BIG GROUP

[dammit chloe]

Ah, I had just assumed that "employer" meant "employer".



My experience is that the contractor loan schemes are way, way more artificial. The stuff that larger employers did was plain vanilla EBT loan schemes before December 2010. Banks stopped the year before. They (larger employers) didn't do any of that super artificial stuff to try to get around the disguised remuneration rules that was done afterwards. Some smaller employers, especially OMBs, tried to do some very artificial stuff after 2010, some of it on a par with the contractor schemes. But it would have been rare for larger employers. And as I say, banks wouldn't have done loan schemes after 2009.



Perhaps. Employers who put money into trust, but where not all the money was taken out by way of loan, would have wanted to settle before the withdrawal of para 59 and so that may distort the numbers. While those settlements would have been for DR reasons, they wouldn't necessarily have been because of the loan charge.

IDontLikeTax so I often speak in my own vernacular and admit to not knowing technical/legal details :-) Especially anything that has happened in the last 13 years since I was last involved and have heard nothing from HMRC to tell me about such stuff.

[webberg]

The Revenue have indeed said that "employers" - whatever that means - have contributed a sizeable chunk of money to the tax collected so far.

We have been trying to ascertain exactly what HMRC mean by this. They bring a whole new level to ducking and diving.

Our problem is that if the employers have indeed contributed such a large proportion of money, why is this not reflected in calculations and communications we have - every day - from HMRC in respect of our clients?

I would have thought that (accepting we do not represent the whole of the impacted population but certainly more than 10%) we would see HMRC reflecting sums collected from others in our client calculations.

We are not.

That says to me:

The money collected from "employers" is for OMB type EBTs and similar and not the mass marketed schemes, or

HMRC is collecting tax twice on the same money.

Given that the latter is unlikely (not sure even HMRC would risk having that exposed), it must be the former.

That leads to the conclusion that the statistics are being manipulated in order to show progress whereas in fact - on the mass marketed schemes - settlement numbers are low.

If HMRC would bother answering our requests, perhaps I could be more definite.

[piebaps]

There's also the "double count" Graham.

Some numbers can be used to justify a number of different work streams. The public sector is rife with these iffy claims.

For example, when dealing with benefit fraud, the DWP will claim success for identifying how much money they saved. The start with the amount which was fraudulently obtained and then add on a multiplier to try and forecast how long the fraudulent claim may have continued and how much more would have been paid. So fiddle £40k and they'll claim they recovered £65k. The reality is usually that they physically recover nothing.

You can see this in HMRC's accounts on page 21 https://assets.publishing.service.go...7-18__web_.pdf

[Iliketax]

The money collected from "employers" is for OMB type EBTs and similar and not the mass marketed schemes

The schemes that most OMBs did were mass marketed. Typically, EBT or EFRBS based loan schemes.

Big picture, it's a numbers vs quantum thing. Let's say an IT contractor is "on" £80,000 per year and got £10,000 of that via a salary, £70,000 by way of a loan. The employer disappeared a long time ago so no NIC can be collected. The income tax "saved" will be something like £20,000. So the individual will pay £20,000 as a settlement.

Let's say an OMB owner got the same £10,000 salary but a £5,000,000 loan. That is £2,000,000 of tax saved, £50,000 employee's NIC plus £640,000 employer's NIC. So £2,690,000.

That means that one of my hypothetical OMBs is equivalent to 134 hypothetical contractors. And from what I see on these forums, the equivalent numbers for many contractors is much less than £20,000 of extra tax per year.

I made up the £5m loan per year for the OMB. So what's the right number? I don't know. But if I look at Dextra, it says:

By 2001 in total the companies had contributed £19.9m to the short-term funds of the EBT and £6.6m to the wealth creation scheme. ...

To be clear, not all of that was for loans. But how much more was put in after they won?

And if I look at Sempra Metals:

27. Details of the annual payments to the trustee were: ... Total £15.138M

Again, how much more was put in after they won?

And Murray Group:

6. The quantum of the fund movements gives an indication of the size of the scheme. The overall totals contributed into the main Trust were £55.5m and €5.3m,

Obviously, there is a question of how much cash HMRC actually got with this one.

Another company (Aberdeen Asset Management) was different but involved "soft loans (i.e. loans at low interest rates which will not be required to be repaid; the interest is not paid either or is funded by a further loan)":

5. The total amount of income tax claimed is in the order of about £5.4m. The amount of national insurance contributions claimed is in the order of about £1.6m

And while these may be larger than the average OMB type situation, they are far, far smaller than some of the ones that I am aware of.

So then the question is how many employer's did this? I don't know but at some time in 2014 HMRC said that there were 700 employers that had used the EFRBS resolution opportunity and that there were around 7,000 that had yet to settle (and many of those would not have done). There probably were many more EBTs. But who knows.

