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

[lucozade]

Hi,
Back on the Ombudsman subject... I've received a couple of letters from my MP. First, one forwarded through him from Lin Homer... essentially saying the same old, same old plus a bit about NTRT accusations of impropriety against HMRC staff that were not credible. Second, one from David Gauke saying, word for word, the same thing.

I assume this isn't news but wanted to make sure in case NTRT wanted a copy.

Unless I'm reading this incorrectly this doesn't sound like good news if we are not getting a positive response from Lin Homer.

[smalldog]

Unless I'm reading this incorrectly this doesn't sound like good news if we are not getting a positive response from Lin Homer.

I wouildnt expect anything else from Homer, shes HMRC boss so towing the government line

[lucozade]

I wouildnt expect anything else from Homer, shes HMRC boss so towing the government line

Sorry I got my wires crossed. Lin Homer is Chief Executive of HMRC whereas Judy Clements is the Adjudicator.

I thought for some bizarre reason someone had received a response from the Adjudicator!

"My bad" as the kids would say.

[Alba]

Montpelier - Taxpayers negligent in avoidance scheme

Not the same as our scheme, but reviewed the highlighted parts too:

Posted by Rachael_Power PM | on Mon, 17/02/2014 - 11:40 1668 15 comments print

A first tier tribunal has ruled that two taxpayers negligently submitted tax returns because of their failure to verify a tax avoidance scheme was a not sham.

The married company directors, Bernard Litman and Ann Newall challenged the view they were negligent and HMRC penalties arising from what the Revenue deemed "negligently submitted tax returns" for tax years 2004/5 in Litman V HMRC [2014] UKFTT 089 (TC).

The couple had adopted a tax avoidance scheme from Isle of Man-based consultancy Montpelier Group. Under this they took out a £400,000 loan to buy capital redemption policies that they then repaid. This loan created a capital losses, which they set against their realised capital gains from the sale of their business and property assets in Essex.

The pair sought advice from Montpelier Tax Consultants about their 2004/5 tax returns. They subsequently included a DOTAS number relevant to the tax planning scheme they had used on the advice of their accountants, Barnes Roffe.

The scheme they were using was found to be ineffective at a court of appeal in 2009 in Jason Drummond v HMRC ([2009] EWCA Civ 608) C and in 2012 the Revenue determined penalties of £23,629 for Newall and £29,536 for Litman, which both appealed.

The taxpayers argued that because they had no expertise in the area and had relied on professional advice, they could not be treated as being negligent because they weren't qualified to carry out due diligence on their adviser's work.

But HMRC’s argument was that the couple had been negligent in not verifying the scheme was legitimate. It said it did not expect the taxpayers to understand complex legislation, but to at least enquire into the commercial reality of the asset acquisition and sale.

The tribunal agreed with the Revenue, citing a previous case (Hanson v HMRC [2012] UKFTT 314 (TC)) in which it was ruled taxpayers relying on advice cannot leave everything to the adviser and do have a duty to take reasonable care.

In handing out the ruling, judge Rachel Short said: “The failure to enquire into the basic commercial reality of the transactions entered into by these taxpayers is negligence.

“A reasonable taxpayer, including one prepared to enter into a packaged scheme like this, would have ensured that the commercial elements of the transaction, including the loan in particular, stood up to some commercial scrutiny and had been properly implemented.

She added that the couple shouldn’t have claimed the capital losses on their returns without understanding that: “an actual transaction had been entered into, that some money had moved and that the transaction was not a sham.”

The tribunal did however reduce the penalty owed by each taxpayer because of the full disclosure they had made in their tax returns.

Penalties were mitigated to 10% of tax due for both Litman and Newell and is now £11,814.60 in both cases.

[DonkeyRhubarb]

Re. the letters from Homer and Gauke

NTRT are planning to send a letter back to Lin Homer, (with copies to Gauke and Judith Hart who are sending similar template responses) giving 5 specific and detailed examples to substantiate our claim that we think HMRC have made false inaccurate and misleading statements.

[reckless]

Re. the letters from Homer and Gauke

NTRT are planning to send a letter back to Lin Homer, (with copies to Gauke and Judith Hart who are sending similar template responses) giving 5 specific and detailed examples to substantiate our claim that we think HMRC have made false inaccurate and misleading statements.

Excellent work NTRT - a moral boost! The way the goal posts are possibly shifting again, proving malpractice by HMRC via the Adjudicator/Ombudsman and the ECHR angle may now be our strongest cards.

[Guttersnipe]

Re. the letters from Homer and Gauke

NTRT are planning to send a letter back to Lin Homer, (with copies to Gauke and Judith Hart who are sending similar template responses) giving 5 specific and detailed examples to substantiate our claim that we think HMRC have made false inaccurate and misleading statements.

Good stuff. Would it be possible for NTRT to forward a copy to members? I have managed to develop a first-name relationship with my MP and would like to keep him informed. He's unlikely to tread on any toes but it's more than possible that he'll be involved in off-the-record discussions on this within the Treasury.

[smalldog]

Excellent work NTRT - a moral boost! The way the goal posts are possibly shifting again, proving malpractice by HMRC via the Adjudicator/Ombudsman and the ECHR angle may now be our strongest cards.

WHS +1, I think this is our only real chance. The treasury have made it quite clear they will not listen to any of our arguments.

[weeboaby]

Good stuff. Would it be possible for NTRT to forward a copy to members? I have managed to develop a first-name relationship with my MP and would like to keep him informed. He's unlikely to tread on any toes but it's more than possible that he'll be involved in off-the-record discussions on this within the Treasury.

Maybe we could get Tony Blair in to act as an "unofficial adviser"? Set up a "Hutton Type" enquiry?

[SantaClaus]

Last chance to stop the proposed "pay disputed tax upfront" legislation

Dear all

Just a reminder that this weekend is your last chance to respond to the proposed legislation on ‘Tackling marketed tax avoidance’.

As you probably know, the Government intends to introduce an accelerated payment measure which will give HMRC the power to link your tax affairs to another person's case and demand money up front, with no right of appeal.

If HMRC are granted these powers, it will allow them to demand almost immediate payment of disputed tax before you have had the chance to have your case heard at the tax tribunal (FTT).

If you do one thing this weekend, be sure to spend 10 minutes firing off an email to ask that these proposals are rejected. This is your last chance, so don't bury your heads in the sand!

See here for exact instructions... Latest News | No To Retrospective Taxation

With apologies and many thanks to everyone who has already responded!

Regards

Santa