Hoey - next steps

[DealorNoDeal]

I have heard the decision of Judge Andrews today in Hoey & the underlying FTT decisions in that case and Higgs (using Keith Gordon) and discusses their impact with my accountant and advisor.

Their view was that HMRCs discretion under s684(7A) means that even if you were successful in arguing that the sums paid to me were always earnings; HMRC will always be able to disapply the PAYE provisions to make me liable; be that in respect of re pre or post DR loans. Indeed the same is true of their arguments regarding the PAYE credit under Reg 185 where HMRC have repeatedly said that the exercise of discretion (which appears to have no time limit!) removes that credit. My advisor has therefore asked how your approach will help anyone unless Hoey is overturned. I understand that they may have a shortage of funds required to continue their JR whilst you have invoiced us for significant contributions toward litigation that has not yet been forthcoming despite numerous timeline promises. Will you be willing to contribute toward Mr Hoey’s appeal given that it will clearly affect us all? If not, why not?

Who is "you"?

[webberg]

I have heard the decision of Judge Andrews today in Hoey & the underlying FTT decisions in that case and Higgs (using Keith Gordon) and discusses their impact with my accountant and advisor.

Their view was that HMRCs discretion under s684(7A) means that even if you were successful in arguing that the sums paid to me were always earnings; HMRC will always be able to disapply the PAYE provisions to make me liable; be that in respect of re pre or post DR loans. Indeed the same is true of their arguments regarding the PAYE credit under Reg 185 where HMRC have repeatedly said that the exercise of discretion (which appears to have no time limit!) removes that credit. My advisor has therefore asked how your approach will help anyone unless Hoey is overturned. I understand that they may have a shortage of funds required to continue their JR whilst you have invoiced us for significant contributions toward litigation that has not yet been forthcoming despite numerous timeline promises. Will you be willing to contribute toward Mr Hoey’s appeal given that it will clearly affect us all? If not, why not?

With respect (and not knowing who you are or why you have not contacted us directly) I would disagree with your adviser.

Clearly I have no idea how well versed or otherwise that adviser may be in these matters, but it was and remains our view that the decision reached by the FTT on the discretion point is incorrect.

I have no idea what state the finances of "Team Hoey" might be but the JR journey for him is over and no amount of additional funding will resurrect it.

You read above that the UT hearing is still going ahead so it seems they have funds for that.

You'll also find that our request for contributions to third party legal costs was just that - a request. If you/you adviser has no faith in what we are doing, you are not obliged to continue with us. If that is the case, I suggest that a private exchange is better than a public one? Alternatively you can declare here enough about you so that I can identify you and I would be in a better place to comment?

Timelines on action I have discussed above, discussed previously and extensively covered in newsletters.

You will see from my response to Saleos above that we have differences in strategy and approach. I have also explained that Saleos advises the UT appeal is going ahead. The JR leg is for now over. Consequently I'm not sure what there is to contribute toward?

If you mean that we should be contributing toward a common litigation process, I'm afraid that is too late. The opportunity for that disappeared perhaps a couple of years ago.

If you mean that we should be contributing toward legal costs regardless, I would remind you that we have used our own funds already to pay for preliminary legal opinions and the like to get us this far.

If you mean that we should be a non profit organisation working without reasonable salary and with no staff/payroll, then I'm afraid that is not going to happen.

[Saleos]

Thank you for taking the time to reply.

You haven’t though addressed the fundamental question I posed. You’ve danced around the elephant.

Why, given HMRCs stated views and Judgements to date on s684(7A) is your own question of why “ limit the PAYE source argument to just one of those” in any way relevant”? As I’ve said, it matters not on whom the obligation to account for PAYE fell; be it end user, agency, UK or offshore intermediary, or Uncle Tom Cobleigh, if HMRC can simply “switch off” that obligation to use your own terminology. It’s akin to arguing whether it was the fall or the ground that killed a failed parachutist. It doesn’t matter, they’re still dead. As is your argument if s684(7A) stands.

And that is my point. The suggestion that the identity of the entity responsible to account for PAYE has any impact on the application of s684(7A) is a simply wrong IMO. And I am far from alone. If you disagree please do explain explicitly why. If you’re presenting these arguments in skeletons in forthcoming litigation they will hardly by a surprise to HMRC even if they do read these posts!

