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

[marcuss]

I had a chat with a retired tax lawyer (ex magic circle) today and here was his thinking on the tax courts matter:

1. HMRC issue 3000 Closure notices for EACH year - so possibly 10,000-12,000 total
2. All the different promoters appeal (which they are doing)
3. Therefore the cases need to be heard at the First Tier Tax Tribunal (FTT)
4. HMRC then have 2 choices - a or b
a. Write to 3000 people asking us to abide by a single "lead case" - we will obviously tell them no
b. Just take a TEST case to court and if they win that one (not a foregone conclusion by the way) then they try to pressurise us into not proceeding with our cases - again we will tell them no.
5. The FTT can only handle 40ish cases at a time, not 10,000. Not 3,000.
6. He noted that there are a. lots of different promoters. b. all schemes were not at all identical c. all "individual" cases are by no means identical.
He suggests that HMRC may have shot themselves in the foot here. Only a new "law" (eg "Thou shallt not have your day in court") would really assist them. Or if they manage to convince a judge that our schemes are all identical (which they are patently not)

One of the basic premises of Human Rights in this country is to have "our day in court" - not to vicariously enjoy the day thru a test or lead case - but to have an opportunity to have our individual circumstances heard by a judge. Its a basic Human Right, and I personally have been in court and seen how judges aim to ensure that right stays with us. (in exactly the same context of arguments by one set of parties that their circumstances are all in fact different, and NOT identical)

A very good info...

Looking ahead, I saw http://www.justice.gov.uk/downloads/...ur-hearing.pdf which would be interesting to our education...

does anyone know where one could attend a hearing, as they are public hearings, so we know what to expect?

[Tax_shouldnt_be_taxing]

I had a chat with a retired tax lawyer (ex magic circle) today and here was his thinking on the tax courts matter:

1. HMRC issue 3000 Closure notices for EACH year - so possibly 10,000-12,000 total
2. All the different promoters appeal (which they are doing)
3. Therefore the cases need to be heard at the First Tier Tax Tribunal (FTT)
4. HMRC then have 2 choices - a or b
a. Write to 3000 people asking us to abide by a single "lead case" - we will obviously tell them no
b. Just take a TEST case to court and if they win that one (not a foregone conclusion by the way) then they try to pressurise us into not proceeding with our cases - again we will tell them no.
5. The FTT can only handle 40ish cases at a time, not 10,000. Not 3,000.
6. He noted that there are a. lots of different promoters. b. all schemes were not at all identical c. all "individual" cases are by no means identical.
He suggests that HMRC may have shot themselves in the foot here. Only a new "law" (eg "Thou shallt not have your day in court") would really assist them. Or if they manage to convince a judge that our schemes are all identical (which they are patently not)

One of the basic premises of Human Rights in this country is to have "our day in court" - not to vicariously enjoy the day thru a test or lead case - but to have an opportunity to have our individual circumstances heard by a judge. Its a basic Human Right, and I personally have been in court and seen how judges aim to ensure that right stays with us. (in exactly the same context of arguments by one set of parties that their circumstances are all in fact different, and NOT identical)

DP, there's a lot to be said on this. For example, if someone was only in the Scheme for the last year then all the guff about being told to pay or that the Scheme didn't work cannot wash. In such a situation the first you hear is a CN stating S.58 now being law. The idea not to submit a SAR for 07/08 cannot fly since you've already applied the law to your yet to be submitted SAR or indeed could have already sent the SAR in before Mr B said not to. That's a very different case. You could have someone involved in property who used the Scheme for a one off property deal to facilitate asset protection. That's not the same. Indeed, unless we're all Huitson we're all different and it's clear from feedback that what HMRC told people and when they told them is not consistent.

On the point that HMRC might suggest we are all bound by a lead case or a set of test cases, of course we would say no - see what happened the last time we agreed to do what HMRC suggested in this respect? Imagine how you might be shafted if you agree to do as they say a second time! I'd even say that the Huitson case in the JR was so far removed from my case that I don't know whether that ruling could be said to apply to me. Looking at the false assumptions aired in the JR, I doubt the case should even apply to Huitson.

One thing is a conundrum though:

The Courts cannot rule or judge on the misleading of Parliament issue. But the Courts can rule on the HR issue to our case. But the Tax Courts cannot consider the HR case. So they either have to deal only with the law as it stands or the law as it stood. In the former case, that means being blind to how the law as it stood came about.

