What is the 2019 Loan Charge?

[webberg]

There is a sense here - and on other threads - that HMRC, having won Rangers and then written law denying its effect with the sole purpose of scaring people into CLSO 2, has already won the battle.

I respect very much the contributions of ILiketax and others and a lot of what they say is based in the statute and is exactly what HMRC want us all to think.

My current issue however is that these contributions appear to accept as a fait accompli that EVERY avenue to a sensible resolution has been blocked off and that the ONLY option is to settle.

There is no debate on whether the legislation acheives the aims. There is reference to materials HMRC publish that indicate how the legislation should be interpreted, but that is inevitably biased and frankly part of the game being played.

There is no discusion for example on whether, if tested in Tribunal, a Judge would need to consider that material if she/he thinks that the legislation as written and the precedents already set in, for example, Rangers, is clear.

There have been cases recently where a judge has expressly said that he did not need to consider HMRC's view as expressed in consultation responses, policy papers, technical papers, as Parliament was clear in what was intended. (Christianuyi).

The legislation we see at the moment has tried to shut down what HMRC see as the worst effects of a case they won, i.e. they ahve spent 15+ years chasing the wrong targets, and try as they might, I for one am not convinced that if tested in Tribunal, weight would be given to this legislation for past periods in quite the way HMRC would like.

That is a future battle. Make no mistake that it would be a long, hard and bitter battle and that eventually HMRC's manipulation of the law (especially the "not retrospective law, but retrospective effect) may prove to be the preferred interpretation.

For now though I see an uncritical acceptance that every avenue is closed and that CLSO is the only real option.

We should all bear in mind that we have untested, complicated law that is trying to fit already complex law as well as reverse a Supreme Court decision. In my view the supporting materials as to what HMRC consider the effect to be is of limited weight and is more akin to the infamous nudge tactics we see deployed.

I don't mean to dismiss the thoughts of those here who are clearly well versed in interpreting the law, nor discourage their contributions which I for one find interesting. I'm also not suggesting that our way through this morass of opinion, law, dirty tricks (on all sides) and cases, is anything other than another option.

The point I'm labouring to make is that the uncritical acceptance and the blocking off of avenues by virtue of untested legislation, is a one sided position and that this is all pointing towards a place HMRC want you to be.

By all means go to that place as it has its attractions but be aware that the final result may not be as HMRC wish.

[Iliketax]

My current issue however is that these contributions appear to accept as a fait accompli that EVERY avenue to a sensible resolution has been blocked off and that the ONLY option is to settle.

Or pay the April 2019 loan charge of course. Or litigate. Or go bankrupt. What else is there? You are obviously passionate that there is another way. So why not share it? When people have asked you about that on other threads, they quickly get confused about what your position is. So be explicit. Then people can make an informed decision.

There is no debate on whether the legislation acheives the aims.

Part of that is because you ask people to stop putting information and discussion on this forum and instead move to a private forum where you have to pay for access.

You appear to want to try to create uncertainty rather than debate. I know I mentioned double tax relieving provisions on here in July last year. But you keep saying that they don't work without saying why. You ask for section numbers and when they are given you just mention trying to find a tea towel. How does that help create a debate?

So create the debate. Don't stiffle it. Engage it specifics.

There is reference to materials HMRC publish that indicate how the legislation should be interpreted, but that is inevitably biased and frankly part of the game being played.

I think that is aimed at some of the links I've put in some of the posts. Normally I've also added a link the legislation (or where it can be found). People can then read it themselves and become more informed. That way, they can ask the right questions. Knowledge is power. It shouldn't be kept in a locked box but made available.

There is no discusion for example on whether, if tested in Tribunal, a Judge would need to consider that material if she/he thinks that the legislation as written and the precedents already set in, for example, Rangers, is clear.

Create the discussion then. Engage with the specific.

