HMRC Enquiries: Bedouin/Redstone

[DonkeyRhubarb]

I think that HMRC is struggling to put together details of non disclosed schemes and as such is not in a position to have an opinion about settlement. Short of a mole or whistleblower HMRC will have to drag details out of individual returns and that is not a short nor easy task.

I do really worry about non disclosure. I can see no real reason for not disclosing and if the primary entity responsible for the failure disappears, then the cost is going to drop on to users. It would be an interesting exercise to debate with some of the knowledgeable forum users (Mr Donkey and Mr Bobbety and others) in a separate thread?

HMRC read these forums, so perhaps not.

[derekdunn1873]

Pessimism or realism?

Most of the posts on this forum seem to suggest we will all be required to pay the tax HMRC think we owe.

My questions are:
1. Is the above my imagination, and are there actually any enlightened people that think that this may all fall apart for HMRC
2. If it really is the case that we will all have to pay, are companies and other tax advisors (who say otherwise) just hoping to delay this as much as possible?
3. Is it pointless to bother challenging HMRC for figures that are easily payable, as getting professional advice will likely cost thousands of pounds with no definite success?
4. How can HMRC levy penalties on people for things like non-DOTAS registration, absolutely nothing to do with the user... We will see dotas scheme users being charged less than non dotas scheme users, that won't look good in court of public opinion(which is where this was all born, once again in my opinion).

In my mind I would just like an APN through the door, get it paid without interest and penalties and wait for the inevitable loss in court in 5 years time...

I'd much rather that than the way HMRC have had to skirt around doing this as Bedouin is supposedly non-DOTAS. I am actually a bit embarrassed that Bedouin have made HMRC do this, kind of makes them look like assholes and probably doesn't help our cases at all...

[DonkeyRhubarb]

My response to HMRC querying non-DOTAS would be...

"I relied wholly on the professional advice of the scheme provider and no mention of DOTAS was ever made to me"

[derekdunn1873]

My response to HMRC querying non-DOTAS would be...

"I relied wholly on the professional advice of the scheme provider and no mention of DOTAS was ever made to me"

Kind of like DOnTASk me... I'm pretty sure as uneducated as I am that the DOTAS thing may prove a problem for Bedoiun, but less likely for us...

[DonkeyRhubarb]

Kind of like DOnTASk me... I'm pretty sure as uneducated as I am that the DOTAS thing may prove a problem for Bedoiun, but less likely for us...

If/when it becomes a problem for Bedouin they may disappear.

[derekdunn1873]

If/when it becomes a problem for Bedouin they may disappear.

As long as HMRC don't come a knocking on my door for their cash I'm fine with that...

I haven't seen anything on here to confirm, but I assume if we lose, and we have to pay, there is close to zero chance of getting anything from Bedouin, either because we have no grounds to do so, or if we do they will spontaneously combust?

[webberg]

Most of the posts on this forum seem to suggest we will all be required to pay the tax HMRC think we owe.

My questions are:
1. Is the above my imagination, and are there actually any enlightened people that think that this may all fall apart for HMRC
2. If it really is the case that we will all have to pay, are companies and other tax advisors (who say otherwise) just hoping to delay this as much as possible?
3. Is it pointless to bother challenging HMRC for figures that are easily payable, as getting professional advice will likely cost thousands of pounds with no definite success?
4. How can HMRC levy penalties on people for things like non-DOTAS registration, absolutely nothing to do with the user... We will see dotas scheme users being charged less than non dotas scheme users, that won't look good in court of public opinion(which is where this was all born, once again in my opinion).

In my mind I would just like an APN through the door, get it paid without interest and penalties and wait for the inevitable loss in court in 5 years time...

I'd much rather that than the way HMRC have had to skirt around doing this as Bedouin is supposedly non-DOTAS. I am actually a bit embarrassed that Bedouin have made HMRC do this, kind of makes them look like assholes and probably doesn't help our cases at all...

If only it were that easy!

