IR35 / Ltd company / Employee

[LisaContractorUmbrella]

Thank you Lisa. This case is an Employment Appeal Tribunal, which does create case law precedent but it is not an HMRC case.
You are referring to point 1.309 in the Autumn Statement :

•• introduce a new power that requires taxpayers who are using avoidance schemes
that have been defeated through the Courts to pay the tax in dispute with HMRC
upfront. This will provide HMRC will an additional tool to address a legacy stock of an
estimated 65,000 avoidance cases, around 85% of which date back to before 2010. It will
remove the cash advantage of sitting and waiting during an avoidance dispute, and bring in
£700 million over the forecast period
•• consult on the scope for extending this power by widening the criteria for which
taxpayers are required to pay any disputed tax upfront

The Consultation and draft guidance should be published today so we will be able to see the detail of when they propose that the up front payment kicks in. It is not up on HMT's site yet.

Kate Cottrell

Thanks for the explanation - glad I am not the only one waiting for the draft guidance with bated breath

[DirtyDog]

To get 93% returns, I'd guess that the scheme runs something similar to the Boyle case which HMRC have just won - take a loan in a foreign currency at unrealistic exchange rates in something which rapidly devalues like the Uzbekistani Som.

Linky

[northernladuk]

I haven't been following these schemes so apologies if this is a stupid question but is there a penalty on the scheme providers as well as the customers getting hit for tax. I can't fathom why companies are still pushing this model when there is a very high risk it will fail in court. Do they get away fairly easily so worth wringing every penny out of it until HMRC shut them down or what? Surely it is negligent to continue to push a scheme that is likely to fail?

[cojak]

I haven't been following these schemes so apologies if this is a stupid question but is there a penalty on the scheme providers as well as the customers getting hit for tax. I can't fathom why companies are still pushing this model when there is a very high risk it will fail in court. Do they get away fairly easily so worth wringing every penny out of it until HMRC shut them down or what? Surely it is negligent to continue to push a scheme that is likely to fail?

There appears to be nothing wrong with these schemes themselves, only the validity of those 'employees' using the scheme.

So non-UK employees could use the scheme I guess.

But you're right, there should be a penalty for schemes with invalid users in them.

[LisaContractorUmbrella]

I haven't been following these schemes so apologies if this is a stupid question but is there a penalty on the scheme providers as well as the customers getting hit for tax. I can't fathom why companies are still pushing this model when there is a very high risk it will fail in court. Do they get away fairly easily so worth wringing every penny out of it until HMRC shut them down or what? Surely it is negligent to continue to push a scheme that is likely to fail?

Here you go HM Revenue & Customs: Penalties to tackle offshore tax evasion

[DirtyDog]

Here you go HM Revenue & Customs: Penalties to tackle offshore tax evasion

That addresses the individual, but does nothing happen to the scam organisers, apart from unhappy people moaning about how they have been abandoned?

[Clare@InTouch]

There's an article here in regard to professional negligence claims against promoters, but I presume that's the best anyone could hope to go for without an extension of the transfer of debt regulations.

HMRC takes on tax scheme promoters | AccountingWEB

I would imagine a lot of the final people in the chain are also based offshore.

[LisaContractorUmbrella]

That addresses the individual, but does nothing happen to the scam organisers, apart from unhappy people moaning about how they have been abandoned?

Well, the HMRC would apply penalties for failure to operate PAYE and would also expect payment for the underpaid income tax and NIC's - problem is that these companies regularly phoenix leaving HMRC with nothing and the contractor coughing up. As I understand it HMRC do have the power to go after individual directors if their company goes down the tubes owing HMRC but they would then presumably be limited to the director's assets.