HMRC Consultative Document - marketed tax avoidance schemes

[varunksingh]

Copy paste from his post:
"
In Arctic Systems the House of Lords found that there was a settlement: Mr & Mrs Jones escaped tax only because they also held that the gift of a share was more than a gift of capital and thus fell within the spousal exemption.

But it is wrong to assume that means that contractors in their own limited companies are free from worry or that HMRC might not seek to issue failure notices based on subsequent cases such as HMRC v Buck, HMRC v Bird, HMRC v Bingham where where that spousal exemption was not a saviour.

I make this point merely to highlight that it is wrong to brush this aside as merely an issue for those in EBTs. The accelerated payment provisions will give HMRC great powers to force taxpayers to pay any tax under dispute by subjectively applying failure notices based on cases that you or I may not think immediately relevant. Remember under the proposals taxpayers have NO right of appeal when issued with a failure (or follower as the consultation document calls them) notice."

What percentage of Contractor limited companies are run together by husband wife teams? And how r they protected. Idea here is not to argue or spread rubbish which someone has to shoot down. Idea is discuss and correct each other's understanding if one is wrong. Explain the rational against above and I will stand corrected.

[cojak]

Eek go back and read saleos post and tell me how u r sure that it is not going to affect Ltd co. If people don't want to see it then other matter. I'll stop arguing on this point.

If Saleos wants to post how this affects Ltds regarding IR35, (which what the readership of this forum is mainly interested in) he is welcome to do so.

There are a few who may be affected by spouse share-splitting, but most of us don't do that and so don't care so much.

In the meantime, it does not affect Ltds because Section 9a relates to sole traders and Individuals see https://www.pcg.org.uk/tax-investigation-faq

(Oh, and while you continue to push the Ltd angle, I will continue to allow eek to repudiate it.)

[DonkeyRhubarb]

Couple of articles worth reading

consultation document | Let

Untitled Document

[eek]

But it is wrong to assume that means that contractors in their own limited companies are free from worry or that HMRC might not seek to issue failure notices based on subsequent cases such as HMRC v Buck, HMRC v Bird, HMRC v Bingham where where that spousal exemption was not a saviour.

I make this point merely to highlight that it is wrong to brush this aside as merely an issue for those in EBTs.

Taking the last point first. No EBT are on the dubious side of tax law. Always have been, always will be especially when the people using them are directly earning the money going into and out of them.

Now lets look at the examples you quote without details to show why you are wrong

Buck V HMRC

Husband held 9999 shares and wife 1 share in jointly owned company. The husband waived any right to dividends. In 1999 the directors declared a dividend of £35k per share to be paid out of reserves of around £46k. A similar arrangement was made in 2000. It was noted that the company had insufficient reserves to pay dividends of this magnitude as without the waiver the company would have required some £300m of reserves.

The Commissioner held that the waiver arrangement fell within the definition of settlement in S660G(1) ICTA 1988 and that it arose from property in which the husband had an interest. The exclusion offered by S660A(6) ICTA 1988 did not apply as there was no outright gift, merely a one-off waiver.

The waived dividend was clearly designed to dodge tax, not reflect the risk of being a contractor.

Mr P A and Mrs F J Bird v HMRC (SpC 720)

An allotment of shares in a company then owned by a husband and wife was made to minor children at par and dividends subsequently paid. The allotment gave the children a 60% holding in the company.

The Commissioner found that this was an arrangement within the scope of the taxation of settlor provisions and that the dividend income of the children resulting was properly assessable as income of their parents.

Not exactly a common state of affairs...

AJ Bingham v HMRC TC02528 - this is more recent but its worth reading here

Here the money was split multiple ways between husband, wife and children) ending up in accounts still controlled by the husband / father... The income split also differed year on year to reflect changes in other income and explicitly minimize the tax paid.

Not one of the examples you give relates directly to the Arctic case. Its all (blooming stupid) variations (two of which include children) to minimize tax paid...

Are there any other cases you would like to quote for me to repute and allow me to continue making you out to be the tax avoiding trolling scaremongerer you appear to be.

[varunksingh]

Are there any other cases you would like to quote for me to repute and allow me to continue making you out to be the tax avoiding trolling scaremongerer you appear to be.

I would have discussed further if it was not name calling. Like you, HMRC has declared myself and 65000 like me to be criminals and make it look like retrospective legislation will only apply here and NEVER AGAIN, ESPECIALLY TO LTD Cos.

So instead of wasting my time with you, it is better I work hard and prepare to pay HMRC. Courts will prove later. If I have done wrong I will correct it. And if courts later prove I have not, gr8. So no more on this topic after this from my side.

