BN66; what the hell is going on over there?

[Mich the Tester]

What I don't understand is why all such schemes are not required to get HMRCs approval number and without such number any taxpayer taking part in this scheme should expect automatic heavy duty penalties.

Because that would put the onus on people to prove that their activities are legal. It used to be the time honoured principle that the authorities must prove that what you are doing is illegal. It's the presumption of innocence, and it's what seperates a country that operates by rule of law from one that operates by autocratic decree.

[Cosmo]

What I don't understand is why all such schemes are not required to get HMRCs approval number and without such number any taxpayer taking part in this scheme should expect automatic heavy duty penalties.

It had a DOTAS number from 2004!!

If you are going to make comments on something, try at least to have some knowledge of the subject.

[AtW]

It had a DOTAS number from 2004!!

That's disclosure number isn't it? Not exactly the number I meant - guaranteed permission.

If someone told me they can reduce my income tax to 3.5% without change to the way I work or where I get clients from then I certainly would not believe them regardless of anything, in some cases having common sense is the best - if it sounds to be too good to be true, it probably is!

[TheFaQQer]

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

The issue is whether there is a loophole there or not - HMRC say not (and therefore there is no retrospective legislation), dodgy contractors working in the UK and not paying tax say that there is (and therefore this is retrospective legislation, which should be illegal).

[AtW]

it's what seperates a country that operates by rule of law from one that operates by autocratic decree.

Well, you've got your rule of law - they've proven that in court.

What I find particularly pathetic is that challenges are made on the basis of Human Rights law, ffs - this law does not give offshore dodge scheme rights, it's meant for things like HMRC can't torture you physically to make a confession, and stuff like that.

[AtW]

The issue is whether there is a loophole there or not - HMRC say not (and therefore there is no retrospective legislation), dodgy contractors working in the UK and not paying tax say that there is (and therefore this is retrospective legislation, which should be illegal).

Good summary.

I did not want to get involved into BN66 because I thought it was legislation covering "shifted income", that's pretty controversial and I think IR is wrong there, but this is totally different thing - word "offshore" should have been red flag.

[Cosmo]

That's disclosure number isn't it? Not exactly the number I meant - guaranteed permission.

If someone told me they can reduce my income tax to 3.5% without change to the way I work or where I get clients from then I certainly would not believe them regardless of anything, in some cases having common sense is the best - if it sounds to be too good to be true, it probably is!

There is no such thing!

[Incognito]

For god's sake it's simple:

The court case centres around self-employed IT contractor Robert Huitson, who started using a scheme set up by Montpelier Tax Consultants (Isle of Man) Ltd in 2001.

This arrangement allowed him to receive an annual fee of £15,000, plus a further sum in his capacity as the owner of a life interest in an offshore trust.

However the government cracked down on this type of scheme following legislation introduced in the 2008 Finance Act which also allowed them to take retrospective action.

The judge found that by exploiting the arrangements, Mr Huitson, who was not resident in the Isle of Man,avoided income tax of £84,980 over seven years and reduced his effective tax rate to 3.5 per cent.

http://www.ft.com/cms/s/0/e028b586-0...44feabdc0.html

[Mich the Tester]

Well, you've got your rule of law - they've proven that in court.

What I find particularly pathetic is that challenges are made on the basis of Human Rights law, ffs - this law does not give offshore dodge scheme rights, it's meant for things like HMRC can't torture you physically to make a confession, and stuff like that.

Agreed that Human Rights law is a stupid angle to take. However, you seem to believe that people should get permission from the government for their actions. I do not believe that. I believe the government gains permission from the people for it’s actions. If you were to ask the people to give the government permission to decide at some point in the future that what they did yesterday will be illegal and they must then be punished for what they did before it was illegal, the people would not grant that permission. I hope.

[AtW]

There is no such thing!

Indeed, which is what I proposed should happen! Those numbers were half way there - just indication that scheme was notified about.

Personally I think tax system should be simpler with regressive scale - 30% max, after certain level going down, ie: >£1 mln pay less %-tage.

This will close avoidance/evasion.

Until it applies to everyone people who try to gain unfair advantage over honest taxpayers should not expect to get away with it.