What's the big deal with BN66?

[Churchill]

i am making ir35 provision. aren't you?

No mate, I work through an umbrella and pay what I feel is more than my fair share of tax.

[AtW]

I don't think anyone expected HMRC to change the rules and back-date them.

Risk management involves calculating even low probability risks that have high impact.

You say it does not matter how much tax was not paid, well it does - the more "savings" scheme works the more likely it will attract attention of HMRC.

More importantly - in the event of successful challenge it would mean that you'd need to cough up far more money than if you use reasonable tax planning, so the advantage of the scheme of having 3.5% tax suddenly turns out into hidden bomb - the difference in tax due is so huge that now wonder it would cripple people!

That's the exposure and it can be pretty high.

Easy and correct risk assessment. But then again I am not a greedy person.

[Pondlife]

The point being most contractors insist \ consider \ assume \ contend, whatever description you want to use, that their contracts are outside IR35.

All of a sudden, HMRC decide to open IR35 investigations on these and go back 6 or whatever years and then demand IR35 taxes.

Those gobbing off about Montpelier now, will they be so self righteous when they find they could, potentially, have an IR35 tax bill every bit as big as some are facing now under BN66?

Would they say the argument 'your tax planning was dodgey' or 'you should have made provision to pay the IR35 taxes' dont wash when they are caught?

The difference as I see it is that the rules for IR35 haven't changed and no one is looking to retrospectively change them. If you were always foul of the rules but put your head in the sand then you are taking a punt that your number won't come up in the investigation lottery draw. In this case you should have made provision to cough up if/when hector comes knocking.

If, on the other hand, you have taken independent legal advice from someone who has proved their mettle in court (not from the schemes sales adviser) and done an honest appraisal of your working practices, then it's still a punt but a far safer one. If you are still concerned then make provision for legal representation (PCG) or get insurance against the bill.

I don't think this is the time to be starting a "you made your bed" thread, I do think it's time to reflect on HMRCs attitude of "all rules are subject to reassessment and will be retrospectively implemented".

[ratewhore]

The difference as I see it is that the rules for IR35 haven't changed and no one is looking to retrospectively change them.

I'm not clear on what rules have changed and what was clarified. Can someone point it out to me?

[Bagpuss]

The Settlement legislation was around for some years and that involved reinterpretation retrospectively when applied to man/wife entities. That would have been a good time to drop a dodgy scheme

[DS23]

at the end of my first year of contracting i was invited to an agency xmas do. i was the first contractor to arrive and the was just collecting my first drink from the free bar when the second contractor arrived. we shook hands, and shouted introductions to each other over the din of the music blaring. he asked if i was offshore and i was nodding before i knew what he was asking. and i didn't.

over the next few weeks i investigated the offshore route. i calculated that the warchest necessary to cover investigation would be so big and the likelyhood of it being required so much greater that it was not worth using it. and i'm glad i didn't.

still, i'm full of sypathy for those caught out. the retrospective aspect is clearly wrong and i am reasonably confident that the european court will reverse the judgment. i know what big tax liability is all about. my ma is facing bankruptcy and bailiffs in the wake of a 150k tax bill. but with creative thinking and a bit of luck we can get through it and so can the 66ers.

[Churchill]

Risk management involves calculating even low probability risks that have high impact.

You say it does not matter how much tax was not paid, well it does - the more "savings" scheme works the more likely it will attract attention of HMRC.

More importantly - in the event of successful challenge it would mean that you'd need to cough up far more money than if you use reasonable tax planning, so the advantage of the scheme of having 3.5% tax suddenly turns out into hidden bomb - the difference in tax due is so huge that now wonder it would cripple people!

That's the exposure and it can be pretty high.

Easy and correct risk assessment. But then again I am not a greedy person.

No Atw, you're not greedy, you're merely a self-righteous twat having a "I told you so" moment.

[malvolio]

No Atw, you're not greedy, you're merely a self-righteous twat having a "I told you so" moment.

I've studiously tried to avoid that myself, but the main reason I got booted out of the original BN66 thread was for predicting exactly what happened and why. Heigh ho.

The thing is, though, this is by no means the end of it. The BN66 team are going to appeal and several signficant representative groups are protesting the acceptance of retrospection as a principle of taxation. Killing the MP scheme isn't a problem, that's simply HMG exercising its right to make laws, but allowing retrospective changes is serious.

[scooterscot]

I think anyone with a small amount of common decency and empathy towards other human beings would recognise now is not the time to start a thread about how they deserved what they have recieved.

Sorry - but when it comes between greedy short-sightedness and the victims of a nature disaster my sympathy has a clear direction.

[AtW]

allowing retrospective changes is serious.

Well that's exactly what's happening now - court appears to say that HMRC can make such retrospective changes in such circumstances. That's what happens when clearly wrong scheme (don't tell me it's normal course of business to pay 3.5% income tax (American Express charges nearly as much for transaction!) whilst doing business in this country) goes to court and results in such judgement that I can't see how they can avoid making.