2019 tax charge - consultation preparation

[AtW]

If there is a ranking/spectrum of severity of avoidance that HMRC use then i think that should be disclosed on their website along with its methodology for the benefit of the taxpayer.

Why would taxpayer need it? Taxpayer already knows what he needs to know - rates of taxes to pay, just fill in self assessment like everybody else does and pay what's due.

IMHO they are attacking all big schemes now, taxes in this country are very high now but the solution is to either earn more money OR leave the country, for example Germany got 25% flat rate tax on dividends.

[QCApproved]

I think you'll find that's exactly what numerous people did for these schemes in accordance with statute and case law for a over a decade. I don't think anyone was sent a return back as incorrectly filled out or lacking the requisite information for the computation of that persons taxes for that year.
As,however, you have propounded their avoidance was in some way different to avoidance via a limited company - if there are these extra-judicial distinctions that are causing differences in treatment of avoidance regardless of the legal effectiveness of that avoidance then it could be argued that it would have been useful to know them so that people could have made fully informed decisions as to which avoidance method to use to mitigate their risk.
Most of us worked it out ourselves though via the lack of enforcement of IR35 being evident.
HMRC were very keen to enforce its view re loans but the inconvenience of the legality of the avoidance has presented some challenges to this approach.

[QCApproved]

some might suggest the simplest and best way to address any sum of tax uncollected by lack of enforcement of the IR35 rules would be to impose a retrospective increase on the dividend taxes of all contractor limited companies going back 10 years - wouldn't this be in the best interest of most taxpayers at the risk of being unfair to a few "genuine" contractors - why should that sum be written off?

[AtW]

some might suggest the simplest and best way to address any sum of tax uncollected by lack of enforcement of the IR35 rules would be to impose a retrospective increase on the dividend taxes of all contractor limited companies going back 10 years - wouldn't this be in the best interest of most taxpayers at the risk of being unfair to a few "genuine" contractors - why should that sum be written off?

No, that would not be in the best interest of most taxpayers. It would be a very stupid move that would undermine formation of businesses in this country, that's not the objective of the Govt or HMRC, now undermining attractiveness of "schemes" is a publicly stated objective, very popular policy across all parties.

btw, Govt is getting rich people too - it's not just about targeting small people anymore, but obviously the rich got enough money to pay off without breaking a sweat.

it would have been useful to know them so that people could have made fully informed decisions as to which avoidance method to use to mitigate their risk.

Just don't use any methods of tax avoidance, ok? It's an obvious answer, if something is artificially designed for tax avoidance, lacks commercial sense then don't touch it with a bargepole. This would mitigate your risk very nicely - this is not a tax/financial advice, just my personal view!

[QCApproved]

why would a one off retro tax undermine the formation of business if it only applied to anyone who was hired through an intermediary recruiter and signed a contract to work for an employer it would be a good way to plug that gap why just settle for the scheme money at the end of the day and not a full house of all avoidance

[AtW]

why would a one off retro tax undermine the formation of business if it only applied to anyone who was hired through an intermediary recruiter and signed a contract to work for an employer it would be a good way to plug that gap why just settle for the scheme money at the end of the day and not a full house of all avoidance

Because those people have not done anything wrong (assuming they paid corp tax, VAT as appropriate, dividend tax, PAYE etc).

Any retro tax on business is very bad idea, but dealing with tax avoiders is another matter - that's not tax on business.

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Anyway, don't want to overstay my welcome ...

[QCApproved]

surely any unfairness of a retro tax must be weighed against the huge sums of tax at stake - since it seems impossible to identify and investigate who has not been caught by the IR35 rules since 2000 would a retro blanket levy on the whole constituency not be the best option - or do you think it is OK to write that entire sum off? Is it not an exceptional scenario requiring exceptional measures?


Is a contractor working through a company for the same employer for a period a "business"
opinion is divided

[AtW]

surely any unfairness of a retro tax must be weighed against the huge sums of tax at stake

There is very little extra tax at stake - remember they already paid 80% of tax anyway, the gap is much smaller than between 3.5% scheme and what was due.

More important HMRC (certainly political leadership) is fully aware that they can only get real money from the rich (and they do) and when it comes to small scale users they fully expect to have lots of people go bankrupt - they are fine with it because they expect it to provide lasting deterrent effect. Almost everybody hates evil aggressive tax avoiders anyway and it's very important for the Govt to at least LOOK like they are doing the right thing.

Now bankrupting 10 (or in reality 30-50) times more people who did nothing wrong and in any case paid 80% of tax due makes no sense isn't good idea - it would actually cost the Govt in loss tax because a lot of those people will lose ability to work and pay 80% of what they should have paid anyway, much easier to just increase tax on dividends and collect extra dosh from other completely unrelated people to this whole debacle (like myself).

Over...

[StrengthInNumbers]

This cannot be a right thing. If this was right all HMRC official who said nothing for years and all scheme providers would have been penalised the same way. This just collect what I can without anything respect for what is right and what is not.

[jbryce]

Almost everybody hates evil aggressive tax avoiders anyway and it's very important for the Govt to at least LOOK like they are doing the right thing.

Over...

Which is why HMRC and HMG are now coming after Contractors who avoid NICs by working through a limited company. It's tax avoidance, plain and simple.

HMG have made the calculation that everyone hates a tax avoider. When you play contractor use of Ltd companies to the man in the street they recognise it as tax avoidance. Is it aggressive? Who knows, but by the time the HMRC juggernaut have finished spinning it, the general public will come to regard contractors, one and all, as aggressive tax avoiding scum.

Over.