Edm 1239 - the 2019 loan charge

[Calmbeforethestorm]

Out of curiosity, I was looking at the breakdown of cross-party support for EDM 1239. Lib Dems who kicked it off are on 10, Tories and DUP (whose government introduced the 2019 Loan Charge legislation) are at 13 and 6 respectively, Plaid Cymru have 3 and Greens a lone MP. That leaves Labour far and away the biggest supporter of the EDM, with 40 signatures to date. It seems that of all the political tribes, they have realised how employers, intermediaries and scheme providers are being given a free ride at the expense of the scapegoated ordinary freelance workers. Perhaps they also get the whole IR35 debacle and what this is going to mean for the flexible economy as a whole. One can hope that some significant opposition will come out of all this. The question is whether it will come in time, before April 2019 when the damage is done?

It could also be , that they just see it as a way of bashing the evil Tories.....and also, don't forget, the Tory MP's voted for the Finance Act containing the legislation.....they're probably embarrassed that they've been caught out voting for things without understanding them first.

[Groundhogdays]

Tory and Labour - Two Cheeks of the Same Arse?

It could also be , that they just see it as a way of bashing the evil Tories.....and also, don't forget, the Tory MP's voted for the Finance Act containing the legislation.....they're probably embarrassed that they've been caught out voting for things without understanding them first.

Of course, it was a Labour government that brought in IR35 historically, and set this whole wrecking train in motion, leading to the proliferation of loan schemes, then HMRC hampered because of a deliberate 'light touch' policy on big business, until handed a gift by the economic crash, and carte blanche to ask the desperate cash-strapped government of the day for any powers they want...so we have the 2019 Loan Charge, CEST and Public Sector IR35 (new, improved) and the prospect of a Private Sector rollout.

One way or another, freelancing is going to be very different in a few years time. Inevitable.

[Groundhogdays]

Another Look at the MP Sign-Up Rate

Till now we have 11% of MP signatures on EDM 1239 , is that enough to trigger discussion in Parliament ?

I know LCAG Loan Charge Action Group are doing great work but is that making any affect on HMRC , as have not seen any postings/replies from HMRC related to LCAG actions on either Twitter or this forum , unless I have missed.

After taking another look at who is and isn't eligible to sign the EDM, it seems that ministers, whips and private parliamentary secretaries have to maintain neutrality anyway. So that shaves off roughly 129 MPs, which would put the MP sign-up at closer to 14.39%. Not exactly a landslide by any reckoning, but if you look at the rate of sign-up since the EDM was raised, it is 36 signatures in May, 30 in June, and a further 9 in July (as at 17th July). That seems more significant, if the trend continues...


I can see that historically most EDM's go nowhere, but this one might have legs if people keep on at their MP's, and if the public petition shows enough public support for a change of heart. Maybe, but its going to be uphill, all the way. All eyes are on Brexit, so this is just a tiny distraction at the moment. HMRC's timing was very cunning.

[GreenMirror]

After taking another look at who is and isn't eligible to sign the EDM, it seems that ministers, whips and private parliamentary secretaries have to maintain neutrality anyway. So that shaves off roughly 129 MPs, which would put the MP sign-up at closer to 14.39%. Not exactly a landslide by any reckoning, but if you look at the rate of sign-up since the EDM was raised, it is 36 signatures in May, 30 in June, and a further 9 in July (as at 17th July). That seems more significant, if the trend continues...


I can see that historically most EDM's go nowhere, but this one might have legs if people keep on at their MP's, and if the public petition shows enough public support for a change of heart. Maybe, but its going to be uphill, all the way. All eyes are on Brexit, so this is just a tiny distraction at the moment. HMRC's timing was very cunning.

They have known about loan schemes since 1999 only only just choosing to act now.

[Groundhogdays]

Overplaying Their Hand?

They have known about loan schemes since 1999 only only just choosing to act now.

Yes, and there may be several reasons for that. I think HMRC were more or less kept on the leash while government wanted a light touch on commerce, regulation to attract investment and court popularity. Part of this included companies being able to minimise employer costs by using contractors. That was mostly under New Labour who famously left 'no money' for the Cons. Only it all got out of hand tax-wise, accelerating after the Financial Crash and morphing into the Gig Economy, where too many people were suddenly working as self-employed, under brollys, PSC, loan scheme arrangements and whatever - it all must have added up to a massive, spiralling tax loss for HMRC and government. Hence eventually this savage reaction and entrenched attitude with wagons circled. They are determined not to blink first, even in the wake of the much- publicised suicide risk.