I'll start. Case law is very clear. Pepper v Hart has been clear for a long time. You look at the legislation. If it is ambiguous then in certain circumstances the Courts may look at what was said in Parliament. Yes, that may have changed a bit in looking at what the policy objective of the legislation is to allow it to be viewed purposely. HMRC's guidance is not one of the things that any court should have regard to in almost any situation.

The legislation we see at the moment has tried to shut down what HMRC see as the worst effects of a case they won, i.e. they ahve spent 15+ years chasing the wrong targets, and try as they might, I for one am not convinced that if tested in Tribunal, weight would be given to this legislation for past periods in quite the way HMRC would like.

Taking the last point. Be specific. Give us your insights. Otherwise you might as well rant to the llamas.

That is a future battle. Make no mistake that it would be a long, hard and bitter battle and that eventually HMRC's manipulation of the law (especially the "not retrospective law, but retrospective effect) may prove to be the preferred interpretation.

If you are a professional soldier who gets paid to battle then of course you want a "long, hard and bitter battle" where you get paid every month it goes on. Innocent people caught in the cross fire often take a different view.

For now though I see an uncritical acceptance that every avenue is closed and that CLSO is the only real option.

Then explain what that is. Set out your vision. But when people on here who are not members of the Big Group have asked you, there is just confusion and it sounds like you are selling snake oil.

We should all bear in mind that we have untested, complicated law that is trying to fit already complex law as well as reverse a Supreme Court decision. In my view the supporting materials as to what HMRC consider the effect to be is of limited weight and is more akin to the infamous nudge tactics we see deployed.

So ignore the supporting materials that (sometimes) help explain what HMRC think. Focus on the law. Explain it, "debate on whether the legislation acheives the aims". Although, I don't care if it achieves its aims or not. What I care about is, when viewed realistically, what does it actually achieve?

The point I'm labouring to make is that the uncritical acceptance and the blocking off of avenues by virtue of untested legislation, is a one sided position and that this is all pointing towards a place HMRC want you to be.

At this risk of being too repetitive, be specific. Be critical in a constructive way rather than critical in a ranting kind of way. Then people can take a knowledgeable, informed view when they take their own personal tax advice. They can choose whether to ignore the April 2019 loan charge and risk all the penalties, etc that go with that. Or they can choose to settle. Or they can choose to pay. Or they can choose to seek time to pay.

Giving specifics that people can then debate and argue with means that people are better able to take an informed decision. Don't stifle the debate. Don't be uncritical. But be specific and be constructive. Where it might appear that you have a conflict of interest, or you do have one, make that clear.

By all means go to that place as it has its attractions but be aware that the final result may not be as HMRC wish.

So explain what you see the final result is. Be specific. The more ambiguity in what you say, the less helpful it is and the more Sir Gus O'Donnell's quote from the other weekend comes to mind.

[webberg]

I had anticipated the above response and have thought about this next piece.

On this forum I am regularly accused of spreading rumour and scare stories, creating uncertainty and generally taking action that increases my fee.

On the BG forum I am regularly accused of giving away too much, allowing HMRC to read my posts and take correcting action and generally being too free with information.

This forum has the additional restriction that anything which looks to be advertising is quickly shut down.

So if for example, after my dalliance with the cold towels, I continue to believe that the relieving provisions in the DR charge work well in theory but create problems in practice, because they do not use real world examples, how far do I go with that?

You say I should engage in a debate that exposes the flaws. The end game there is likely that you have the view you started with and I have a view I started with. How does that bring clarity?

My clients say that if the legislation has flaws, then we should keep that to ourselves to be used to the advantage of those who pay my fees. That is sensible from their perspective but limits what I can say here.

You claim that our ideas are unclear. I disagree. I have said many times that we believe that the decision reached in Rangers is correct and our strategy has always been based on that assumption. People who call us and ask for an explanation are given more detail. Again, I'm limited to what can be said here as to lay out our full explanation and analysis would not only be advertising but would allow HMRC free and early sight of it and perhaps allow others to copy it.