[webberg]

All of the above observations are valid in their own way.

The really frustrating part is that HMRC - upon whom we should be able to rely in terms of integrity of numbers and probity of purpose - routinely present numbers and arguments in a manner that is at best disingenuous and at worst, false.

They deny the use of Behavioural Insights (see FOI requests) and claim that the materials they produce are all from internal sources.

There is an excellent piece on Linkedin presently from Keith Gordon QC which deconstructs the latest HMRC attempt (supported and repeated by MPs) at pulling the wool over the eyes of the taxpaying public, we are told HMRC is there to serve. I recommend a read of that.

Taxpayer agents, no doubt of the view that many people remain of the misguided opinion that HMRC does have high standards and always tell the truth and can therefore be trusted, have resorted to making similarly skewed and/or misleadingly accurate claims. This is does not enhance the professional standing of the agents but I can understand their position.

More importantly, as was demonstrated to us - again - late yesterday afternoon, it allows those who are not professionals but who have managed to acquire some form of interest in the situation, to make spurious claims and use scare tactics to leverage fees out of contractors for often entirely unnecssary actions.

We note with considerable regret that the levels to which HMRC has sunk in defending their campaign against contractors, has permitted those unscrupulous enough to think making money from misery is acceptable, a degree of credibility that they should not have.

We regularly report such instances to HMRC. The reaction? None at all.

An oft asked question of us is why HMRC did nothing if their view, then and now, is that the schemes never worked?

We explain that HMRC had no legal powers to do that.

The follow up is then, why are such schemes still allowed to operate? (Do a check on Google and you'll find dozens).

We can't answer that and HMRC, by debasing themselves by selective use of statistics, is not only standing back and allowing this to happen, but is actively encouraging it.

I'm not claiming that we are whiter than white here. We will stress parts of communications and allow others to fade. We always though try to present our arguments and positions objectively (accepting a bias). HMRC - in our opinion - does not.

We view HMRC as far from a bastion of integrity. Their maxim of "maximising revenue" has been allowed to corrupt them. It is alleged that their bullying and harassing treatment of taxpayers is reflected in an internal culture of bullying and discrimination. I have no evidence of that personally, but it is not a great leap to assuming that an organisation prepared to use underhand tactics (confident that elected officials will perjure themselves to protect them) would treat its staff in this way.

HMRC has had a major hand in creating the present situation and the sooner they recognise that and try to correct it, the better.

[webberg]

Late yesterday afternoon, an agent acting for an IOM trustee, sent a communication to borrowers/beneficiaries of that trustee, indicating that action before the 31st January would be wise.

We have this morning issued a response to our members.

This will also shortly be on our forum.

If you have not received this or have further questions, please let us know through the usual channels.

[Geeptof]

Credit to Big Group /WTT for declaring the start of a very firm legal challenge to both HMRC and any trustee (loans scheme providers) threatening to demand repayment of loans - as announced on Contractor UK last week.

Why we’re taking HMRC to court over Loan Charge 2019, by WTT Consulting

This is a holistic no nonsense commitment to fight the 2 main threats affecting contractor loans.

Scheme providers such as Montpelier ( director and trustee is Edward Watkin Gittins – see other threads on this ) are threatening their former contractor clients with court action if they don’t make some repayments on the loans.

I hear that news of the very first court threat in December went viral and immediately started a very angry backlash against Gittins and his family who were all in business (and apparently did rather well out of all the contractors fees) from hundreds potentially affected, and with this latest Big Group announcement will now have thousands more people and their own families fighting against the Gittins.

Considering the loans were taken from the invoice fees generated by the contractors own consulting work you can understand why feelings are running so high.

Talk about crossing the line by a country mile.

[webberg]

Let's be clear here.

Big Group has a strategy and is following it.

We have no particular axe to grind against Montpelier and Mr Gittins or any other firm of individual involved in the schemes from the past.

We are objective and dispassionate and non judgmental about why people invented and offered schemes, why people joined them or subsequent actions from those firms and/or agents or factors who now have a position of control or influence.

We deal with the facts.

We deal with the situation in front of us and wherever possible include this in our over arching strategy.

Where there is a threat of loans being recalled, we will (and have) used our resources to investigate how, why and when this might happen and how that action might be legally resisted.

We have no opinion as to whether loan repayment threat is being driven by personal or financial motives.

So, whilst I welcome the comment above, please be aware that Big Group does not exist to bring to some form of "justice" any particular individual or firm.

[stonehenge]

Scheme providers such as Montpelier ( director and trustee is Edward Watkin Gittins – see other threads on this ) are threatening their former contractor clients with court action if they don’t make some repayments on the loans.

The clients are beneficiaries of the trust, right? Aren't trustees meant to act in their best interests?

[piebaps]

That depends on the trust law of the country where the trust was settled - broadly yes but check the small print.