BN66 - Court of Appeal and beyond

[DonkeyRhubarb]

For the record

I would not like to name the individual publicly but she is one of the main people at MP if you want PM me and I will let you know.

I have been contacted by the lady concerned. At the time she was first called about this she was not aware of the Supreme Court decision, even though some in the Tax Company knew about it as well as the legal team.

She would like me to reassure everyone that there was absolutely no intention to mislead here.

And in fact it shouldn't come as any surprise to us that she was in the dark. As we all know, communication is not one of Montpelier's strong points.

[northernSoul]

I agree.

Unfortunately your opinion of this whole matter is also completely irrelevant. Only the judges' opinions count, as they interpret and execute the law as passed by the bodies of the representatives of the people. That is the nature of the rule of law.

I have a friend caught up in this who has finally decided to pay. He has lost the interest on the tax money he has had to pay; a great deal of inconvenience ; and a big pile of management fees to Montpelier, none of which look likely to be recoverable.

I think you and the people on this forum would do well to seek legal advice on an individiual basis - an initial consultation may cost a couple of hundred quid (some individuals may have legal insurance without knowing about it incidentally - e.g on certain household insurance), but it might make clear that your interests and Montpelier's may not be identical, and may in fact be in conflict. A company in Montpelier's position would generally have an interest in drawing out proceedings as long as possible - that way more of its potential litigators become penurious, and time limitation on the commencement of actions may be a present factor in preventing people from suing them.

[bananarepublic]

Unfortunately your opinion of this whole matter is also completely irrelevant. Only the judges' opinions count, as they interpret and execute the law as passed by the bodies of the representatives of the people. That is the nature of the rule of law.

I have a friend caught up in this who has finally decided to pay. He has lost the interest on the tax money he has had to pay; a great deal of inconvenience ; and a big pile of management fees to Montpelier, none of which look likely to be recoverable.

I think you and the people on this forum would do well to seek legal advice on an individiual basis - an initial consultation may cost a couple of hundred quid (some individuals may have legal insurance without knowing about it incidentally - e.g on certain household insurance), but it might make clear that your interests and Montpelier's may not be identical, and may in fact be in conflict. A company in Montpelier's position would generally have an interest in drawing out proceedings as long as possible - that way more of its potential litigators become penurious, and time limitation on the commencement of actions may be a present factor in preventing people from suing them.

You are of course quite right. If I'd known about Padmore in 2001 I don't think I would ever have signed up. MP had an interest in the continuance of the scheme even when I did not - I left in 2005. I didn't know that I could have brought matters to a head in front of the commissioners. If I had would there have been anybody to represent me though? There were already 4 cases in the system which I agreed to have linked to my case. It wasn't until late 2007 that somebody at HMRC figured out this new angle, fully 5 years after they were aware of the scheme. In any event whatever MP did there were other organisations providing exactly the same scheme.
Whatever MP did or didn't do they have fulfilled their obligations so far with respect to the legal challenge. Could they have done better for us earlier - yes. Were their interests divergent from ours - certainly. BUT there was always an element of caveat emptor about the whole scheme. What grounds would we have for suing them anyway? Surely not on the basis of a legally levied tax bill. What would you hope to get back. A few quid on management fees. More stress, more expense. Can't see the point.
In the current situation the interests of most people are with sticking with MP as there are still angles they can persue for people in certain circumstances which otherwise they would have to fund themselves.

[slogger]

You are of course quite right. If I'd known about Padmore in 2001 I don't think I would ever have signed up. MP had an interest in the continuance of the scheme even when I did not - I left in 2005. I didn't know that I could have brought matters to a head in front of the commissioners. If I had would there have been anybody to represent me though? There were already 4 cases in the system which I agreed to have linked to my case. It wasn't until late 2007 that somebody at HMRC figured out this new angle, fully 5 years after they were aware of the scheme. In any event whatever MP did there were other organisations providing exactly the same scheme.
Whatever MP did or didn't do they have fulfilled their obligations so far with respect to the legal challenge. Could they have done better for us earlier - yes. Were their interests divergent from ours - certainly. BUT there was always an element of caveat emptor about the whole scheme. What grounds would we have for suing them anyway? Surely not on the basis of a legally levied tax bill. What would you hope to get back. A few quid on management fees. More stress, more expense. Can't see the point.
In the current situation the interests of most people are with sticking with MP as there are still angles they can persue for people in certain circumstances which otherwise they would have to fund themselves.

I was lied to by Montpelier back in 2006 when I joined - I asked if anyone in scheme was under investigation - they said no, I asked if HMRC was investigating scheme - they said no. After being in scheme for a while I learnt from colleagues that scheme was indeed under investigation and had been for a while - immediately I left scheme (unfortunately I had to leave client as montpelier wouldnt allow me to convert from their scheme to ltd) - my liability thank goodness is nowhere near what some of my friends is. I wouldnt have joined if montpelier had been truthful at outset - and indeed I left as soon as I found out I'd been misled .. I assume I'm not the only person they did this to.

Having said this I think our best chances do actually lie with montpelier defeating hmrc, I dont think montpelier could have forseen what hmrc did, and I really dont think worth suing montpelier whilst they are still fighting for us.

[Tax_shouldnt_be_taxing]

Is this the previous occurrence to which you refer?

UNITED KINGDOM MEMBERS OF PARTNERSHIPS CONTROLLED ABROAD (Hansard, 15 July 1987)

If so then you have fallen for the HMRC/Labour Government spin.