Ultimately however, you have missed the point of the first post.

The point is that every time a question from a forum user pops up, there is a tendency to say "HMRC has thought of that and the answer is you pay tax". There is no balance, no discussion of alternatives.

It's not just Iliketax. This is not personal. The above view comes from those who know something about tax and those who may not know much but who are impacted by the law.

Perhaps there are no alternatives. Perhaps HMRC has thought of everything.

I believe that the position of HMRC is flawed. I believe that there is value in pushing an alternative view. I do this in an open and transparent way within the usual boundaries of a practice.

It is no secret who I am, who my firm is, what my background is. My career record is out there for all to see. I don't hide behind an anonymous forum name and if people have issue with what I say (and a lot do), finding my phone number and email is simple and I'll have that conversation. I do not engage as clients all of those callers, but equally some of them join us.

I know many who demonstrate some knowledge of tax in these forums regularly get called out as being HMRC officers. I have not come across any posters who have admitted being connected to HMRC in any way. I have had no reason to disbelieve such assertions.

I do however think that it is beholding on those of us who claim knowledge to provide clarity to the less knowledgeable and that has to start with identity.

I hope this is not a rant. I hope this is an explanation of why I cannot post all of our ideas and processes - but call us to find out -; of why I think in some areas we will not get clarity, just two people unwilling to admit the other has a better analysis; of why I think that of late sentiment here is being guided towards HMRC's view.

[Iliketax]

I hope this is an explanation of why I cannot post all of our ideas and processes

That's fine. But why say "There is no debate on whether the legislation acheives the aims".

just two people unwilling to admit the other has a better analysis

That's disingenuous. You have provided no analysis. I have no dogma here. If you can persuade me that I'm misinterpreting something then I'm happy to change my mind.

So if for example, after my dalliance with the cold towels, I continue to believe that the relieving provisions in the DR charge work well in theory but create problems in practice, because they do not use real world examples, how far do I go with that?

Isn't that an about face on HMRC's guidance? You said "There is reference to materials HMRC publish that indicate how the legislation should be interpreted, but that is inevitably biased and frankly part of the game being played" and now say it does not use real world examples? Surely it is all about what the legislation says?

You claim that our ideas are unclear.

No. I have no idea what your ideas are. I suggested other who have asked you are not clear.

The point is that every time a question from a forum user pops up, there is a tendency to say "HMRC has thought of that and the answer is you pay tax". There is no balance, no discussion of alternatives.

I have just been looking at a self-employed loan scheme where a civil investigation turned criminal. Is that the kind of balance you were thinking of?

I do however think that it is beholding on those of us who claim knowledge to provide clarity to the less knowledgeable and that has to start with identity.

Why? This is an internet forum. I'm not selling anything. I'm telling people to take independent advice. I'm helping bring knowledge into the open rather than hiding it away. I think I'm being realistic. I'm also using the many hundreds of hours I've spent on the disguised remuneration legislation to try to help other. But If I am wrong, tell me specifically where I am wrong. Then there can be a debate. But no more llamas please.

[webberg]

I'm reluctant to make this a personal exchange and will not.

My point remains that, in my opinion, this and other threads are drifting into "HMRC will always win, no matter what" and that this is being defended (ironically) by taking a very literal interpretation of law (i.e. the DR charge is not retrospective even if it has retrospective effect), accepting that HMRC's carefully constructed examples are actually encountered in the real world and thinking that HMRC's view is the only sensible one.

I don't agree.

Tax cases in particular, use purposive interpretation which as many Judges stress is just an extension of common law principles and the literal interpretation model is no longer considered suitable.

We have matched our client's positions against the examples used by HMRC in their notes on how the double tax releif principles work. Perhaps 30% of them match. 70% do not. Applying real life as seen in those 70% of cases, does not give rise to the sort ot guarantee of no double tax that HMRC would have you believe.

