breeze

[tractor]

...

Hi spelling bee,

1. Personally I believe our claims about risk to be justified as the worst that can happen is you end up with the tax bill that you would have had, had you not used Breeze – plus interest (currently 3%).

2. I worked for Sunday Solutions as a salesperson. I was one of about 20 salespeople. When Sunday went under I was “transferred” to Fleming Laing along with a number of Sunday clients and other staff. That was about 10 months before the tax deadline. When it became clear the Sunday clients were not getting their tax money the following January, I handed in my notice at Fleming Laing not least due to concerns over the true management and control of that company. A lot of people lost a lot of money, I lost my job. I have sympathy with anyone affected, Fleming Laing had a large number of ex-Sunday contractors and I know first-hand the amount of stress and trauma caused to these people. It’s a disgrace. Anyone affected is welcome to contact me and I will try to help them as best I can, I can’t promise that anything I know will be of help but justice has not yet been served in my opinion and if I can help anyone affected of course I will.

3. Mark and I are the sole partners of Black Box.

4. As I said I was a salesperson at Sunday Solutions and Fleming Laing. I also worked for Sunday Solutions’ international brand, Von Essen, for about 6 months while I was working at Sunday. Before launching Breeze I was a director at CBN Global which I left in January 2012.

5. Robert Venables QC :
“In my Opinion, the Trust Deed settled by me for my Instructing Solicitor has the effect that:
- contributions to it are not prevented from being immediately deductible for corporation tax purposes by the Unpaid Remuneration Rules (i.e. Corporation Tax Act 2009 sections 1288 and 1289);
- contributions to it are not prevented from being immediately deductible for corporation tax purposes by the Employee Benefit Contributions Rules (i.e. Corporation Tax Act 2009 sections 1290 to 1296);
- the settled property should fall within Inheritance Tax Act 1984 section 86;
- the proposed new Part 7A of Income Tax (Earnings and Pensions) Act 2003 should not apply to the trusts and powers created by it.”

Counsel opinion usually comes with a level of reasoning. What is the reasoning in each item in list 5 please?

[PhilBreeze]

Handing your notice in isn't the same as losing your job.

That depends on the circumstances.

[centurian]

Penalties cannot be applied but interest can, the current HMRC rate is 3%.

The completely contradicts an earlier post, which said that interest cannot be applied. Admittedly it may not have been yourself - and I cannot be arsed to go and find it.

In any event, when this is added up over several years (and interest rates may go up), then could easily become a good 20%. Most BN66-ers are facing interest bills of over 50%, although interest rates were higher during some periods.

The fee reimbursement that someone would receive from the insurances would provide the majority of the funds needed so if you wanted to be cautious you would need to retain around another 5% (on £300/day), not all of your money, and of course you get to keep any interest/gains on that 5%.

So the fee would re-imburse 15% of the gross - and basic rate tax is 20%, so I see where you get the 5% figure from - although this assumes that NI is also not levied (another 12%).

But surely £300 p/d will push you into higher rate tax, so 5% won't be anywhere near enough, unless you are including a lot of expenses in that. Realistically people need to put aside a good 15%, maybe more if day rate is nearer £500 p/d


Whatever the calculations, the major gripe I have with your marketing is that a lot of people won't bother to put money aside because you have told them it is zero-risk. Again back to BN66, many people spent the money believing that HMRC couldn't get them - and are now facing going bust because they simply don't have the back tax anymore.

[PhilBreeze]

But their 'income' will be generated by the work that they do whilst under contract in which case the whole amount is subject to income tax/corporation tax; if this 'income' is paid to a third party and then paid to the individual as some sort of loan which has no other purpose than to avoid tax, the arrangement is a sham and highly likely to be challenged by HMR&C

We've already covered the fact that our strategy is not a tax avoidance scheme (as recognised by HMRC). How therefore could the sole purpose be to avoid tax? The Ramsay Principle does not apply. The decision of the Special Commissioners in Dextra supports this (SpC331/20).

[PhilBreeze]

BN66 matey, BN66.

BN66 targeted offshore partnerships making contributions to offshore trusts. This is quite different to our strategy in which the contributions are made from UK companies which disclose the trust contributions to HMRC on their returns, therefore HMRC have no case to argue concealment.