And you don’t have to share them here. If you send them to me directly and they hold any water I will quite properly post here confirming that you have done so and, with your permission, share them with Counsel taking forward an appeal behind which you will always be stuck. Now is not the time to keep your arguments hidden from all scrutiny if you genuinely wish to help taxpayers affected.

Thank you for your commentary Saleos. Your contribution to the discussion in this forum, which is more conducive to considered analysis than its 280-character counterpart, is appreciated.

Whilst our previous discussion and subsequent invitations and exchanges have not unfortunately led to any collaboration, we respect your knowledge and the fact that you were and are prepared to defend your clients.

We remain entirely unaware of whatever financial arrangements you have and this is in any event, not something we have or would comment on. If you are indeed working pro bono, then again, respect is due.

Discussing respect, it is also a fact that the adverse commentary on WTT and Big Group via social media have been entirely unhelpful. We have in the main chosen not to engage in these. It cannot be helpful to clients if they see professionals behaving this way.

I remain very much open to any public discussion that does not prejudice my clients, which I’m sure you will appreciate.

Regards your statements of fact;

1. I am aware that Counsel will be very influential in preparing arguments. I am aware that Counsel will also be instructed. I have not been involved in conferences with your Counsel and therefore cannot verify which of the two influences above may have taken precedence. I can say that Counsel will usually run the arguments they consider are best in the circumstances.

2. We have shared with our clients and here various thoughts and strategies usually in response to requests from external sources for us to provide information. This is always a balance. Our Counsel – of his own volition and without our instruction – contacted Mr Mullan. I’m not aware of etiquette between Counsel but at the time we were analysing the first Hoey decision and he considered it helpful -to him - if he contacted Mr Mullan. I understand nothing came of that request. It should be remembered however that Tribunal cases are heard in public and we therefore reject any accusation of “freeloading”.

You also note that I could interfere and offer Counsel and Instructing Solicitors our thoughts and views. That may be possible although I’ve never heard of it being done before, absent an invite. Being frank, I would have had reservations about this given previous rejections of our ideas and social media criticism.

Moving to the “elephant in the room”.

It is well known that HMRC read these threads and so nothing in the below is contrary to arguments we have not already raised with HMRC, nor told our clients.

We think it obvious that any transaction chain involving the flow of funds to a contractor, involves more parties than just the end client. Usually flows begin with the end client but then goes on to encompass, agency (sometimes more than one), promoter or party working for the promoter, some form of third party – often more than one entity – and then the contractor.

Why then limit the PAYE source argument to just one of those?

Indeed, one of the cases mentioned above is very much focused on a party other than the end client. Given that the decision there is not public, we don’t yet know what the Tribunal thinks of that. We can say that a senior barrister in this space considers that the “key” to resolution here lies in that argument.

Often the documented transaction chain is not matched by the flow of money. In those circumstances, it is contrary to the tax jurisdictional principle of “purposive interpretation” to slavishly assume that the documents show the true transaction. Instead a Judge is able (and usually willing) to interpret matters in a manner that suits him/her especially if those money flows – real evidence of action – allow them to arrive at a sensible decision. Look no further than Rangers to see evidence of this is action.

In the transaction chains above, aside from those schemes which claimed on no evidence at all that contractors were self-employed (a status routinely challenged by HMRC in general but conveniently here, allowed to pass unhindered), there is usually a party with a live PAYE scheme. Sometimes those parties were not UK resident. It will be hard for HMRC to argue that a non UK employer with a PAYE scheme reference which and remitted funds to the UK Exchequer, could be somehow excluded from liability by virtue of a discretion.

Close examination of both scheme operation and HMRC attention to process and the rule of law, exposes flaws. Often promoters and agencies shortcut money flows – money should (but does not) go to a third party and then be distributed. If money essentially arrives from end client and is turned around by agency/promoter without going to the alleged third party (which changes the label on the funds apparently), is a PAYE point established? If so, on whom?

Further HMRC has made multiple errors in their enquiry. Even those cases going into Tribunal, including Hoey, were found to have errors in terms of who is bound or not to the decisions. It has since emerged that HMRC has issued some section 684 letters disapplying PAYE – ten years too late and of very dubious provenance or force – but these are not universal.

We would agree therefore that we share a view that HMRC must be wrong. The above elements of this situation have not, from what we read or heard in Tribunal or JR, been addressed.

