"We weren’t trying to avoid tax – but now our lives are in ruins"

[Snooky]

Interesting article in the Telegraph https://www.telegraph.co.uk/money/ta...s-are-in-ruins

Non-paywall version available at https://archive.is/49r5Z

[BigDataPro]

Interesting article in the Telegraph https://www.telegraph.co.uk/money/ta...s-are-in-ruins

Non-paywall version available at https://archive.is/49r5Z

I feel bad for those who thought it was legit. Wondering why HMRC allow it to happen if it was illegal? If HMRC warned about these schemes earlier, I am sure at least 50% wouldn't have got involved in the first place.

[BigDataPro]

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[woody1]

I'm not convinced that a lot of people weren't trying to avoid tax. Some may have ended up in schemes without really knowing but the sales pitch with all of them was "pay less tax, take home more". Although I accept that people weren't to know that the assurances that it was legal, QC approved etc, would prove to be utterly worthless.

Having said that, HMRC were utterly inept at dealing with the schemes over nearly two decades. And no doubt they're competence isn't much better now.

Unfortunately, HMRC have form when it comes to royally screwing up and then asking for (retro) legislation to clear up their mess.

[malvolio]

I feel bad for those who thought it was legit. Wondering why HMRC allow it to happen if it was illegal? If HMRC warned about these schemes earlier, I am sure at least 50% wouldn't have got involved in the first place.

It's difficult. You have to sympathise with people who have had their lives ruined by following professional advice - as it was sold to them by a variety of snake oil salesmen. Equally, while everyone is responsible for their own taxes being paid on time in full, the system is so ridiculously complex it is not surprising that many just threw up their hands and left it to an "umbrella" to deal with.

There were lots of dire warnings, from about 2008 at the latest, but HMRC made no attempt to put these out in detail to all tax payers so unless you followed sites like this one, you were completely in the dark until it was too late.

If HMRC actually admitted that tax is difficult (and a bloody long way from their own "Tax is not Taxing" mantra) and took some care over their activities those people might not have been caught out. We desperately need a new Lawson to kick HMT in the balls, instead we get Hunt and, any minute now, Reeves. 'Nuff said.

[Snooky]

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That's why I also added this

Non-paywall version available at https://archive.is/49r5Z

[BigDataPro]

...
There were lots of dire warnings, from about 2008 at the latest, but HMRC made no attempt to put these out in detail to all tax payers so unless you followed sites like this one, you were completely in the dark until it was too late.
...

Spot on!

[jamesbrown]

Tricky, because if covers a few different groups: those that should've (and could've) known better (e.g., seasoned contractors); those that really weren't in a position to know better and trusted "professional" advisors (e.g., healthcare workers) and those that absolutely knew what they were doing and took a calculated risk. The level of blame/sympathy varies between these groups, although I appreciate that HMRC will argue "ignorance is no excuse" and the general public are also unlikely to make fine distinctions. It must be said, though, that you did need to be extremely credulous to fall for the promises made - but the penalty for being credulous is, arguably, much too high, especially the retro element.

[dammit chloe]

When you consider how unsettled the law was ( 2010 was arguably when the first clear and legislative statement was made ) I'm not sure credulity comes into it. When something is mass-marketed it tends to have gravitas if not challenged quickly and with prejudice.

As for tax avoidance, it depends on a lot. When I was involved in the early 2000s the comparator was a scheme ( approx 80% return to the user depending) or Ltd Co ( approx 80% return to the user depending ). So there was no real incentive there. Now compare it to being inside IR35 and it does become more incentivised. HMRC said at one point 80% of those who were in the one-man Ltd Co group should have been classed as inside IR35 so they were avoiding tax too.

It's a strange game that is being played with obtuse and flexible rules and judgements. For me, as a then first time accidental contractor I tended to the scheme because it was less friction more than anything else. I did as much due diligence as my knowledge allowed. There wasn't the wealth of information out there in 2001 to offer a sufficient warning.

[jamesbrown]

I do sympathise with the degree to which you've all suffered for your mistake. There may be a case that it was easier to miss earlier on. However, for many, many years the majority of these schemes were marketed to the credulous with phrases like "HMRC approved". Anyone spending a few minutes looking at this would immediately realise that HMRC approves nothing. As I said, the level of blame varies quite a lot among those affected, but there were certainly many people that were, bluntly, not too clever and many others who were taking a calculated risk. As it turns out, those calculations were completely wrong because of the punitive way this was legislated against and the complete lack of care and compassion shown by HMRC w/r to taxpayers vs. those promoting avoidance. A lot of this nuance is lost, of course, because there are many vested interests, but there is also no argument for a majority of those who were captured by this being blameless. Unsettled law would be a massive red flag to most people who looked at this more carefully.