[PhilBreeze]

Phil - you and your colleagues must have realised the response you'd get on here.

To be fair, at least these guys have stuck around - they must have known they were walking into a barrage of questions and not too nice comments

Are you suggesting that we think the CUK forum is cynical? Surely not

Electro - thanks for your advice re the website, we'll take your comments on board.

For the record, Breeze Wealth is not an accountancy firm.

[PhilBreeze]

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.

That was an example of one of many implications of the case law which supports our product. My view is that loans from discretionary trusts have twice been ruled as not subject to income tax & NICs, in the two cases where they have been scrutinised by the Courts.

[speling bee]

That was an example of one of many implications of the case law which supports our product. My view is that loans from discretionary trusts have twice been ruled as not subject to income tax & NICs, in the two cases where they have been scrutinised by the Courts.

Your view as a salesman?

[PhilBreeze]

Spotlights
Introduction
'Spotlights' is all about tax avoidance.

It has a 'consumer protection' role in helping you to avoid unwittingly entering into arrangements that HM Revenue & Customs (HMRC) are likely to see as tax avoidance. It does this by identifying the types of arrangements or scheme which HMRC are likely to challenge. HMRC will do this both by providing you with some help to understand how they distinguish between artificial avoidance schemes and ordinary sensible tax planning and by describing specific schemes. Where HMRC think there may be particular drawbacks to a scheme that might not otherwise be obvious, including the fact that other taxpayers are no longer pursuing their arguments on an avoidance scheme, HMRC will tell you.

So, the whole point of Spotlights is to help people distinguish between "artificial avoidance schemes" and "ordinary sensible tax planning".

Again, HMRC have confirmed our product is not an avoidance scheme. In Dextra, the Special Commissioners specifically ruled that the trust was not an artificial tax avoidance scheme. Therefore Spotlights seems fairly redundant in our case, but let’s proceed anyway..

In Spotlights HMRC will:

Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which it is likely to investigate.
Identify specific schemes which, in HMRC's view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, they will make a challenge and seek to ensure full payment of the right tax with the right due date.
Set out below are a number of indicators of tax planning to be wary of. The inclusion of one of these features does not necessarily mean that tax avoidance is involved, but the more of these features that are present, the more likely it is that HMRC would see the arrangements as tax avoidance and challenge your Self Assessment. If you have doubts about a scheme then you should check with a reputable tax adviser.

Tax planning to be wary of:

It sounds too good to be true.
Artificial or contrived arrangements are involved.
It seems very complex given what you want to do.
There are guaranteed returns with apparently no risk.
There are secrecy or confidentiality agreements.
Upfront fees are payable or the arrangement is on a no win/no fee basis.
The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.
The scheme is said to be approved by HMRC (it does not follow that this is true).
Taxation of income is delayed or tax deductions accelerated.
Tax benefits are disproportionate to the commercial activity.
Offshore companies or trusts are involved for no sound commercial reason.
The involvement of professional trustees is claimed to guarantee that the arrangements succeed.
A tax haven or banking secrecy country is involved without any sound commercial reason.
Tax exempt entities, such as pension funds, are involved inappropriately.
It contains exit arrangements designed to sidestep tax consequences.
It involves money going in a circle back to where it started.
Low risk loans to be paid off by future earnings are involved.
The scheme promoter lends the funding needed.
There is a requirement to take out insurance against the failure of the tax planning to deliver the tax benefits.

Under the assumption that you have bolded the criteria that you believe apply to Breeze:

Artificial or contrived arrangements are involved.

It's a commercial arrangement, there's nothing artificial or contrived about it.

There are guaranteed returns with apparently no risk.

I'm unconvinced that this is a strong indicator of "artifical avoidance". For example putting your funds in an ISA offers you a guaranteed return with apparently no risk, and clearly would not be considered “artificial avoidance”.

The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.

I've provided counsel opinion in an earlier post.

The scheme is said to be approved by HMRC (it does not follow that this is true).

Indeed it wouldn't make sense for HMRC to rubber stamp a tax planning product, they want uncertainty, it makes people pay more tax. We've never said ours is HMRC approved - it has however been acknowledged by HMRC that it is not a tax avoidance scheme - that's not HMRC approval of its compliance, but it does mean that its not necessary to disclose the strategy under the DOTAS regime.