For all we know, there are reasons why these (and perhaps others) were not raised. What we do know however is that until these matters are examined in a Tribunal, the fight is not over.

WTT has always been careful to keep its clients appraised of the progress of enquiry. As you will acknowledge the time from scheme opening to FTT is long and often extended by HMRC in the hope that funds will dry up.

We have material from Penfolds from 2007. Hamilton from 2009. The first Tribunal was 2020. So yes, we have been pushing for hearings and did have case management hearings in April, May, June this year, all now postponed. We would have hoped to be in FTT by now, but sadly some of the pieces that need to be in place are not ours to control.

Penultimately, (and I thank all those who have read this far), our door remains open. We have seen advisers enter this space and we have always treated them with professional courtesy, even where for reasons of their own, we appear to have become the object of their ire. We remain of the view that coordination of effort is best for clients of all parties. We therefore welcome this sort of debate which may lead to that. Our door is open.

Finally, our focus remains on our clients. We are now unfortunately engaged on more than one front with the advent of loan repayment claims, but our route to tax resolution is clear – if delayed now by the pandemic. Some clients have left us to pursue other ideas or settlement. Some are engaged with more than one adviser. Some accept strategies without question, some ask questions all the time. Regardless we act for all those who wish to engage us.

[Saleos]

Indeed WebberG, here is your chance to step into the spotlight and be a hero. If you’re arguments are as compelling as to give a 65% prospect of success and you can convince RPC & Counsel of that Hoey could step aside. In that way you wouldn’t be hamstrung by a decision of a higher Court that wasn’t argued as you believe it should.

Or more succinctly, get on stage & show what you’ve got or stop heckling from the cheap seats.

Thank you for taking the time to reply.

You haven’t though addressed the fundamental question I posed. You’ve danced around the elephant.

Why, given HMRCs stated views and Judgements to date on s684(7A) is your own question of why “ limit the PAYE source argument to just one of those” in any way relevant”? As I’ve said, it matters not on whom the obligation to account for PAYE fell; be it end user, agency, UK or offshore intermediary, or Uncle Tom Cobleigh, if HMRC can simply “switch off” that obligation to use your own terminology. It’s akin to arguing whether it was the fall or the ground that killed a failed parachutist. It doesn’t matter, they’re still dead. As is your argument if s684(7A) stands.

And that is my point. The suggestion that the identity of the entity responsible to account for PAYE has any impact on the application of s684(7A) is a simply wrong IMO. And I am far from alone. If you disagree please do explain explicitly why. If you’re presenting these arguments in skeletons in forthcoming litigation they will hardly by a surprise to HMRC even if they do read these posts!

And you don’t have to share them here. If you send them to me directly and they hold any water I will quite properly post here confirming that you have done so and, with your permission, share them with Counsel taking forward an appeal behind which you will always be stuck. Now is not the time to keep your arguments hidden from all scrutiny if you genuinely wish to help taxpayers affected.

[webberg]

We could do this like professionals.

Let's set up a (virtual) meeting between us, our Counsel, you and your Counsel. Invite RPC if you wish.

We can have an exchange of expert views without the fetters of the confidentiality necessary in a public forum.

If that meeting comes to single decision, we can agree to share it here.

If that meeting fails to achieve a meeting of minds, we can continue to pursue our own strategies.

[Saleos]

Our Counsel’s views are in the public domain having been set out in skeleton arguments read in open Court. Your latest Counsel (whose instruction by you presumably post dates any 65% prospects of success opinion and whatever “other weapons” you refer to as they were not deployed in Higgs) has already exchanged skeletons with Rory.

I’m asking you to make the same contribution as all other parties involved in active litigation that have already exchanged “expert” views. Specifically to put your cards on the table and specifically to set out why you believe the identity of the party obligated to account for the PAYE is relevant. Your Counsel is well aware of Rory’s expert view - he can read it at his leisure. As can Counsel involved in the 3rd case. As Rory is theirs. The one “expert view” missing is yours.

Your strategy appears to rely on a smorgasbord of options being presented as the party liable to account for the PAYE. Or at least anyone but the end client that is actually deemed liable by s689 ITEPA. You’ve implied that Hoey has been argued very narrowly and that that has somehow had an impact on the decisions re s684(7A).

