If you cant pay an APN, would the judge rule in favour of bankruptcy

[chr16v]

I'm not trolling those are realities, I've been contracting for several decades and examined many of the schemes as they were offered to me by salesmen and recommended by other contractors.
I looked at them all as too high a risk strategy at the time (which is a view that I'm eternally grateful I took) and stayed with straight Umbrellas and MyCo Ltd's, I've planned my tax affairs quite carefully but in a risk averse manner.
Every scheme I looked at all smelled not only of being too good to be true, but quite honestly reeked of taking the mickey, it was obvious they would be targeted at some juncture and the scheme providers would take their money and leg it leaving the punters to fight.

Personally i think many of the scheme users would share the same caveats that i am i am guilty of.
I am a techy, i work in IT, i dont posses the sharpness in all areas of my life (as does anyone?) and I can be nieve without being greedy. But when choosing a scheme in 2005 i didnt understand or realise that even though a scheme could be legitamately sold to me, and HMRC happliy accept the annual return, i honestly had no clue this was risky. I say it again I work in IT not risk managment or accounting and the scheme looked as genuine as any umbrella or ltd company at the time.
I think some people here who are more savy in these areas are failing to understand that not everyone is blessed with the same set mindset. I think very few ebt users would honestly want to fall foul of HMRC and choose to use a scheme that was likely to blow up in their face with interest.

[fielder]

I can relate to your post chr16v, without giving to much info away I was a fairly young adult in an Umbrella company with a similar mind set. HMRC don't care though as we are liable no matter what apparently.

[StrengthInNumbers]

If you cant pay an APN, would the judge rule in favour of bankruptcy

I was new to UK. In my home country if it is illegal tax thing, it will be cash transaction. As no cash transactions were involved and all declared to HMRC I thought it has to be legal.

Second as I was not a high spender but saver with pension a husband wife limited companies with fixed rate vat was giving better take home. Scheme was a bit less. Again made me think this must be more legal and compliant as run by accountants rather then me running a ltd where accounts are my responsibility. Also if take home is less made me think just because of reduced risk.

Today I know inside out and see where I when wrong. If HMRC would have written to me after my first tax return, I would have known at that time where I went wrong. But with HMRC not saying a work, I never dig into the law or visited these forums. Each year enforced my view it was all compliant. Got my first letter in nov 12 and in feb 13 out of scheme.

But since then I am working 7 days a week, lived in a house without heating with family ( have a 5 year old daughter) and saving every where. Finally I will be able to pay off when HMRC comes knocking. But I definitely feel I am being punished because of HMRC not taking their finger out earlier and writing to us early rather years after being in schemes. This is not fair and not just.

[DotasScandal]

I was new to UK. In my home country if it is illegal tax thing, it will be cash transaction. As no cash transactions were involved and all declared to HMRC I thought it has to be legal.

And to this day, it has not been proven otherwise!!
Many foreign citizens that came into the UK to contribute to the economy followed the same reasoning as you.

Second as I was not a high spender but saver with pension a husband wife limited companies with fixed rate vat was giving better take home. Scheme was a bit less. Again made me think this must be more legal and compliant as run by accountants rather then me running a ltd where accounts are my responsibility. Also if take home is less made me think just because of reduced risk.

Spot on. A VERY large proportion of mid-level contractors did not enter into schemes because of "greed", but because of what they perceived as a good balance between convenience (admin taken care of by scheme), certainty with regard to IR35, and level of take-home pay.
The fact that schemes were DOTAS-registered, now cynically used to paint a target on our backs, played into this false sense of compliance.

Today I know inside out and see where I when wrong. If HMRC would have written to me after my first tax return, I would have known at that time where I went wrong. But with HMRC not saying a word, I never dig into the law or visited these forums. Each year enforced my view it was all compliant.

Exactly. The view held by some of the accounting / tax specialists posting in here is that we should have known it all from the onset. But from the perspective of someone operating in a completely different field (engineering, medical, etc.) the above was completely logical reasoning .

[centurian]

Spot on. A VERY large proportion of mid-level contractors did not enter into schemes because of "greed", but because of what they perceived as a good balance between convenience (admin taken care of by scheme), certainty with regard to IR35, and level of take-home pay.