Cases such as Hicks are one of a growing number where HMRC's analysis and interpretation of law in practice has come in for heavy criticism. HMRC, like the rest of us, are not infallible, so why should we blindly accept their analysis?

I've been over many ways to end this contribution. I'm expecting a forensic analysis of the above but no more clarity, so I'll apologise in advance for saying that I see no value to me, you or the readers in responding further. You may interpret that as you wish.

[Delendog]

I'm reluctant to make this a personal exchange and will not.

My point remains that, in my opinion, this and other threads are drifting into "HMRC will always win, no matter what" and that this is being defended (ironically) by taking a very literal interpretation of law (i.e. the DR charge is not retrospective even if it has retrospective effect), accepting that HMRC's carefully constructed examples are actually encountered in the real world and thinking that HMRC's view is the only sensible one.

I don't agree.

Tax cases in particular, use purposive interpretation which as many Judges stress is just an extension of common law principles and the literal interpretation model is no longer considered suitable.

We have matched our client's positions against the examples used by HMRC in their notes on how the double tax releif principles work. Perhaps 30% of them match. 70% do not. Applying real life as seen in those 70% of cases, does not give rise to the sort ot guarantee of no double tax that HMRC would have you believe.

Cases such as Hicks are one of a growing number where HMRC's analysis and interpretation of law in practice has come in for heavy criticism. HMRC, like the rest of us, are not infallible, so why should we blindly accept their analysis?

I've been over many ways to end this contribution. I'm expecting a forensic analysis of the above but no more clarity, so I'll apologise in advance for saying that I see no value to me, you or the readers in responding further. You may interpret that as you wish.

Hi Webberg, more time posting on BG would be appreciated - I am sure many of us would like more clarification on how the 2019 LC will be avoided and update on progress.

[stonehenge]

For me, it all comes down to...

Is there a cunning plan which stands a good % chance of (a) achieving a better outcome than CLSO2 and (b) avoiding LC19?

I assume webberg believes he has one, otherwise what's the point of BG. (Unless he's deluded or selling snake oil)

The million-dollar question is, what is the % chance?

[ChimpMaster]

For me, it all comes down to...

Is there a cunning plan which stands a good % chance of (a) achieving a better outcome than CLSO2 and (b) avoiding LC19?

I assume webberg believes he has one, otherwise what's the point of BG. (Unless he's deluded or selling snake oil)

The million-dollar question is, what is the % chance?

Even if there is a cunning plan, it needs to be submitted for each taxpayer prior to the 2019LC reporting is due for that taxpayer. Otherwise you are into evasion territory.

Unless the plan is to pay the LC and then carry on fighting afterwards.

Webberg has already said that BG is not aiming to achieve a better outcome than CLSO2 (financially) because HMRC don't negotiate like that.

And there's no chance of avoiding the reporting requirements for 2019LC.

So how much better can any other solution be?

[webberg]

Hi Webberg, more time posting on BG would be appreciated - I am sure many of us would like more clarification on how the 2019 LC will be avoided and update on progress.

You are quite right.

We have a newsletter in draft for issue next week.

[webberg]

Webberg has already said that BG is not aiming to achieve a better outcome than CLSO2 (financially) because HMRC don't negotiate like that.

Where has that been said?

I have said that if you take CLSO 2, then the figure HMRC give you is what you get. Short of arithmetical error, neither I nor any other adviser can get you a negotiated reduction.

CLSO 2 is take it or leave it.

What we say is that the facts and the case at Supreme Court in Rangers points to an employer being liable in pretty much all cases.

That is inconvenient for an HMRC which has spent 15+ years either sat on their hands or chasing the employees.

They are trying to draft legislation that ignores the facts and the decided cases and we believe that whilst such legislation may be fine from the point it was announced, it is not good for past periods. Given that HMRC deny retrospection in any of this, how can they argue differently?

Cue defence of HMRC based on literal interpretation of retrospective law.