That tells me that the only practical solution is for Parliament to rectify the defect to allow the Court process to function in terms of Natural Justice, HR and on the legal application of the law.

That is reason enough for Parliament to take our case seriously. The current mode of thinking by Gaukes Gofers is that the Courts have decided. Well if that's the case then why would the Courts allow us to go to Court (FTT)? That tells me that the Gofers are over ruling the Courts and that's rather churlish to say the least.

[SantaClaus]

+1

I will be in court for my case. See you there Alan

Wonder if court appearances will be in alphabetical name order?

I hereby declare myself ZantaClaus

[Cugel]

Montpelier Postal Address

Well I've just received my final outstanding CN (2004), and I need to get it off to Montpelier for appeal.

As those pleasant HMRC bods have already used up 10 of my 30 appeal days by sending the CN by the slowest method possible I'd like to get it winging its way to Montpelier before the weekend could someone Kindly PM me the postal address for Montpelier as I dont have it with me at work.


Thanks

Cugel

[BolshieBastard]

BBC News - Major UK companies cut secret tax deals in Luxembourg

Major UK-based firms cut secret tax deals with authorities in Luxembourg to avoid millions in corporation tax in Britain, the BBC's Panorama has found.

The programme obtained confidential tax agreements detailing plans to move profits off-shore to avoid what was a 28% corporate tax rate at the time.

Those involved include pharmaceutical giant GlaxoSmithKline (GSK) and media company Northern & Shell.

Both firms told the programme they have a duty to be tax efficient.

Generous deal

In the case of GSK, the UK-headquartered firm set up a new company in the tiny European tax haven of Luxembourg in 2009.

Continue reading the main story
“
Start Quote
Because of the veil of secrecy surrounding all these decisions around tax...we, on behalf of the taxpayer, cannot be certain that this was a good, honest, proper deal”
End Quote
Margaret Hodge MP

Public Accounts Committee Chair
In 2010, the new subsidiary lent £6.34bn to a GSK company in the UK.

In return, the UK company paid nearly £124m in interest back to the Luxembourg subsidiary - effectively removing that money from the UK company's profits.

That move meant the money was no longer available to tax in the UK at 28%.

In Luxembourg, tax authorities had agreed a generous deal to levy tax on that £124m at effectively less than 0.5%, or just over £300,000.

As a result, GSK in the UK potentially avoided up to £34m in UK corporation tax.

Richard Brooks, a former investigator with HM Revenue & Customs (HMRC) who now writes for Private Eye satirical magazine, said the documents reveal in detail the machinations of tax avoidance on a large scale with the full cooperation of the tax haven.

"We're seeing really with these, for the first time, exactly how companies avoid tax through a jurisdiction that wants to help them do it," he said.

Tax breaks

In the UK last year, companies paid more than £42bn in corporation tax, equal to 10% of the Exchequer's total tax revenue.


GSK said it has an obligation to investors be tax efficient and to patients to free up money for research into new medicines In the case of Northern & Shell, owners of Channel 5, the Express, OK! Magazine and others, before 2009, some of the company's subsidiaries in the UK had been lending each other money totalling £804m.

There was no obvious tax advantage on these transactions to be had in the UK.

Northern & Shell then set up a company in Luxembourg and transferred the loans there. Interest payments on those loans left the UK, leaving lower profits available for taxation by HMRC.

In Luxembourg, that money was effectively taxed at less than 1%, which meant Northern & Shell had sheltered profits which would otherwise have generated £6m in UK corporation tax.

Richard Brooks said of the practice: "The company puts its money into Luxembourg and borrows it back. It just sends money round in a circle and picks up a tax break on the way."

In a statement to the programme Northern & Shell said: "Our strategy is to comply with relevant regulations whilst minimising the tax burden for Northern & Shell and our customers. The board considers it entirely proper that Northern & Shell endeavours to structure its tax affairs in a tax efficient manner."

Tax expert Richard Murphy said of the practice: "All absolutely, without a shadow of a doubt, legal. I am still able to ask the question, is this acceptable? This is purely artificial structuring which is designed to undermine the tax revenues of the UK."