DR, the Hansard evidence is what gives me something to hang my hat on. Whilst it is littered with counter claims to what s58 does, I always come back to the Hansard quote from Norman Lamont:

As the law now stands, after the High Court decision, a partner in a foreign partnership who has paid tax on the partnership profits in the normal way could obtain an entirely unexpected benefit in the form of recovery of tax for the previous six years. Thereafter, the purpose of retrospection in this clause is to prevent taxpayers from obtaining such a windfall tax advantage. It is not to inflict an unexpected tax charge on the unwary. I am sure that the House will want to think about the distinction that I have drawn between the different types of retrospection.

As you can see, retrospection doing the exact opposite to what it does in s58. You cannot pass this one of many juxtapositions between Clause 62 and s58. Or rather in this example, you can take the Lamont quote and apply it to HMRC as thus:

As the law now stands, s58 can obtain an entirely unexpected benefit in the form of tax recovery for the previous 6 years.

So HR aside and as a case that has been made here many times before, what s58 claims to achieve and as evidence in Hansard shows from 2008, is in fact the total opposite of what Clause 62 did and with clear intent, yet fobbed off with the word "clarification" and that gem of "as having always had effect". No sir. That is a total lie and written in Parliament. That is one of many bullets that need to be fired to test the application of this law to us.

[bananarepublic]

I was lied to by Montpelier back in 2006 when I joined - I asked if anyone in scheme was under investigation - they said no, I asked if HMRC was investigating scheme - they said no. After being in scheme for a while I learnt from colleagues that scheme was indeed under investigation and had been for a while - immediately I left scheme (unfortunately I had to leave client as montpelier wouldnt allow me to convert from their scheme to ltd) - my liability thank goodness is nowhere near what some of my friends is. I wouldnt have joined if montpelier had been truthful at outset - and indeed I left as soon as I found out I'd been misled .. I assume I'm not the only person they did this to.

Having said this I think our best chances do actually lie with montpelier defeating hmrc, I dont think montpelier could have forseen what hmrc did, and I really dont think worth suing montpelier whilst they are still fighting for us.

Interesting points. I went to one of the original seminars in the IOM back in 2001. They were very upfront about the possibilities of investigation. Even to the point that it would be expected, if I recall correctly - it was a long time ago! Also about the possibilities of losing.
For a bit of perspective and ignoring interest I don't actually think that I am any worse off than if I had paid IR35 and am certainly better off than if I had been investigated for IR35 after the event and lost. Things were very uncertain on this front in 2001.

[slogger]

Interesting points. I went to one of the original seminars in the IOM back in 2001. They were very upfront about the possibilities of investigation. Even to the point that it would be expected, if I recall correctly - it was a long time ago! Also about the possibilities of losing.
For a bit of perspective and ignoring interest I don't actually think that I am any worse off than if I had paid IR35 and am certainly better off than if I had been investigated for IR35 after the event and lost. Things were very uncertain on this front in 2001.

i was definitely told there could be an investigation - not saying that at all!

[northernSoul]

MP

You are of course quite right. If I'd known about Padmore in 2001 I don't think I would ever have signed up.

It depends upon the advice you were actually given, but if the above statement is true, you might be entitled to sue if the advice given did not make this clear. Your problem might be time limitation.

Damages usually include any foreseeable loss - interest on tax, management fees, possibly connected asset disposal losses (e.g forced house sale etc). You would generally be entitled to be in the position you would be were Montpelier not negligent. I doubt that includes the extra tax itself (almost certainly a limit in your contract) but I may be wrong - I understand the general position is that under contract law you are entitled to be in the position you would have been had the contract completed succesfully. It depends upon the wording of your agreement I suppose.

It'd be best for you to get advice I suggest, and sooner rather than later.

[BrilloPad]

I have a friend caught up in this who has finally decided to pay

Oh dear. Why not get a ctd?

I have a friend caught up in this who has finally decided to pay seek legal advice on an individiual basis - an initial consultation may cost a couple of hundred quid

Lawyers always tell you that you have a great case.

[bananarepublic]

It depends upon the advice you were actually given, but if the above statement is true, you might be entitled to sue if the advice given did not make this clear. Your problem might be time limitation.

Damages usually include any foreseeable loss - interest on tax, management fees, possibly connected asset disposal losses (e.g forced house sale etc). You would generally be entitled to be in the position you would be were Montpelier not negligent. I doubt that includes the extra tax itself (almost certainly a limit in your contract) but I may be wrong - I understand the general position is that under contract law you are entitled to be in the position you would have been had the contract completed succesfully. It depends upon the wording of your agreement I suppose.

It'd be best for you to get advice I suggest, and sooner rather than later.

Thanks, but I can't see what case I would have, EVEN if I thought that I had been misled. They were quite open about the possibility of losing. They did not mention retrospection or if they did deemed it highly unlikely, but so what? The scheme had caveat emptor written all over it. Only a highly naive person would have thought otherwise.

Of course if they *knew* that the scheme was highly at risk from retrospection that would be an entirely different matter. But there is no evidence for this. Even people with an axe to grint against MP never mentioned this.

The above aside, I am not in the habit of blaming my misfortunes on others. Even if I was I would hope that I had the common sense not to sue MP whilst they are still fighting our corner. The expense, time, hassle and stress of a completely different course of action with even more dubious prospects of success seems stupid right now (and afterwards also).

This is all water under the bridge as far as I am concerned so I am sticking with MP.