2019 tax charge - consultation preparation

[Whysoserious]

Rapidly going off topic on this one, and it was only said in jest.

That aside, I was in Vegas recently and the highest chip they offer is 100k (not that I could afford to gamble at that expense).

Back to the main topic now please...

[Iliketax]

I'm no expert on this. Also the legislation hasn't even been drafted yet, so no one can give any solid information on how it will work (not even HMRC) IF it comes into force. It's the beauty of this announcement. It's so vague, people panic, discuss, debate and drum up fear. Fear on legislation that hasn't even been written yet.

However HMRC would like to present the 5th April 2019 tax charge as being the 'check-mate' move by the government. Regardless of whether the scheme wins in court, regardless of whether you have paid the APN or not. The 5th April 2019 tax charge will apply (in HMRC world).

I personally believe the legislation if given Royal Ascent would require so many safe guards, require to circumvent almost every existing corporate, employment and UK tax law that the limit of the legislation would limited.

Instead I see it as a tactic by HMRC to pressure people into settling, hence the 3 year wait for the legislation, that isn't even written yet, to be implemented.
If HMRC were confident APNs would bring in money without challenge, they wouldn't need this legislation.
If HMRC were confident on winning even one EBT/Loan scheme in court, they wouldn't need this legislation.

In my opinion HMRC can foresee the real risk that an EBT scheme will win in court. In that scenario all APNs would need to be paid back with interest.
Therefore they need this legislation as an insurance policy that the money collected won't ever be repaid.

Some comments:

1. This is a technical consultation, not a policy consultation. The government has decided it will happen. In the real world, it is not controversial. The technical consultation is all about getting it introduced in a way that has the intended effect while minimising 'innocent' things.

2. This is supposed to raise £2.5bn. So not trivial. To use the phase of one of those involved from HMRC's side (on a different anti-avoidance thing): "the money has already been counted". So it won't just go away.

3. I agree that the March 2016 technical note was deliberately designed to be vague in some areas. The government does not want to introduce a bright line at the moment between 'good' and 'bad loans. It does not have enough information yet to know where the lines might need to be. So one thing that HMRC will be doing in parallel is finding out more about what happens in practice and what ideas there are to try to get around the new rules. But the technical note is very clear what the key changes will be. The vagueness is only around the edges.

4. I can't see any need to change any corporate law for this. Also, I can't see any need to change employment law. This will just be a tax change. What changes were you thinking of?

5. Yes, HMRC have tactics to get people to settle early. The 30 November 2016 deadline being one of them (which will have nothing to do with 99.99%+ of contractors). The reality is that for some, settlements will be substantially better from a cash perspective. I have nothing to do with contractors but the terms of HMRC's settlements over the last year have got tighter (compared with the original EBT settlement opportunity).

6. if HMRC lose Murray Group at the Supreme Court (or other cases which are expected to be heard in the FTT, e.g. one is expected to come up in December) then you rightly say that this is an insurance policy. But it is much more than an insurance policy as it applies to all outstanding 'bad' loans, not just those that HMRC have or are able to challenge.

[DonkeyRhubarb]

6. if HMRC lose Murray Group at the Supreme Court (or other cases which are expected to be heard in the FTT, e.g. one is expected to come up in December) then you rightly say that this is an insurance policy. But it is much more than an insurance policy as it applies to all outstanding 'bad' loans, not just those that HMRC have or are able to challenge.

It will be interesting to see if Parliament is willing to pass a law that says "these loans are bad" if a court has already ruled "these loans are not bad".

Of course, that presupposes that a court would rule in favour of the taxpayer, which may be a big ask. The courts in recent years have been getting increasingly purposive in their interpretation of the law.

[DotasScandal]

So one thing that HMRC will be doing in parallel is finding out what ideas there are to try to get around the new rules.

And I'm sure HMRC are grateful for all the helpful contractors at CUK who are more than happy to assist.

[webberg]

I agree Mr Scandal.

Taxtopics was created with a view to discussing a separate issue each month in a forum away from public gaze.

In the circumstances, we have decided to continue the debate on this matter for the time being as more and more implications are coming out.

See you there.

[Whysoserious]

If HMRC and the Government are relying on an internet forum to write new UK tax legislation then they truly must be an incompetent bunch at the Treasury.

ILikeTax - I agree with you that the legislation will come in. I disagree with you on the reach and power that the new legislation will have once it's given Royal Ascent.

[Iliketax]

I disagree with you on the reach and power that the new legislation will have once it's given Royal Ascent.

In what way do you disagree and why?

[Whysoserious]

Because when it comes to tax, the clever people don't work for HMRC or the Government.

I'm not going to provide any detail. That would just be foolish.

[AtW]

Because when it comes to tax, the clever people don't work for HMRC or the Government.

These clever peope make a killing on highly priced advice without going to jail for fraud when their schemes fail, but the clients get burnt in the end.

[webberg]

The webinar hosted by HMRC in which they managed to dodge all the tricky questions made it very clear.

The legislation is Government policy and will be introduced.

Our emphasis is to:

a. Reduce collateral damage
b. Create an opportunity to settle at a fair value
c. Clarify who is in and who is out

At the moment the Technical Note is cast in very wide terms and it has to be narrowed or it will cause chaos.