Offshore companies or trusts are involved for no sound commercial reason.
A tax haven or banking secrecy country is involved without any sound commercial reason.

As I said in an earlier post even HMRC can find sound commercial reasons to offshore their property portfolio. In any case, isn't legally paying less tax a fairly compelling commercial reason? Why else would the most successful internet businesses like eBay, Skype & iTunes structure themselves to pay tax in low tax jurisdictions?

There is a requirement to take out insurance against the failure of the tax planning to deliver the tax benefits.

It's we who are covered not our clients, who are not required to take out any insurance.

Taxation of income is delayed or tax deductions accelerated.
It involves money going in a circle back to where it started.
The scheme promoter lends the funding needed.

None of the above points are relevant to our product and that you've chosen to highlight them indicates a severe lack of understanding of how our product works. This is not the first time you've used completely irrelevant arguments in an attempt to challenge the validity of our product.

And you work for a competitor of Breeze that clearly has a vested interest in creating confusion over the compliance of such arrangements, in an attempt to scare as many contractors as possible into avoiding them and paying PAYE income tax & NICs on their full contract value, using a service such as the one provided by your company.

If you actually have any sound legal argument as to how our product poses a risk to the contractors using it, I would love to hear it.

Particular schemes
The schemes featured in Spotlights are generally those which HMRC consider have the widest implications and about which there is the greatest need to warn potential users. They will often be schemes that have been disclosed to HMRC and have been given a Scheme Reference Number (SRN). Please note that the issue of a SRN does not mean either that HMRC 'approves' the scheme or that HMRC accept that the scheme achieves its intended tax advantage. These articles are limited exceptions to the usual rule that HMRC do not comment on tax avoidance. No further comment will be made. Only a minority of schemes will appear in Spotlights. In particular, HMRC will not include schemes aimed at very specialised areas, with a limited scope or where HMRC estimate not much tax loss is involved. A scheme that has not featured in Spotlights may still be challenged. You may wish to consider it in the light of the advice above on 'tax planning to be wary of' and consult a reputable tax adviser.

Contents
Spotlight 12: Taxing the rewards for work carried out for a UK based employer (23 August 2011)
HMRC are aware that new tax avoidance schemes that seek to avoid Income Tax and National Insurance contributions (NICs) are being advertised to contractors, highly paid employees and those using recruitment agencies. It is claimed that these schemes get around new disguised remuneration rules.

Arrangements may involve payments passing through a series of companies, loans from a third party or an offshore alleged employer, a deed of covenant, secondments from one employer company to another or claims of self employment, etc. In HMRC’s opinion these arrangements do not succeed in avoiding the tax and NICs due. HMRC will challenge these arrangements and litigate where necessary to recover unpaid tax and NICs.

Current legislation ensures that rewards and recognition from working for UK-based businesses are charged appropriately to UK Income Tax and NICs. This legislation applies whether the rewards are routed through employee benefit trusts, employer funded retirement benefit schemes or through any other intermediaries, either as loans, transfers of assets or other payments. The legislation will also apply to such third party arrangements where an employment is disguised as self employment or a contractual arrangement.

Those intent on avoiding Income Tax and NICs by using trust arrangements should also be aware that there could be adverse Inheritance Tax (IHT) and trust tax consequences regardless of whether they themselves set up the trust. These include IHT charges when contributions are made to the trust, when funds are transferred from a trust to a sub-trust or removed from the sub-trust, when uncommercial loans are made by the trustees and at the ten year anniversary of the trust

Spotlight 12 describes a different strategy to ours which I referenced in my earlier response to your post. Again unsure of the relevance?

[LisaContractorUmbrella]

We've already covered the fact that our strategy is not a tax avoidance scheme (as recognised by HMRC). How therefore could the sole purpose be to avoid tax? The Ramsay Principle does not apply. The decision of the Special Commissioners in Dextra supports this (SpC331/20).

So what do you have from HMR&C which confirms that you are not operating an avoidance scheme?? And why would the UK companies you work with need to declare payments to you on their returns?