I always knew we were right....

[DonkeyRhubarb]

Nicely quoted out of context.

Here is what I said -

"What they mean by "tax avoidance" is essentially tax evasion that can't be easily or cheaply proven because HMRC was notified of the scheme on one hand and criminal prosecution requires much higher level of evidence."

It's still just as funny.

[DonkeyRhubarb]

If HMRC through this guidance prevent someone else getting into the same position, then I'm all in favour of it.

BN66 back in 2008 should have been the ultimate deterrent but instead people have been signing up in droves for these ebt/loan 85% schemes. According to a recent NAO report, it is estimated that at least 20,000 contractors have used them in the past few years to avoid £2Bn in tax. That is 10 times the scale of BN66.

In the current climate it seems like utter folly/madness to use these schemes but then I've already been bitten so I'm a lot more wary now.

[NotAllThere]

well it's funny you should say that 'Cowboy advisers' set for £1m fines under HMRC tax avoidance plans | News | Fundweb

Just saw that now. Why not make it retrospective... there's precedent after all!

[LisaContractorUmbrella]

Just saw that now. Why not make it retrospective... there's precedent after all!

There's nothing to say they won't I think this is the result of another consultation document which came out today on tax avoidance - haven't had time to read all 42 pages yet but will do so and report back to the panel with anything interesting

[DonkeyRhubarb]

National Audit Office report on marketed tax avoidance schemes

Contractor ones highlighted in red. I suspect the true scale is much greater than these estimates.

Scheme title...................................Tax loss.........Users
Partnership loss scheme.....................£3,500M.........14,000
EBT schemes...................................£1,700M. ........3,400
Interest relief...................................£1,100M.. .......900
Employment intermediary schemes.......£600M............16,000
Stamp Duty Land Tax schemes...........£500M.............6,800

(BN66 was £200M/2,000 users)

[malvolio]

There's nothing to say they won't I think this is the result of another consultation document which came out today on tax avoidance - haven't had time to read all 42 pages yet but will do so and report back to the panel with anything interesting

HMRC put a stake in the ground in Dec 2008 that all schemes it believed to be purely about avoidance (define that as you will) were able to be investigated from that point onwards. Of course, that doesn't help prevent "abuse" if people don't know about it, and the scheme providers sure as hell won't say anything.

It is not, however, retrospective taxation (which I also deplore wholeheartedly), it is in effect challenging you, rightly or wrongly, to justify the declarations you made during that period.

[normalbloke]

Not at all. There are very valid commercial and legal reasons for my using a UK Limited Company to process my variable gross earnings from my freelance work. There are no commercial reasons for me giving that income to another company for them to use as they see fit, including them passing it on to yet another organisation who then lend some of it back to me for my personal use.

We've had this debate before and you continue to be wrong. Just because something is legal, it doesn't necessarily mean it's right. For example, in this context "legal" means being used for its correct purpose; like optimising the income from a company's pension fund to maximise the net take home for its retired workers is correct use of the EBT route, whereas enriching a worker by artificially reducing their tax to a ludicrous extent isn't. The challenge for HMRC - before you trot out the trite "make it illegal then" argument - is that closing stable doors is very difficult without killing off the legitimate benefit you were originally aiming to create. Stopping abuse of EBTs is easy, all you have to do is explain why you just cut the pensions of a few million retirees...

"Just because something is legal, it doesn't necessarily mean it's right"

Interesting. That's quite a sweeping statement. And relies on some sort of unquantified intent or opinion which obviously hasn't been well defined in the law to which it relates. So its down to interpretation - a matter for the courts to decide. In 1987 Parliament decided to allow this particular arrangement to continue. (ref Padmore case - if you read Norman Lamont's speech). I think all the scheme users want is their day in court concerning the scheme.

"Right" is an interesting moral and philosophical concept which is open to massive degrees of interpretation. This is why we have courts. In this case HMRC have just ridden straight across it and unilaterally decided they are right and changed the law retrospectively without going to the courts. FWIW I don't think that's 'right'.

btw HMRC said Income Shifting isn't 'right'. Many of the 'moral majority' may agree. However that was decided in the courts that it was... for the time being at least.

[malvolio]

"Just because something is legal, it doesn't necessarily mean it's right"

Interesting. That's quite a sweeping statement. And relies on some sort of unquantified intent or opinion which obviously hasn't been well defined in the law to which it relates. So its down to interpretation - a matter for the courts to decide. In 1987 Parliament decided to allow this particular arrangement to continue. (ref Padmore case - if you read Norman Lamont's speech). I think all the scheme users want is their day in court concerning the scheme.

"Right" is an interesting moral and philosophical concept which is open to massive degrees of interpretation. This is why we have courts. In this case HMRC have just ridden straight across it and unilaterally decided they are right and changed the law retrospectively without going to the courts. FWIW I don't think that's 'right'.

btw HMRC said Income Shifting isn't 'right'. Many of the 'moral majority' may agree. However that was decided in the courts that it was... for the time being at least.

I don't actually need the history lesson thanks, I know Padmore and Arctic in some detail. But you are missing the point of my proposition. To use a more concrete example, agricultural buildings built by farmers are exempt from many planning laws: that doesn't mean you can build a house anywhere you like by claiming that you are a farmer and it is in fact a henhouse. If you can prove that you are and it is, then fine.

Nor, to be clear, am I taking sides. All I'm trying to do is explain how HMRC thinks. Know your enemy and all that...

[normalbloke]

You probably don't need a history lesson. But I'm sure quite a few people who post here haven't a clue what Parliament agreed on in the 1987 debate. Doesn't stop them having an opinion on it though, obviously.

And, I for one am well aware how HMRC think.

[AtW]

It's still just as funny.

I would not be laughing if I was one of those "tax avoiders" HMRC is talking about.

Needed to print out my last tax return yesterday - looked at all that tax I've paid and thought - it's well worth paying it to have good night sleep.