Article in the Times

[QCApproved]

The whole HMRC function seems to have escaped the trend of offshoring to various locations where we know things can be done very much more cheaply - perhaps that delight will be the agenda at some point for them. Could be a welcome saving for the taxpayer for some of their activities to be handled there, may also stem the bright ideas from some of their alumni.

[me206et]

Unfortunately. The providers and the qc's just get away with it. I notice that one of the top "lawyers" for defending these cases is also a QC who said they were legal and above board. So paid to say it was ok and paid even more to defend his position. The gift that keeps on giving.

[cojak]

Very interesting article, I am involved in the health care recruitment businesses but luckily for a responsible company that doesn’t permit dodgy umbrellas.

I can confirm that unfortunately the industry is riddled with agencies who are permitting or promoting these schemes to win over workers from rivals. The nhs and local councils make the right noises when told but always seem to fail to take any action.

Until hmrc make an example of an agency the industry in general will not fall into line!

Quite. No point in having legislation if it’s not enforced.

[Togoodtobetrue]

My contacts tell me that rather than get their house in order Tripod Partners have decided to ring all of their workers (and everyone else’s) to tell them that the article is nonsense and that the schemes they offer are a legal loophole.

[webberg]

I don't know Tripod and have not spoken with them and I would agree that what they are said to be doing is legal.

However, as any fule noes, HMRC is against such schemes and have signaled in no uncertain terms that they will challenge.

Back in the 80's and perhaps 90's, it was perfectly acceptable to undertake a transaction in which the economic result and the tax result varied because reading the law in a very literal fashion permitted that.

A case came along called Ramsay which HMRC thought was the answer. This was about substance over form. In short, look at the start place for parties in a transaction, then the end place and if there were steps in the middle that were there for tax purposes, you can ignore or rewrite them.

This case became a little too sweeping for the Courts and later came what is called purposive interpretation.

In short, establish the facts, review the law as intended and written as it applies to those facts, work out how the transaction answers to the law.

Literal interpretation is no longer a safe haven in Court. Some can argue that we should be entitled to rely upon the rule of law. That is true, but it's the law as interpreted by the Courts.

So it may be that this company is acting within the law and that the loophole they have found is legal, but that will not stop a Court deciding, on the facts, that the law was intended to catch the transactions and applying tax.

I wonder where the comapny will be when that happens?

[GreenMirror]

What Tripod have is legal. And the courts will probably rule it so.

However HMRC will retrospectively determine it is illegal.

[webberg]

What Tripod have is legal. And the courts will probably rule it so.

However HMRC will retrospectively determine it is illegal.

With respect I think that is incorrect.

The Courts will have no opinion on the legality of what is happening, unless what is happening is clearly illegal.

Instead, the courts could decide that the tax legislation should be interpreted in a way that does not produce the result claimed.

That does not mean that either party in the dispute has done anything illegal, just that the Courts prefer one interpretation over another.

There is no brightline threshold test here to determine which tax treatment is correct. It's all a question of opinion and analysis.

If you are tempted by this sort of arrangement, make sure that you subject it to as thorough an analysis as possible and if tax is not your area, take it to some body who is an expert for a view. If Tripod (and all the others out there in a similar space) are confident of their position, they should welcome such examination with open arms.

[Togoodtobetrue]

I suppose the issue then rather than whether it is legal is whether it is sound advice for healthcare workers to sign up for these schemes, if they go into it with their eyes wide open aware of the risks fair enough but some of these workers are being promised that it’s completely safe and could be facing massive bills in the future that they can’t pay.

[webberg]

I suppose the issue then rather than whether it is legal is whether it is sound advice for healthcare workers to sign up for these schemes, if they go into it with their eyes wide open aware of the risks fair enough but some of these workers are being promised that it’s completely safe and could be facing massive bills in the future that they can’t pay.

Totally agree.

We (and I'm sure others) would be happy to give a free opinion on anything anybody in this situation wants to share.

[Togoodtobetrue]

I had a really sad / bizarre conversation with a contractor this week who is being chased by hmrc for tax owed from using an umbrella that was an offshore loan scheme. Her tactic to deal with it was to shop round for an umbrella that can increase her take home pay now to repay the debt