[eek]

I would have discussed further if it was not name calling. Like you, HMRC has declared myself and 65000 like me to be criminals and make it look like retrospective legislation will only apply here and NEVER AGAIN, ESPECIALLY TO LTD Cos.

So instead of wasting my time with you, it is better I work hard and prepare to pay HMRC. Courts will prove later. If I have done wrong I will correct it. And if courts later prove I have not, gr8. So no more on this topic after this from my side.

I don't think describing you as a trolling scaremonger is unfair or unjust. You didn't understand the differences around Section 9a (scaring some rational posters with your false information) followed by a secondary attack using incorrectly specified tribunal cases without the details that showed why they were lost (only 1 was an S660 case and no rational person would think that dividend waiver was anything other than a tax dodgy). Everything you posted was inaccurate and wrong, so calling you a troll is fair (you wanted a response) and scaremongering is also fair (you posted inaccurate information to scare people).

As for HMRC calling people criminals, they haven't. What they are saying is that they want the tax money owed sooner rather than later. And its not like the SN66 people (I feel sorry for) who used legitimate tax plans of the time (only for HMRC to decide that they wouldn't lose by trying to retrospectively change the law to catch them out). Your case is one where HMRC are legitimately winning case after case, and so feel they shouldn't have to wait until being paid.

[varunksingh]

I don't think describing you as a trolling scaremonger is unfair or unjust. You didn't understand the differences around Section 9a (scaring some rational posters with your false information) followed by a secondary attack using incorrectly specified tribunal cases without the details that showed why they were lost (only 1 was an S660 case and no rational person would think that dividend waiver was anything other than a tax dodgy). Everything you posted was inaccurate and wrong, so calling you a troll is fair (you wanted a response) and scaremongering is also fair (you posted inaccurate information to scare people).

As for HMRC calling people criminals, they haven't. What they are saying is that they want the tax money owed sooner rather than later. And its not like the SN66 people (I feel sorry for) who used legitimate tax plans of the time (only for HMRC to decide that they wouldn't lose by trying to retrospectively change the law to catch them out). Your case is one where HMRC are legitimately winning case after case, and so feel they shouldn't have to wait until being paid.

I guess being quite might give a wrong signal. So let it continue.

Can you please tell me which case HMRC are legitimately winning case after case? If you cannot then I guess all names you have given me will apply back. But what I would request is lets discuss and If I am wrong then please correct me instead of calling names. I am not fighting here. Will accept my mistake if I am wrong with you and with HMRC as well. If I have to sell myself and pay RIGHTFUL tax I would. I am not saying that.

Recent cases from HMRC in news are
1) Boyle - Which was not even an EBT, Forex even did not exist but should apply to ALL EBTs as per HMRC!
2) AAM - Giving Bonues through EBT to companies in individual names with full access to those funds by those company directors. But it should apply to ALL EBTs as per HMRC!
3) Rangers where HMRC lost should not even be mentioned which was an EBT and was giving Loans. And I know at least one argument why my EBT would be more by the law compared to Rangers.
4) I am not going to older cases at all where HMRC had lost. Lets just keep to above three

Now as you proved above all the cases I mentioned are different from Arctic and I AGREE 100%. Similarly Boyle and AAM are different to Rangers and MAY be VERY different to other EBTs.

Now as per HMRC's new condoc, NO ONE WILL HAVE THE RIGHT TO APPEAL once a follower/failure notice has been issued. HMRC MIGHT says Boyle's or any other case should apply to EBTs and all users have to pay. No tax payers get the right to prove that your case is different. If they can do that then why can't they do this to other case which you have rightly proved are different? And that is the whole point - How HMRC can use this legislation.

Second point is retrospective nature of legislation. If that is allowed than what is legal and rightful tax planning today does not make a difference because no one knows what HRMC might change tomorrow. So as per natural justice it should not be allowed and EVERY TAX PAYER should understand this. If all are happy and say retrospective legislation should be allowed than ok. But you cannot ignore and say that government can do retrospective legislation and it will not affect us ever because we run a ltd co.

[eek]

Sadly I've been asked not to reply as I am upsetting the residents......

[malvolio]

What you continue to ignore is that it's not about the legality of the scheme, its about whether or not you are entitled to use it, regardless of its precise structure. Retrospect is not the issue either.

HTH. BIDI.

[cojak]

Sadly I've been asked not to reply as I am upsetting the residents......

You are welcome to continue here eek http://forums.contractoruk.com/accou...trusts-17.html