Apparently, the LC can't be challenged legally until it has been enacted. There will be test cases, but slowed down in the courts and by then a lot of people will have been forced to pay up (at virtual gunpoint, as someone said) and those HMRC deals always make you sign away any right to get your money back, in case of future rulings in favour of the tax payer. Or those cases might be queued already, so there might be a glut of them in the quarter after April 2019. All at the same time as Brexit. I'm wondering at the timing of all this, and whether the government was wary of the European Court of Human Rights. They will have factored in the cutting off from that avenue of redress.

However, when it comes to elections and possible snap elections, government will be vulnerable. I think many more than the supposed 100, 000 individuals are affected by the LC. So I would multiply the potential loss of votes by 4 for a family, and then some for the extended family, friends and colleagues who will support them. That is where the government has overplayed it's hand, and especially if the retrospection is allowed to creep over into Public and Private Sector IR35. Then, it will really blow the doors open from being seen as a minority IT contractors' issue.

Maybe I'm being fanciful. Life goes on, and we'll see. Never a dull moment!

[QCApproved]

Please continue to do this and meet your MPs on the subject


Additionally -

Jacob Rees-Mogg is the fill in host for Matt Frei tomorrow on LBC Radio from 10-1 tomorrow
Let him know on air how you view the retrospective LC as a conservative policy or via twitter and other social media associated with the show.

[GreenMirror]

However, when it comes to elections and possible snap elections, government will be vulnerable. I think many more than the supposed 100, 000 individuals are affected by the LC. So I would multiply the potential loss of votes by 4 for a family, and then some for the extended family, friends and colleagues who will support them. That is where the government has overplayed it's hand, and especially if the retrospection is allowed to creep over into Public and Private Sector IR35. Then, it will really blow the doors open from being seen as a minority IT contractors' issue.

Maybe I'm being fanciful. Life goes on, and we'll see. Never a dull moment!

Indeed you are being fanciful. Very sad.

See how Gauke changed his mind between opposition and government below. However these hurdles can be overcome! LCAG is doing incredible work - but they need to keep pushing.

Gauke 2008
----------
The retrospective nature of the clause is deeply troubling. We fully share the Government’s concern about the issue that it is trying to address. There is a problem with the arrangements and it is perhaps more than just a kink in the system, as the Economic Secretary put it. Trading profits derived from UK land are being received tax free by UK residents and domiciled individuals because of schemes involving the establishment of offshore trusts, specifically in the Isle of Man.

The existing legislation appears to deal with the issue where the UK residents or domiciled individuals are partners in the relevant offshore funds, but it does not seem to work where the partners are trusts and the UK individuals are benefiting from the arrangement. There is not a problem with trying to address that point, but there is a point of principle here. The proposal essentially states that the amendments contained in the clause are to be treated as always having had effect. Either the law exists or it does not. It is troubling when the Government state that the law in the past is something because that is what they say it is now. That is essentially what subsection (4) states.

This is partly an issue of simple democracy. It raises issues about EU law and legitimate expectations. I shall not pursue that point, but the hon. Member for South-East Cornwall is right to raise it. In part, it cuts to the question of the certainty and stability of the UK tax system. For investors, the idea that UK tax law is likely to be changed retrospectively is unattractive, and the UK is, for various reasons, acquiring a reputation for having an uncertain and unstable tax system, which is bad for the UK economy.

Gauke 2012
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Laurence Robertson (Tewkesbury, Conservative)
To ask the Chancellor of the Exchequer how many people had to pay additional tax following the coming into force of section 58(4) of the Finance Act 2008; and if he will make a statement.

Hansard source (Citation: HC Deb, 18 June 2012, c723W)

David Gauke (Exchequer Secretary, HM Treasury; South West Hertfordshire, Conservative)
UK residents are taxable on their worldwide income wherever it arises—including situations where it arises by way of foreign partnerships. Section 58 of Finance Act 2008 was enacted to help put that beyond doubt and in so doing, made clear that a wholly artificial tax avoidance scheme involving a foreign partnership comprised of foreign trustees did not work. As section 58 retrospectively clarified existing legislation, its introduction had no affect on any taxpayers' tax position.

[Groundhogdays]

Fanciful, Sad - Moi?!

Indeed you are being fanciful. Very sad.

See how Gauke changed his mind between opposition and government below. However these hurdles can be overcome! LCAG is doing incredible work - but they need to keep pushing.

Gauke 2008
----------
The retrospective nature of the clause is deeply troubling. We fully share the Government’s concern about the issue that it is trying to address. There is a problem with the arrangements and it is perhaps more than just a kink in the system, as the Economic Secretary put it. Trading profits derived from UK land are being received tax free by UK residents and domiciled individuals because of schemes involving the establishment of offshore trusts, specifically in the Isle of Man.

