BN66; what the hell is going on over there?

[Mich the Tester]

I’ll tell you what’s a pisstake. Governments all over Europe who charge umpty % tax on everyone’s income and everyone’s expenditure and everyone’s death and everyone’s investments and everyone’s transport and if they could tax you for farting they would do so, and then have the sheer incompetence to run a ‘deficit’. In other words, ‘we know you lot gave us umpty squazillion pounds to spend and you would think it’s possible to build roads, schools and hospitals and provide basic security with that money, but we failed so you’ll have to pay more’. Then they find that not everyone’s a mug and some smart people find ways to prevent the incompetent lying assholes from stealing their money; oh dear, this must be stopped otherwise we won’t have enough money to run up an even bigger deficit’.

Rant over.

[Tarquin Farquhar]

Ah, you see you’ve used the word ‘avoiding’. Avoiding tax is legal; evading tax isn’t.

Ah, but you are wrong there. Avoiding tax is now regarded as being illegal here, even if not actually against the law at the time. I am not being facetious.

So if you read what the judge said in this case, to find out what the offenders did wrong, you will see that it comes down to "contravention of the important public policy set out above, and in full knowledge of how Parliament had maintained that public policy". That is to say, the judge states clearly that Parlament is entitled to change the law retrospectively, to make something illegal retrospectively, if it is contrary to what they wanted people to do. To be fair to the judge, he does imply that you had to know that what you were doing was not what the government wanted.


This is not even new. HMRC website says

A small minority of HM Revenue & Customs (HMRC) customers continue to engage in tax avoidance, which undermines the delivery of fair tax outcomes. We aim to persuade our customers not to attempt to engage in avoidance by:

• making tax law robust against avoidance,
• engaging with our customers about our approach to avoidance,
• optimising our operational response to avoidance; and
• changing the economics of avoidance to make it less attractive

so that the expected costs, difficulties and risks of attempting avoidance outweigh the expected potential gains.

It may not be against the law in a literal sense, but that won't stop Parliament, HMRC, and judges comong out to get you.

[Iron Condor]

Close the loophole and apply the rules after that particular loophole has been closed, not a number of years previously.

I think that in a nutshell is the issue.

IANAL

I dont like the term 'loop hole' for this case.

But people who use these types of schemes like to use that term, and people who sell these schemes use it to sell it.

If the people who sold the scheme had used the term, 'artificial arrangement' (which is what the judge thinks it is).

I wonder how many takers they would have got?

[Mich the Tester]

It may not be against the law in a literal sense, but that won't stop Parliament, HMRC, and judges comong out to get you.

That in itself is a even scarier thought.

[AtW]

Close the loophole and apply the rules after that particular loophole has been closed, not a number of years previously. I think that in a nutshell is the issue.

I think the issue is much bigger than this - if HMRC just closes the loophole and thus allow a lot of people get away with paying just 3.5% of tax rather than 30-40%, then this would just encourage lots more people do the same - it's the piss take among tax avoidance (only 0% is lower than quoted number) and I am not suprised HMRC went as far as they could do make example of it.

[Tarquin Farquhar]

I dont like the term 'loop hole' for this case.

But people who use these types of schemes like to use that term, and people who sell these schemes use it to sell it.

If the people who sold the scheme had used the term, 'artificial arrangement' (which is what the judge thinks it is).

I wonder how many takers they would have got?

Artificial? As against what, Natural?

[AtW]

I’ll tell you what’s a pisstake. Governments all over Europe who charge umpty % tax on everyone’s income and everyone’s expenditure and everyone’s death and everyone’s investments and everyone’s transport and if they could tax you for farting they would do so,

This is partly because some "clever people" end up paying a lot less then others, so taxpayers have to pick the difference - since these "clever people" are likely to have a lot of money this means that tax loss is pretty high and it would require a few average taxpayers to cover it up.

[Pondlife]

Ah, but you are wrong there. Avoiding tax is now regarded as being illegal here, even if not actually against the law at the time. I am not being facetious.

Best close that ISA and stop your pension then.

I'm off to bury my duty free ciggies in the backgarden. If anyone asks the dog did it.

[Moscow Mule]

Artificial? As against what, Natural?

No, as opposed to doing work in the UK, living in the UK and getting taxed in the UK, rather than via a trust in the IOM.

[AtW]

Artificial? As against what, Natural?

3.5% tax is very much artificial, unnatural - albeit highly desireable.

40% is !£$*£%&"%& of a tax, but it's natural - it's what expected to be paid if you earn over £XX.

If with some arrangement average tax drops from 40% to 30% then maybe that's avoidance, but when you go right nearly down to zero that's total piss take.

What amazes me is that people assumed this won't be challenged and did not keep the difference in tax in some account just in case it gets challenged and they have to pay out. Naturally (and that's not artificial here) greed took over and money had to be spent so now people are in deep trouble.

I personally got hit by retrospective legislation - removal of CGT Taper Relief, so that now I'll get taxed double on my SKA shares if I ever were to sell them, that's years after I made investment. That's a big bummer and really retrospective stuff but I can do tulip all about it even though I did not take the piss - had 0 gain in the time, they just changed the rules. In this case however piss take is self-evident, trying to clutch straws isn't going to help.