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

[jamesbrown]

Can you legitimately make it your primary residence first?

Right, I think that's the question that needs to be asked...

I would think, yes, but not without some risk as I believe the PPR relief is not automatic insofar as it is subject to reasonable use, and should not have "avoidance" (scare quotes) as the motivation. In principle, I believe that income tax is also due on properties that are intended as investments (as opposed to CGT).

[smalldog]

Right, I think that's the question that needs to be asked...

I would think, yes, but not without some risk as I believe the PPR relief is not automatic insofar as it is subject to reasonable use, and should not have "avoidance" (scare quotes) as the motivation. In principle, I believe that income tax is also due on properties that are intended as investments (as opposed to CGT).

It's definitely cgt HM Revenue & Customs: Is your asset liable to Capital Gains Tax? "property you rent out" I pay income tax on rental profits as part of my SA.

Not practical for ppr, wife, child and it's a 1 bed flat somewhere totally different! So not an option and don't want to fake it.

[ASB]

There may be some creative use you can come to by switching residences and utilising the 3 year exemptions that may be allowable.

But that is just about minimisng the CGT payable, one way or another ther will be disposals, and these are chargeable events under the rules and utilising the maximum reliefs available.

[jamesbrown]

It's definitely cgt HM Revenue & Customs: Is your asset liable to Capital Gains Tax? "property you rent out" I pay income tax on rental profits as part of my SA.

Not practical for ppr, wife, child and it's a 1 bed flat somewhere totally different! So not an option and don't want to fake it.

Fair enough and, yes, I think income tax applies to the capital gain only in the case of flipping or building something new. Sounds like CGT would be unavoidable in your case, as I believe that Old Greg is correct about these being two entirely separate issues (i.e. the capital gain and the purpose for which it is used).

[smalldog]

Mark field blazing the trail in the bill debate

Currently, if the UK tax authorities wish to challenge the legitimacy of a DOTAS-registered scheme in court, the taxpayer is permitted to hold on to the disputed tax while the case is being resolved. This was discussed earlier by the Chief Secretary. Because the Government believe that this incentivises scheme promoters to sit back and delay resolution, they now propose to extend the accelerated payments measures to existing DOTAS-registered schemes. This means that disputed tax will be paid up front to HMRC and returned only if a scheme is subsequently found to be legitimate. However—this is where the Government need to rethink their understandable enthusiasm for clamping down on tax avoidance—no exception is proposed in cases where taxpayers have demonstrably not sat back and delayed as long as possible. My investor constituents are desperate to get their dispute settled by an independent arbiter as a
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matter of urgency. In their case, it is HMRC that is stalling progress. Legitimate investors understand the need to deal quickly with the tens of thousands of outstanding mass-marketed avoidance cases currently clogging up the courts. They simply propose an exception in the case of existing DOTAS-registered schemes whose promoters have taken all reasonable measures to enable a dispute to be brought before the statutory appeals tribunal.

It strikes me as a shocking breach of faith that the Government are now attempting to impose a requirement on such individuals to pay a disputed up-front sum when it is an agent of the state—in this case, HMRC—that is deliberately and actively delaying the sitting of the tribunal. Worse still, I fear, is the general message being sent to other private investors, who stand to be deterred from any future investment in the UK film industry.

DOTAS was designed with the best will in mind—something you may well remember, Madam Deputy Speaker, as the system came into play under a previous Administration. It was designed, rightly, to promote openness and transparency in investors’ relationships with HMRC—in principle, a welcome step. However, DOTAS is now in effect helping to produce retrospective legislation, with DOTAS declarations being used as a stick with which to beat legitimate investors who never planned on having liquid assets to meet disputed liabilities. I fear that augurs ill for the Government’s broader, much vaunted anti-avoidance plans, as set out in the Bill, and their overarching plan to make Britain entirely open for business.

It is useful at this juncture to highlight some of the letters I have received in response to my article of last Friday. One constituent, a small-scale investor in the scheme, advised me:

“HMRC has previously offered us full relief on our cash contributions if we forgo relief on the loan element. We haven’t agreed to this. Now they plan to make us pay all the tax in the autumn. Many will feel pressured to settle on the basis of HMRC’s earlier offer as that will reduce the cash to be found by some 37%. This is harassment, which if conducted by a loan shark would rightly have you and your colleagues legislating. HMRC has no case and is relying on intimidation and extortion instead.”

A correspondent from further afield wrote:

“I am an ordinary, law abiding person who has never knowingly cheated anyone, least of all HMRC! But their endless delays and apparent moving of the goal posts make me feel almost like a criminal.”

Another wrote:

“The cries of protest highlighting this radical shift in power seem to have fallen on deaf ears of government officials. I represent hundreds, if not thousands of similar professionals that are on the brink of ruin as a result of the changing of the goal posts by HMRC whose unchecked powers seem to be morphing.”

That concern was shared by many others. There is concern that the decision process lies solely in the hands of a designated officer—some relatively anonymous HMRC official, acting as judge and jury, with no independent or proper safeguards. That does not seem right, as pressures on individuals to act in the best interests of a Department that is failing to collect taxes as quickly as it would like will be immense.

I know we discussed this matter in the House in the context of retrospective legislation last year, but we need to give serious thought as to how Parliament can properly control such Executive power.

[SantaClaus]

Isn't it interesting how Maria Miller overclaimed her expenses by £45,000 for her second home, but only had to pay back just £5,800 and say "sorry".

So she's allowed to do something bordering on illegal/immoral, and it gets classified as a "mistake". Whereas we do something totally legal and are treated like criminals.

If this was a banana republic, it would almost be funny.

[TykeMerc]

Isn't it interesting how Maria Miller overclaimed her expenses by £45,000 for her second home, but only had to pay back just £5,800 and say "sorry".

So she's allowed to do something bordering on illegal/immoral, and it gets classified as a "mistake". Whereas we do something totally legal and are treated like criminals.

If this was a banana republic, it would almost be funny.

The irony of one rule for the lawmakers in Parliament and one for the rest of us plebs isn't lost, it's also far from new. Yes it stinks, but sadly we can do exactly nothing about it.

[centurian]

Isn't it interesting how Maria Miller overclaimed her expenses by £45,000 for her second home, but only had to pay back just £5,800 and say "sorry".

And she didn't even say sorry for what she actually did - just that she was obstructive - and even then, only took 31 seconds to do it.

[OnYourBikeGB]

And she didn't even say sorry for what she actually did - just that she was obstructive - and even then, only took 31 seconds to do it.

The hypocrisy of it all is incredible. If there is one thing I can take away from this whole sorry mess it's a greater understanding of how the world really works, and just how f***ed up it really is.

[DeadDOTAS]

HMRC not too keen on new legislation either

Dear all,

I've heard last week (indirectly) from some of my informed friendly HMRC contacts that they themselves are not too keen on this new legislation around "accelerated payments" etc. either:

Apparently, it's been the Treasury (Gauke & Osbourne) who've somewhat ignored them and pushed the legislation through regardless - whilst HMRC believe they are standing with all that on thin ice.

Seems that politicians are ignoring both, the electorate AND the public "servants".
Nothing new here then.

In the meantime, the Financial Times has picked up and reported on the noise and discord around all this:

Osborne faces row over new HMRC powers to seize unpaid tax - FT.com