Mmm... Not sure I agree with "VERY large proportion"

A lot of contractors remained in the schemes long after the opening salvos of HMRC upping the ante.

And a reasonable number are still in the schemes to this very day.

[BrilloPad]

And a reasonable number are still in the schemes to this very day.

Quite a few trying to recuperate losses on earlier schemes!

[webberg]

Mmm... Not sure I agree with "VERY large proportion"

A lot of contractors remained in the schemes long after the opening salvos of HMRC upping the ante.

And a reasonable number are still in the schemes to this very day.

Not in a position to comment on proportions or numbers. Clearly a lot of contractors bought in to the weasel words used in the providers materials and did not apply much in the way of critical analysis to how they could achieve better take home pay than an equivalent salaried employee.

That's not so different to people buying houses is it? When we make that purchase, we all want a good price. We all organise ourselves such that the vendor might sell to us for a lower price that others can have. Might be because we have cash, want to move soon, have a mortgage ready, etc. We all seek advantage.

I don't condemn people for seeking a better deal. I do very much condemn those who take advantage of that basic desire in order to profit unreasonably. That condemnation is enhanced when I see some of the documents and words used. They come very close to outright lies and certainly in some cases, cross that line.

Should users have realised earlier that there was a war on their schemes?

Easy for me to say "yes" because I spend hours a day immersed in tax. The war began in 2002 and has increased in intensity every year since and will do for a while yet. HMRC arguably did not make a declaration of war but rather either had a deliberate plan to be stealthy or more likely just fell into that mode when pressured by politicians.

(It is the latter who have most blame in this situation in my opinion, but I'll forego the rant for now).

In fact, if you asked the man on the Clapham Omnibus in 2004, 2006, 2008, 2010, if contractors tax arrangements were offensive, he would probably say "no" on the grounds that a) he could not grasp the detail and b) nothing said or done by HMRC flagged the issues.

That test remains valid and a Court will eventually ask it.

So, I generally have sympathy for those caught in this mess and who started before say 2011. After that, less so but I believe that HMRC has not acted in an honourable nor sometimes legal manner and therefore should shoulder a lot of blame and not visit the consequences of their ineptitude upon others. I will therefore use every tactic I can think of to prevent an unwarranted excursion into the pockets of users.

Anybody in a scheme now should be asking HARD questions of providers before leaving. Or, just leave. Or, don't join.

Is there an emoticon for climbing off a soapbox?

[DotasScandal]

Mmm... Not sure I agree with "VERY large proportion"

A lot of contractors remained in the schemes long after the opening salvos of HMRC upping the ante.

And a reasonable number are still in the schemes to this very day.

This is of course subjective, and was based on the (relatively large) population that got in touch with us.
Agree that there are still people in schemes - as far as we're aware these fall into two categories: those that have their head in the sand still, and those who think they are neck deep in this sh*t anyway, think they are doomed, and don't know what to do next (they are in a sort of paralysis, if you will).

Both groups need help and not "you deserve every bit of pain that's coming your way" judgements....

[NotAllThere]

Personally i think many of the scheme users would share the same caveats that i am i am guilty of.
I am a techy, i work in IT, i dont posses the sharpness in all areas of my life (as does anyone?) and I can be nieve without being greedy. But when choosing a scheme in 2005 i didnt understand or realise that even though a scheme could be legitamately sold to me, and HMRC happliy accept the annual return, i honestly had no clue this was risky...

The reasons I didn't get involved in such schemes was that I saw early on that IR35 would be optional, based on set up, and that I have a fundamental objection to anyone controlling my money other than me (which is why I'd never use a brolly).

[Tass1968]

Whilst accepting that perhaps I ought to have done a little more due diligence on my scheme, and that in hindsight it is perhaps in the grey area of what is 'morally' right or wrong, it still feels wrong to be screwed on account of somebody changing the mind:

The two things that still baffle me;

First, if I buy a financial product and am given bad advice, I have recourse to compensation for that bad advice. So as HMRC gave my scheme the bad advice initially (i.e. advising that it was legal at the time - or at least that what my scheme told me), can I get compensation from HMRC to pay my retrospective tax bill?

And secondly, the VAT my scheme charged for services each year exceeded my newly arrived tax bill for each year in the scheme. Do HMRC have to refund the VAT if the earnings are now considered income?