The existing legislation appears to deal with the issue where the UK residents or domiciled individuals are partners in the relevant offshore funds, but it does not seem to work where the partners are trusts and the UK individuals are benefiting from the arrangement. There is not a problem with trying to address that point, but there is a point of principle here. The proposal essentially states that the amendments contained in the clause are to be treated as always having had effect. Either the law exists or it does not. It is troubling when the Government state that the law in the past is something because that is what they say it is now. That is essentially what subsection (4) states.

This is partly an issue of simple democracy. It raises issues about EU law and legitimate expectations. I shall not pursue that point, but the hon. Member for South-East Cornwall is right to raise it. In part, it cuts to the question of the certainty and stability of the UK tax system. For investors, the idea that UK tax law is likely to be changed retrospectively is unattractive, and the UK is, for various reasons, acquiring a reputation for having an uncertain and unstable tax system, which is bad for the UK economy.

Gauke 2012
----------
Laurence Robertson (Tewkesbury, Conservative)
To ask the Chancellor of the Exchequer how many people had to pay additional tax following the coming into force of section 58(4) of the Finance Act 2008; and if he will make a statement.

Hansard source (Citation: HC Deb, 18 June 2012, c723W)

David Gauke (Exchequer Secretary, HM Treasury; South West Hertfordshire, Conservative)
UK residents are taxable on their worldwide income wherever it arises—including situations where it arises by way of foreign partnerships. Section 58 of Finance Act 2008 was enacted to help put that beyond doubt and in so doing, made clear that a wholly artificial tax avoidance scheme involving a foreign partnership comprised of foreign trustees did not work. As section 58 retrospectively clarified existing legislation, its introduction had no affect on any taxpayers' tax position.

Interesting post - I'm still gauking. Janus-faced politicians are par for the course, are they not? Opposition is a different game from being in power. The political classes are assured that the general public don't have long memories for their flip-flopping policies.

Guess I'm just a glass half-full kind of chap. I have hope that something can come out of this mess, however I'm just not sure it will be in time for a lot of people to not get hurt.

I might be fanciful again here, but there appears to be a greater proportion of available MPs who have supported the EDM, than of general public who have signed up to the public petition thus far (I say proportionately, as it hasn't even hit 5000 yet, when interested parties are potentially 100,000+). I suppose it's been a slow-burner issue until recently.

[GreenMirror]

Interesting post - I'm still gauking. Janus-faced politicians are par for the course, are they not? Opposition is a different game from being in power. The political classes are assured that the general public don't have long memories for their flip-flopping policies.

Guess I'm just a glass half-full kind of chap. I have hope that something can come out of this mess, however I'm just not sure it will be in time for a lot of people to not get hurt.

I might be fanciful again here, but there appears to be a greater proportion of available MPs who have supported the EDM, than of general public who have signed up to the public petition thus far (I say proportionately, as it hasn't even hit 5000 yet, when interested parties are potentially 100,000+). I suppose it's been a slow-burner issue until recently.

Indeed. HMRC run the government. Labour approved the retrospection in 2008. My Labour MP was on the finance committee that approved it. He had no idea! And did not care either.

There are several things everyone should be doing: -
1. Contacting MPs
2. Tweeting
3. Signing petitions
4. Requesting details held by data protection every 40 days.

So far LCAG are doing a brilliant job. And HMRC are getting rattled - witness the 5 year TTP. Much much more is needed. A band wagon is building.

[Groundhogdays]

Lighting a Fire

Indeed. HMRC run the government. Labour approved the retrospection in 2008. My Labour MP was on the finance committee that approved it. He had no idea! And did not care either.

There are several things everyone should be doing: -
1. Contacting MPs
2. Tweeting
3. Signing petitions
4. Requesting details held by data protection every 40 days.

So far LCAG are doing a brilliant job. And HMRC are getting rattled - witness the 5 year TTP. Much much more is needed. A band wagon is building.

LCAG, agreed - love their work! I wouldn't like to have either Mel Stride or Jon Thompson's job.

It would be good if someone came forward with something useful on the LCAG's HMRC Whistleblowers forum, as I saw one or two tweets hinting at HMRC worker disgust at the 2019 Loan Charge. Not quite a smoking gun, but every little helps.

I was also interested in that other post that popped up today, about the disproportionate targeting of contractors for tax, when compared to employers, end-clients and agency hirers. Shining more of a light on that could be useful, since there has been a deafening silence from these parties so far. Maybe they're hoping the tulipstorm will pass them by, if it can be contained to contractors only.

The long hot summer and Brexit rolls on...