I’m asking, again, as politely as I can, that you to back that up with an explanation as to why you think someone else being relieved of the obligation would help? It does, to me at least, seem rather fundamental to your “resolution strategy” and you’ve posted that you think it important publicly. But refuse to explain why.

You have my email address and assurance that it will be treated in the strictest of confidence. Alternatively your current (not former) Counsel and Rory have already exchanged skeletons once and could readily do so again upon your instruction.

No need to keep hiding your light under a bushel Graham.

We could do this like professionals.

Let's set up a (virtual) meeting between us, our Counsel, you and your Counsel. Invite RPC if you wish.

We can have an exchange of expert views without the fetters of the confidentiality necessary in a public forum.

If that meeting comes to single decision, we can agree to share it here.

If that meeting fails to achieve a meeting of minds, we can continue to pursue our own strategies.

[webberg]

Is that a yes to a meeting or a no?

I'm not sure who you are referring to when you say "former Counsel" and "current Counsel"?

We have used the same Counsel since the beginning and have recently asked another Counsel to join us.

I'm also unclear why I would lay out my skeleton arguments in public prior to a hearing? Did you do that with Mr Hoey? If not, why am we being asked to?

I do have your email address. What I don't have is any trust in material being treated in confidence. Professional people don't have to like each other (although I stress that I have no personal bias here) but it is expected that we respect each other. I regret that being targeted on social media has rather dented that respect.

Therefore I suggested the meeting between our respective teams.

Yes or no?

[Saleos]

Our Counsel’s views are in the public domain having been set out in skeleton arguments read in open Court. Your latest Counsel (whose instruction by you presumably post dates any 65% prospects of success opinion and whatever “other weapons” you refer to as they were not deployed in Higgs) has already exchanged skeletons with Rory.

I’m asking you to make the same contribution as all other parties involved in active litigation that have already exchanged “expert” views. Specifically to put your cards on the table and specifically to set out why you believe the identity of the party obligated to account for the PAYE is relevant. Your Counsel is well aware of Rory’s expert view - he can read it at his leisure. As can Counsel involved in the 3rd case. As Rory is theirs. The one “expert view” missing is yours.

Your strategy appears to rely on a smorgasbord of options being presented as the party liable to account for the PAYE. Or at least anyone but the end client that is actually deemed liable by s689 ITEPA. You’ve implied that Hoey has been argued very narrowly and that that has somehow had an impact on the decisions re s684(7A).

I’m asking, again, as politely as I can, that you to back that up with an explanation as to why you think someone else being relieved of the obligation would help? It does, to me at least, seem rather fundamental to your “resolution strategy” and you’ve posted that you think it important publicly. But refuse to explain why.

You have my email address and assurance that it will be treated in the strictest of confidence. Alternatively your current (not former) Counsel and Rory have already exchanged skeletons once and could readily do so again upon your instruction.

No need to keep hiding your light under a bushel Graham.

We could do this like professionals.

Let's set up a (virtual) meeting between us, our Counsel, you and your Counsel. Invite RPC if you wish.

We can have an exchange of expert views without the fetters of the confidentiality necessary in a public forum.

If that meeting comes to single decision, we can agree to share it here.

If that meeting fails to achieve a meeting of minds, we can continue to pursue our own strategies.

[webberg]

Same post twice - an error?

I'm here until 5pm and then not until Sunday.

[bobbydazzler75]

So to clarify webber, you have nothing and want another free tutorial from those who actually have done something other than made up "weapons" whilst taking millions in a rebus mk2 style.

By way of contrast those who funded the Hoey LC JR were given access to Rory’s opinion BEFORE deciding whether to commit £1500 to an association that meant any unused funds would go back to them.

WTT clients have paid the same, plus VAT, without knowing what the actual arguments were, still don’t know now, and can never get the money back as it was invoiced as a fee for WTT.

And you want a free tax lesson from
Someone that actually knows WTF they’re doing!

The 65% is an absolute nonsense and every other tax advisor I've spoke to says this.

I agree with earlier poster that Phil M warned all about this a long time ago and was hounded out of here for speaking the truth.

Don't say you weren't warned everyone. Webber has history in this to say the least.
Done believe me? Well ask HMRC as they know BGs arguments and don't even consider it worthy of worrying about. You've been conned....again.

Unfortunately the cult remains strong and you will all no doubt only find out when it's too late.

I'm off now, feel free to ban me. Just don't claim you weren't told ...repeatedly...by numerous parties.