty clear that HMRC have contemptuously steamrollered a whole group of people who have done nothing illegal or wrong. They just happened to be 'in the way'.

[phileds]

Another thank DR again.

Mr D Rhubarb - I don't read the thread that often (time/depression) but when I do I re-realise the efforts and tenacity you have applied to the fight against BN66 for so long. Thanks for your fighting spirit, and a Happy New Year to you and all of us in this mess.

Thanks also for the summary time line, a very useful reminder. I like to think that the fact that the Special Commissioners were mentioned so long ago by HMRC, but eventually never referred to for a decision, might go in our favour - after all, surely some clarity years ago would have been preferable to the subsequent years of indecision and now, court battles.

However, I suspect the judicial view of this will be that HMRC were not obliged (in some weasel-worded, smelly, legalistic sense) to invoke a case in front of the Special Commissioners. Common sense and a desire to see tax fairness and timely resolution (either way, in HMRC's favour or ours) would, one would think, be paramount for a tax department. Recent news and parliamentary reviews have told us what we already knew, unfortunately - that HMRC is badly, ineffectively and inequably run.