Striking deals
Continue reading the main story
Panorama: Find out more

Darragh MacIntyre presents Panorama: The Truth About Tax
BBC One, Monday, 14 May at 20:30 BST
Then available in the UK on the BBC iPlayer
The secret tax deals revealed in the documents, first seen by French journalist Edouard Perrin of TV production company Premier Lignes and then shared with the BBC, were all devised by accountancy firm PriceWaterhouseCoopers (PWC).

In a statement, PWC said all their advice and assistance is given in accordance with UK, European and international tax laws and agreements.

In the UK, the Controlled Foreign Companies Rules were tax laws devised to put a stop to companies escaping UK taxation by diverting profits overseas.

But some companies believed these rules breached European law by limiting economic freedom. It led to a series of court cases and by 2010 around 150 companies were in dispute with the HMRC over whether they should pay UK tax on their foreign profits.

Rather than continue the battle through the courts HMRC began striking deals with major companies over their tax.

GSK negotiated a tax settlement with HMRC and closed down its £6.34bn loan operation through Luxembourg.

In a statement, the company said: "Both the UK and Luxembourg tax authorities are agreed that we have paid all the taxes that are due. We take very seriously our duty to pay tax. But we also have a duty to our shareholders and patients to be financially efficient so that we can maximise returns to investors and fund the development of future medicines."

A spokesperson for the company also stressed that over the period GSK "paid around £1bn in UK corporation and business taxes".

Margaret Hodge MP, who chairs the Public Accounts Committee which questioned settlements HMRC had reached with major companies, expressed concern over the ability of Parliament to scrutinise them.

"Because of the veil of secrecy surrounding all these decisions around tax, and we're talking big numbers here, lack of transparency means that we, on behalf of the taxpayer, cannot be certain that this was a good, honest, proper deal."

HMRC say they are unable to discuss how these cases were settled because of taxpayer confidentiality.

[BarneyCool]

You can just fax it over to them.

Well I've just received my final outstanding CN (2004), and I need to get it off to Montpelier for appeal.

As those pleasant HMRC bods have already used up 10 of my 30 appeal days by sending the CN by the slowest method possible I'd like to get it winging its way to Montpelier before the weekend could someone Kindly PM me the postal address for Montpelier as I dont have it with me at work.


Thanks

Cugel

I've not got the fax no to hand but you can give them a call on 0161 831 6440

[Morlock]

The Lowdown on IR35

Direct quote from HMRC's latest IR35 guidance doc:

"IR35 is tax and National Insurance contributions (NIC) legislation which prevents people who use intermediaries from being better off than they would have been if their end clients had employed them directly."

So now we know it's true purpose: nothing to do with tax collection, just to prevent people from being better off. The state institutions in this country just seem determined to stigmatise ambition, success and entrepreneurism, and to put obstacles in their way!! FFS!

[Morlock]

Which pimply grad wrote this load of bollox?

HMRC's IR35 guidance:

"We will use three risk bands:
- low risk
- medium risk
- high risk."

"If you are in either the ‘high risk’ band or the ‘medium risk’ band, there is a risk that we will check whether IR35 applies to you. And this risk is not low."

"‘Low risk’ means that there is a low risk that we will check whether IR35 applies to you."

[TalkingCheese]

Direct quote from HMRC's latest IR35 guidance doc:

"IR35 is tax and National Insurance contributions (NIC) legislation which prevents people who use intermediaries from being better off than they would have been if their end clients had employed them directly."

So now we know it's true purpose: nothing to do with tax collection, just to prevent people from being better off. The state institutions in this country just seem determined to stigmatise ambition, success and entrepreneurism, and to put obstacles in their way!! FFS!

I agree. It makes me mad !

Guess what ? End clients dont want to employ me directly... so they can get rid of me when the work is finished and I can help someone else out. I choose to accept that risk as part of my business model but it provides many different challenges to being employed directly (similar to other small businesses) so why should I be punished ?

[TalkingCheese]

still off topic... sorry. Friday ramblings

I agree. It makes me mad !

Guess what ? End clients dont want to employ me directly... so they can get rid of me when the work is finished and I can help someone else out. I choose to accept that risk as part of my business model but it provides many different challenges to being employed directly (similar to other small businesses) so why should I be punished ?

In fact I should just be a permy and so should all contractors:

- Earn less money
- Pay less tax (higher % but less in public purse because of above)
- Be worse off
- Create a shortage of contractors
- Leave companies with a shortage of skills
- End up doing a watered down job

Everyone loses... way to go !