breeze

[PhilBreeze]

It is really simple. You have a model which you say is covered by case law. You ask me to read it an come to an opinion. I would like to know whose opinion backs up your view that these cases apply to your model. Is it:

- defined by statute
- the opinion of HMRC
- the opinion of a judge
- the opinion of a QC
- your opinion

With respect, I won't take your word for it but am interested to hear the word of an expert or official.

Ok understood. Let me explain the rationale behind citing the two cases. One of the functions of the courts is to interpret and apply the law. It's very difficult to draft legislation that takes every eventuality into account, and often it's the responsibility of the courts to interpret the legislation and apply it to an individual case. Legislation can also be ambiguous or poorly drafted, or simply non-existent in which case the courts can draw on the over 800 years of previous decisions that make up our body of common law, and actually create new laws to fit such unforseen circumstances.

These newly created laws then become part of the common law for future decisions to be based on. For example, there is no Act of Parliament that outlaws murder, it's not necessary because the Courts have always ruled that murder is illegal. In the case of murder, no Act of Parliament is necessary - no loophole exists - the Courts are bound to take into account the previous decisions which have effectively created new laws.

Moving on to the topic of tax strategies, many involve complex financial instruments and fall into a grey area where the existing legislation could be interpreted either way. This is usually why the promoter will pay a QC large sums of money to interpret the existing law and if they interpret the law in favour of the promoter's strategy, the strategy gets the QC's seal of approval.

However, the QC is not a lawmaker and can only second guess what the Courts would decide, if the strategy was ever challenged - albeit a highly qualified and informed opinion, it is just that - an opinion - and in rare cases the QC can turn out to be wrong.

Prior to the Dextra and Sempra cases, no body of law existed covering the legality of loan payments to beneficiaries of a discretionary trust. There was no legislation specifically declaring it legal or illegal, and no such arrangement had been through the Courts. It was a legal unknown, although many experts were of the opinion that the loans weren't taxable.

The Dextra case decision found that the trust payments weren't taxable. This was again upheld in the Sempra case.

What is the significance? We now have a clear idea of the Courts' stance in respect of the arrangements. No QC opinion needed, at least in so far as to say that it would be patently false to claim "receive a loan from a discretionary trust, regardless of the other circumstances of the case, and you will DEFINITELY be liable for tax on it, by virtue of the nature of the payment" - the previous decisions of the Courts, which form the basis of any future decisions, simply don't support this.

I cited the judgements in response to Lisa quoting an HMRC document that had little relevance to the way our product works, in contrast the two judgements are hugely relevant to our product, and both support it.

I wasn't trying to claim "the Dextra and Sempra cases prove the compliance of our product" - it's much more complicated than that and sorry if you got that impression - I was however making the point that there is existing case law clearly supporting our product.

[speling bee]

Ok understood. Let me explain the rationale behind citing the two cases. One of the functions of the courts is to interpret and apply the law. It's very difficult to draft legislation that takes every eventuality into account, and often it's the responsibility of the courts to interpret the legislation and apply it to an individual case. Legislation can also be ambiguous or poorly drafted, or simply non-existent in which case the courts can draw on the over 800 years of previous decisions that make up our body of common law, and actually create new laws to fit such unforseen circumstances.

These newly created laws then become part of the common law for future decisions to be based on. For example, there is no Act of Parliament that outlaws murder, it's not necessary because the Courts have always ruled that murder is illegal. In the case of murder, no Act of Parliament is necessary - no loophole exists - the Courts are bound to take into account the previous decisions which have effectively created new laws.

Moving on to the topic of tax strategies, many involve complex financial instruments and fall into a grey area where the existing legislation could be interpreted either way. This is usually why the promoter will pay a QC large sums of money to interpret the existing law and if they interpret the law in favour of the promoter's strategy, the strategy gets the QC's seal of approval.

However, the QC is not a lawmaker and can only second guess what the Courts would decide, if the strategy was ever challenged - albeit a highly qualified and informed opinion, it is just that - an opinion - and in rare cases the QC can turn out to be wrong.