Bear in mind that each advisor and "expert" here has their own interpretation. The following is mine. My expertise is tax avoidance schemes rather than contractor schemes specifically so there are perhaps nuances that have escaped me.

1. HMRC do not have a favourable Court decision that would strike down EBT loan schemes. There is a case on going, (Murray Group), and more planned for later this year. Those schemes using other methods, offshore, share options, etc are further from a Court decision. Murray Group is so far a loss for HMRC. There are significant elements of that scheme that would say any scheme following that pattern is "safe". If HMRC do eventually lose that case (and I think they will unless there is a political fix) then they will seek to distinguish it from all others, especially those using offshore trusts. They will however need to pick another case and run it. Cue another 5/6 year battle.

So, yes it could fall apart for HMRC in the short term. Medium term (5 to 10 years) I think they will get a decision.

2. If my prediction at 1 above is correct, then yes you will have to pay. Providers are hoping to defeat the challenge as they want to continue to sell product. Tax advisers you would hope would be more objective. some I've spoken with dismiss the HMRC challenge out of hand and take a hostile approach to HMRC. Others urge settlement as sensible. I would say a slight bias towards the latter is detected. Many are coming to the view that if Murray is lost, then HMRC may be forced to review their present settlement terms and offer better.

3. Very subjective. It may be that £10k is a "small" amount for some, but life breaking for others. Tax advisers and other professionals are usually not cheap (see other posts of mine). No adviser worth his fee will give you a guarantee of success. No provider should have guaranteed that a scheme should work either, but they did and they continue to do so - misleading and dishonest.

4. The DOTAS rules are clear. There is an obligation to disclose and it falls on a number of parties in order. It starts with the provider but extends beyond them. The rules are not exclusive either. If say an adviser discloses (not unknown) there could still be an obligation on the user. It's a consequence of self assessment. YOU are responsible for YOUR tax affairs. If you consider you are using a scheme that should be disclosed, the assumption is that you checked and had confirmation that disclosure had been made or that you were satisfied sufficient advice had been taken by those above you in the reporting chain that no disclosure was required. The issue here is that the providers set up, sell rubbish by dint of misleading statements and allegedly dishonest statements, fold when the going gets tough, set up again under a different name and use the same tactics. The real crime is that the FCA and others don't intervene and stop this.

I've said before that I'm massively sceptical about schemes said to be non disclosable. In the present legal environment I would say a Judge will find against such a claim 9 times from 10.

[StrengthInNumbers]

Based on legal decisions until now most probably HMRC will lose against EBTs using loans which WERE IMPLEMENTED AS PLANNED.

HMRC will collect tax now using APNs. Will refund after losing in FTT but appeal continues. Those who settle will not get anything back.

[Rab]

Will refund after losing in FTT but appeal continues. Those who settle will not get anything back.

For those that haven't joined a group though, their case will never go to the FTT. So no refund will ever come, as there's no way to issue a follower notice to HMRC.

[webberg]

For those that haven't joined a group though, their case will never go to the FTT. So no refund will ever come, as there's no way to issue a follower notice to HMRC.

The scenario is that a number of people will have joined the same scheme.

When the manure and ventilation meet, some people will fight HMRC's interpretation and may do that via a group formed and run by the provider, or their own group.

Some will look to settle their position. once that have done that, they are insulated from the result that the fighting group achieves, good or bad.

Some will go into denial and sit back and wait.

At some point a case goes to FTT. It may not be you but it will be somebody with a fact pattern that is essentially the same. If the scheme is held to be effective, a final tax position is calculated. If you have overpaid (APN or assessment), then you get some money back. If you have underpaid, you owe them something.

If the scheme is held to be ineffective (note, not unlawful - different analysis) then chances are you owe HMRC.

Then interest and possible penalty is calculated.

A follower notice is something issued BY HMRC to YOU. It says, that thing you did has been looked at in another case and found not to work, so therefore yours doesn't work, here's a notice telling you that and look out for a demand (probably APN) very soon.