HMRC Enquiry letters on Loans from EBT and other schemes

[pnr8uk]

A very positive recommendation. In fact, suspiciously so for a first poster...

If you are a genuine scheme or ex scheme user can I ask why you haven't joined the private garraway group? As you refer to pooling funds.

Happy to join show me how if you like or not if you don't want to. just wanting to help out others who may be stuck no agendas or suspicion warranted - that's all

Also I left Sanzar and returned two years later to Garraway - two different investigations.

[Old Kent Road]

Prn8uk... See Sanzar thread. It's littered with references to group membership, and instructions on how to join are re- posted every couple of pages, usually in bold red so they aren't easily missed. Group covers sanzar and Garraway.

[pnr8uk]

Prn8uk... See Sanzar thread. It's littered with references to group membership, and instructions on how to join are re- posted every couple of pages, usually in bold red so they aren't easily missed. Group covers sanzar and Garraway.

Thanks dude - will do

[dangerouswhensober]

HMRC wins appeal in film partnership scheme

The Times today (18th February) reports that HMRC yesterday won a Court Of Appeal judgement against members of the Eclipse 35 film partnership. The article (on page 2 of the paper, and also on-line) states that the CoA confirmed an earlier ruling (presumably UTT) that the partnership was not trading. As a result, almost 300 wealthy investors (including a couple of well-known football managers) are now required to pay tax on loans related to the schemes - the average individual tax bill is estimated at £1.3 million, including interest. The article states that the ruling is likely to affect 30 other Eclipse partnerships involving £600 million in disputed tax.

It's not clear whether FCP (who organised the Eclipse partnerships) will appeal to the Supreme Court.

IMO - Lucky for us EBT scheme members that we didn't get involved in those dodgy film investment schemes alongside all those shady celebrities ...

[dangerouswhensober]

Link to on-line report of this CoA decision ...

This is the link to this story as reported on-line today by the Telegraph:

Ferguson faces bill for film 'tax dodge' - Telegraph

[dangerouswhensober]

Comment by Rebus on this CoA decision

This is a quote from the Financial Times report of the same story - the last paragraph seems to be particularly ominous for us ...

Martin Taylor, head of client relations at Rebus, said the decision quashes any remaining hope that the investor may have that they will be able to receive the vast majority of the tax relief they had expected.

Rebus represents investors that have been mis-sold complex investment schemes.

“Rebus’s view is that investors will now face tax bills that are greatly in excess of their initial investment,” commented Mr Taylor.

“The result of this will be that many investors will experience a dramatic change in their personal circumstances. It is likely to mean that some may have to sell their homes, delay their retirements or in the worst hit cases the consequences of the decision may push some individuals into bankruptcy.

“In our opinion this decision now sets the tone for all future litigation relating to tax avoidance schemes (whether actual or perceived). It is a watershed moment as an indicator as to how the courts are likely to consider these schemes in the future.”

[jbryce]

This is a quote from the Financial Times report of the same story - the last paragraph seems to be particularly ominous for us ...

Martin Taylor, head of client relations at Rebus, said the decision quashes any remaining hope that the investor may have that they will be able to receive the vast majority of the tax relief they had expected.

Rebus represents investors that have been mis-sold complex investment schemes.

“Rebus’s view is that investors will now face tax bills that are greatly in excess of their initial investment,” commented Mr Taylor.

“The result of this will be that many investors will experience a dramatic change in their personal circumstances. It is likely to mean that some may have to sell their homes, delay their retirements or in the worst hit cases the consequences of the decision may push some individuals into bankruptcy.

“In our opinion this decision now sets the tone for all future litigation relating to tax avoidance schemes (whether actual or perceived). It is a watershed moment as an indicator as to how the courts are likely to consider these schemes in the future.”

Which is all well and good, but these schemes are very different from a lot of the loan based schemes that are rattling around at the moment. So, for example, can an APN be issued to a loan based scheme off the back of this decision? No - because it is a fundamentally different beast.

In the end, at some point an EBT may have its day in court - if it was executed well it may even succeed. Just because HMRC doesn't like, does not mean it will lose in court. Rangers is an example of that. Contractor limited companies are an example of that too.

[centurian]

WHS - this chap is drumming up business for his class action mis-selling claim - which means proving the point that the entire tax avoidance scheme business was utterly broken. He needs to show that they were sold a total dud - not sold a high-risk product that didn't pay off.

That isn't to say he's completely wrong - some types of scheme were on dodgy ground the begin with - the defence mechanism being "make it too complicated so that HMRC can't be arsed to fight it" rather than actually making it work - and for most of the noughties that approach worked. But HMRC are now calling rather than folding, which means we get to see who's really holding the good hands.

[centurian]

This is the link to this story as reported on-line today by the Telegraph:

Ferguson faces bill for film 'tax dodge' - Telegraph

I've just read the detail - rather than diverting income, they had to actually pay into the scheme - some of whom borrowed to pay in, so they could claim tax relief well in excess of their "investment" - kind of like, paying to buy a tax credit.

Now it looks like the tax relief has gone, probably penalties and interest as well to HMRC - and I wonder whether they will actually get their "investment" back from the scheme providers - who will no doubt have shelled out quite a bit in legal fees already.

Ouch....

At least with loan schemes, you do actually receive the "loan" money quite quickly - although obviously not as much as the gross income you might have received.

[Iliketax]

I've just read the detail - rather than diverting income, they had to actually pay into the scheme - some of whom borrowed to pay in, so they could claim tax relief well in excess of their "investment" - kind of like, paying to buy a tax credit.

Now it looks like the tax relief has gone, probably penalties and interest as well to HMRC - and I wonder whether they will actually get their "investment" back from the scheme providers - who will no doubt have shelled out quite a bit in legal fees already.

Ouch....

At least with loan schemes, you do actually receive the "loan" money quite quickly - although obviously not as much as the gross income you might have received.

They were never expecting to get their initial investment back.

I think that the economics for the scheme provider are quite interesting. And if the Revenue play hardball, even more interesting for the punters.

The individuals paid £50m of real money to the LLP. They:

1. Either: borrowed some more, paid it back as prepaid interest and advance payments with a guaranteed future payments to ensure that the loans were repaid meaning that (unless Barclays went bust) they would lose £50m.

2. Or: Paid £50m to shuffle some pieces of paper around.

In the real world, they effectively paid Disney £6m and this was "in effect the financial payment for Disney's participation". And Future Films got £44m for organising it all. Lucky Future.

Oh, and the people who put in the £50m will almost certainly lose all of that but, they thought, they'd get a tax £293m tax deduction.

Interestingly, the LLP is supposed to make £474m of future profits (with a £504m interest expense, so that they just lose the initial £50m). The Court of Appeal hints that this is investment income ("That aspect had the character of an investment. Mr Aaronson did not argue to the contrary"). If HMRC pursue the tax on this then the individuals will have lost their initial £50m plus another £213m at the current 45% tax rate. So if they were expecting to save £67m (40% tax on £293m less £50m) it could actually cost them £263m. Eeek.

As for this being a "watershed moment", that is bo!!ocks. Getting the facts together was hard for the FTT. But on those facts the decision for the Court of Appeal looks pretty straightforward.