Prior to the Dextra and Sempra cases, no body of law existed covering the legality of loan payments to beneficiaries of a discretionary trust. There was no legislation specifically declaring it legal or illegal, and no such arrangement had been through the Courts. It was a legal unknown, although many experts were of the opinion that the loans weren't taxable.

The Dextra case decision found that the trust payments weren't taxable. This was again upheld in the Sempra case.

What is the significance? We now have a clear idea of the Courts' stance in respect of the arrangements. No QC opinion needed, at least in so far as to say that it would be patently false to claim "receive a loan from a discretionary trust, regardless of the other circumstances of the case, and you will DEFINITELY be liable for tax on it, by virtue of the nature of the payment" - the previous decisions of the Courts, which form the basis of any future decisions, simply don't support this.

I cited the judgements in response to Lisa quoting an HMRC document that had little relevance to the way our product works, in contrast the two judgements are hugely relevant to our product, and both support it.

I wasn't trying to claim "the Dextra and Sempra cases prove the compliance of our product" - it's much more complicated than that and sorry if you got that impression - I was however making the point that there is existing case law clearly supporting our product.

So, in your opinion, the case law that you cited means that you cannot say, "receive a loan from a discretionary trust, regardless of the other circumstances of the case, and you will DEFINITELY be liable for tax on it, by virtue of the nature of the payment." Not definitely liable for tax isn't quite how I understood your view of the case law.

Still interested in hte risk element.

Your various marketing materials say:

- Risk free
- Zero risk
- Minimal risk
- Without exposing yourself to unnecessary risks

Which is it and how do you justify it?

[LisaContractorUmbrella]

But in Dextra, HMR&C's argument that F1989 s.43 applied was accepted by the Court of Appeal and the decision was upheld by the House of Lords. As the trustees were viewed as intermediaries it was considered that contributions made should be viewed as emoluments. As I understand it the same argument was successfully used in the Sempra case even though a family benefit trust rather than an employee benefit trust was used. Also aren't these cases about 10 years old?? I am fairly sure that there have been tax tribunals since that would offer more compelling case law especially after the legal strike against EBTs.

ahem

[porrker]

Interesting thread..... I would stay well clear of any scheme involving Loans from Trusts as I suspect not only does it go against the spirt of the December 2010 legislation but its so obviously contrived and may be open to clarification when the GAAR is released. The BN66 thread should be a good enough warning what happens then!!

I'm also shocked that a promoter comes onto an open forum and explains how their scheme works!

[SueEllen]

I'm also shocked that a promoter comes onto an open forum and explains how their scheme works!

They need to otherwise they won't get people to sign up.

Unfortunately they also forget that information on this forum like quite a few other financial forums is available on google.

[porrker]

They need to otherwise they won't get people to sign up.

Unfortunately they also forget that information on this forum like quite a few other financial forums is available on google.

Most promoters are very secrative about how the schemes work. They normally get you to sign an NDA before explaing the mechanics of the scheme... They most certianly do not openly discuss on a forum...

Phil - Now you've started to explain can you please tell me If I sign up to the scheme who does the the agency contract with? who will I work for? and who actually will pay me? Breeze, Black Box or another?

[Alan @ BroomeAffinity]

If it isn't retained in a bank account that *you* control, don't go near them.

It's almost certainly trousered by Breeze in fees and nothing is paid in tax. I had a massive barney with a promoter of another scheme on LinkedIn not so long ago and, in Paxman-style, I continually asked him about the 16% and in true Michael Howard style, he refused to answer.

[speling bee]

It's almost certainly trousered by Breeze in fees and nothing is paid in tax. I had a massive barney with a promoter of another scheme on LinkedIn not so long ago and, in Paxman-style, I continually asked him about the 16% and in true Michael Howard style, he refused to answer.

They are in business to make a profit, like we all are.

[Alan @ BroomeAffinity]

They are in business to make a profit, like we all are.

Of course they are. But £16k from each client (assuming £100k per year) with not a great deal of work or risk involved?

[eek]

Of course they are. But £16k from each client (assuming £100k per year) with not a great deal of work or risk involved?

But there is risk involved. If its anything like other schemes it will however by your own risk rather than theirs.