No To Retro Tax – Campaign Against Section 58 Finance Act 2008

[ready_to_leave]

I think most self-employed people would argue they are in business, and I'm not just referring to IT workers. Not everyone uses a limited company, ruin them, you ruin their business. But, that wasn't the point I was making, it was simply that if HMRC want to have these powers, counterbalances are necessary with consequences for misuse so that they cannot be used arbitrarily as a tactic to avoid the law, because that's what's going to happen if there isn't. I don't think that it's unreasonable that to have these powers, penalties and proper compensation are made available to those people who will suffer as a result of Hector forcing their opinion over the rule of law.

I realise my posts have been pessimistic and somewhat abstract around the loss of the rule of law in the UK. But given the stage we are at a warning by the Dean of Harvard Law School; Roscoe Pound (in 1941), cited in The Constitution of Liberty (ironically in the decline of law chapter) I think depressingly echoes our own direct experience of the UK's adoption of administrative directives coming to replace the idea of law.

"Even if quite unintended, the majority are moving in the line of administrative absolutism which is a phase of rising absolutism throughout the world. Ideas of the disappearance of the law, of a society in which there will be no law, or only one law, namely that there are no laws but only administrative orders; doctrines that there are no such things as rights and that laws are only threats of exercise of state force, rules and principles being nothing but superstition and pious wish. A teaching of separation that separation of powers is an outmoded 18th century fashion of thought, that the common law doctrine of the supremacy of the law has been outgrown, and expounding of public law which is to be a subordinating law, subordinating the interests of the individual to those of the public official and allowing the latter to identify one side of a controversy with the public interest and so give it greater value and ignore others; and finally a theory that law is whatever is done officially and so whatever is done officially is law and beyond criticism by lawyers - such is the setting in which the proposals of the majority must be seen."

I think we are beyond any outcome other than that outlined above in a general sense as well as a specific one in our case.

[OnYourBikeGB]

I realise my posts have been pessimistic and somewhat abstract around the loss of the rule of law in the UK. But given the stage we are at a warning by Dean Roscoe Pound (in 1941) cited in The Constitution of Liberty (ironically in the decline of law chapter) I think depressingly echoes our own direct experience of the UK's adoption of administrative directives coming to replace the idea of law.

"Even if quite unintended, the majority are moving in the line of administrative absolutism which is a phase of rising absolutism throughout the world. Ideas of the disappearance of the law, of a society in which there will be no law, or only one law, namely that there are no laws but only administrative orders; doctrines that there are no such things as rights and that laws are only threats of exercise of state force, rules and principles being nothing but superstition and pious wish. A teaching of separation that separation of powers is an outmoded 18th century fashion of thought, that the common law doctrine of the supremacy of the law has been outgrown, and expounding of public law which is to be a subordinating law, subordinating the interests of the individual to those of the public official and allowing the latter to identify one side of a controversy with the public interest and so give it greater value and ignore others; and finally a theory that law is whatever is done officially and so whatever is done officially is law and beyond criticism by lawyers - such is the setting in which the proposals of the majority must be seen."

I think we are beyond any outcome other than that outlined above in a general sense as well as a specific one in our case.

Good quote, and very apt.

[LisaContractorUmbrella]

I don't know if this has any relevance for you guys Tax avoiders face massive penalties after landmark Montpelier case - Professional Adviser IFAonline

[mrkitchen]

I don't see how they can apply it to cases which pre-date DOTAS, so you should be ok.

Re. smalldog's post, the proposals if accepted would become law after July (not April)

DR if it becomes law after July would that be when demands would start to be issued ?

[DonkeyRhubarb]

DR if it becomes law after July would that be when demands would start to be issued ?

In theory, yes.

But let's not get ahead of ourselves. First we need to await the outcome of the consultation and see whether all the proposals go forward to Parliament in their present form.

[OnYourBikeGB]

In theory, yes.

But let's not get ahead of ourselves. First we need to await the outcome of the consultation and see whether all the proposals go forward to Parliament in their present form.

Likewise DR, if you know, if they were to be issued, would it be for the outstanding tax, or would it include accumulated interest? I can't see how they could demand the interest on something that hasn't been proved, but I'm starting to think that anything is possible.

[DonkeyRhubarb]

Likewise DR, if you know, if they were to be issued, would it be for the outstanding tax, or would it include accumulated interest? I can't see how they could demand the interest on something that hasn't been proved, but I'm starting to think that anything is possible.

Interest is included in the "follower cases" proposal (chapter 3, page 13, 3.30-3.33).
https://www.gov.uk/government/upload..._avoidance.pdf

They don't specify with the DOTAS proposal but it does say this in 4.10

"The majority of the details set out in Chapter 3 will also be relevant to this [DOTAS] proposal, but with some additional considerations and safeguards."

I would therefore assume that it will include interest.

[Buzby]

Quick Summary

In theory, yes.

But let's not get ahead of ourselves. First we need to await the outcome of the consultation and see whether all the proposals go forward to Parliament in their present form.

Thinking I might send a quick letter to MP with summary:

• I used a legal IR35 tax product from 2001-2008.
• HMRC then recommend government change the law retrospectively, which happened even though the minister responsible didn't understand the implications (ie didn't know it would bankrupt so many people)
• Judicial review said not against human rights for a government to retrospectively change the law
• HMRC now would like to introduce new law to enable collection of taxes before court decide if tax is due
• I could now be made bankrupt before any court has 'reviewed' HMRC actions

I just think we need as many MPs as possible to ensure they understand the implications of the proposal.

[Buzby]

Repaying loans

A question that has been asked many times, but no clear guidance has been given to us, unless of course you are famous:

COMEDIAN JIMMY CARR is to pay around £500,000 in tax after leaving the controversial K2 tax avoidance scheme that left him paying a rate of just 1%.

As a result, his company is now paying full corporation tax. The legal, but infamously "morally repugnant" scheme worked by transferring salaries into a Jersey-based trust, which lent investors back the money. As the loan could technically be recalled, it was not subject to income tax. It sheltered £168m from the taxman annually.

As a result of the revelations, Carr became the face of the government's battle against tax avoidance, with the prime minister branding the comedian's tax affairs "dodgy" during a state visit to Mexico.

But the comic's latest accounts for his business, FN Good Ltd, for the year ending April 2013, reveal it made a £2.5m profit, the Mirror reports. The tax bill is based on 23% of his earnings.

His tweeted apology at the time read: "I met with a financial adviser and he said, ‘do you want to pay less tax? It's totally legal'. I said ‘yes'. I now realise I've made a terrible error of judgment."

So users of the K2 product have repaid the loan and I assume then paid dividends from Ltd company.

What would happen if I repaid my loans for say 2001/02 and then the trust distributed the funds this year as normal income? how could HMRC argue that the loans were disguised income if I had repaid them?

[cojak]

Thinking I might send a quick letter to MP with summary:

• I used a legal IR35 tax product from 2001-2008.
• HMRC then recommend government change the law retrospectively, which happened even though the minister responsible didn't understand the implications (ie didn't know it would bankrupt so many people)
• Judicial review said not against human rights for a government to retrospectively change the law
• HMRC now would like to introduce new law to enable collection of taxes before court decide if tax is due
• I could now be made bankrupt before any court has 'reviewed' HMRC actions

I just think we need as many MPs as possible to ensure they understand the implications of the proposal.

What is a legal IR35 tax product? Did you align it to the one contract you were on between 2001 and 2008?

IR35 is viewed on a contract by contract basis.

If there was no connection between the contract and the tax product, then there was no connection between IR35 and the tax product.