HMRC Consultative Document - marketed tax avoidance schemes

[LisaContractorUmbrella]

Convict, I think you're seeing what you want to see. HMRC are most definitely referring to 'schemes' that are devised for the purpose of avoiding tax; Limited Companies are a perfectly legitimate trading vehicle and will not be affected by the legislation changes

[convict]

Convict, I think you're seeing what you want to see. HMRC are most definitely referring to 'schemes' that are devised for the purpose of avoiding tax; Limited Companies are a perfectly legitimate trading vehicle and will not be affected by the legislation changes

I guess I'm seeing a sledgehammer being used to crack a nut. Maybe they should refine the draft legislation accordingly and remove the wide-ranging potential for mis-application.

oh, and we already have GAAR and that should be enough to stop schemes. I'm not trying to defend the use of schemes, merely point out that as it stands, the proposed legislation can be applied in ways way beyond that.

[varunksingh]

All of this discussion around legal precedents and whether or not all EBT's work in the same way is pretty irrelevant as they were outlawed with the introduction of the Disguised Remuneration Legislation. The fact that people kept coming up with variations on a theme has probably contributed heavily to HMRC taking their current all encompassing approach

I will be very happy with HMRC if they agree with you. EBTs after 2010 Disguised Remuneration Legislation are very likely not to be successful. But this is unfair that without proving in court that EBT before Dec 2010 very legal they are finding a shortcut to get the tax they want. Quite a few legal precedents to support EBTs before Dec 2010. HMRC knows that otherwise why Disguised Remuneration Legislation!

[LisaContractorUmbrella]

I will be very happy with HMRC if they agree with you. EBTs after 2010 Disguised Remuneration Legislation are very likely not to be successful. But this is unfair that without proving in court that EBT before Dec 2010 very legal they are finding a shortcut to get the tax they want. Quite a few legal precedents to support EBTs before Dec 2010. HMRC knows that otherwise why Disguised Remuneration Legislation!

It doesn't matter whether it's fair or not - it's the law

[LisaContractorUmbrella]

I guess I'm seeing a sledgehammer being used to crack a nut. Maybe they should refine the draft legislation accordingly and remove the wide-ranging potential for mis-application.

oh, and we already have GAAR and that should be enough to stop schemes. I'm not trying to defend the use of schemes, merely point out that as it stands, the proposed legislation can be applied in ways way beyond that.

It is heavy handed, no doubt about that, but there are many different types of tax avoidance 'schemes' which use a variety of different types of taxation to give the tax advantage and any new legislation has to consider all sorts of possibilities. That doesn't mean that HMRC would attack existing, legitimate tax structures using new legislation just because there is a tiny possibility that they could - at the end of the day IR35 covers PSC's being used to avoid PAYE tax

[DonkeyRhubarb]

The devil is in the detail

When assessing the scope of the "follower" proposal it's important to refer to the actual draft legislation in Annex A of the consultation.

Don't just rely on HMRC's description in Section 3.

Remember, "assume" makes an ass out of u and me.

[VictorValiant]

Enquiry

According to the text in Annex A they can issue a "failure notice" purely on the basis that a Tax Enquiry has been opened with no further justification than that. It gives them "carte blanche" to force payment on the slimmest of premise. If that doesn't overload Royal Mail then I hate to think what will.

[DonkeyRhubarb]

According to the text in Annex A they can issue a "failure notice" purely on the basis that a Tax Enquiry has been opened with no further justification than that. It gives them "carte blanche" to force payment on the slimmest of premise. If that doesn't overload Royal Mail then I hate to think what will.

Not quite.

They would also have to cite a final ruling of a court in a related case and explain why it applies.

See "Content of failure notices" on page 5 of Annex A.

[varunksingh]

Not quite.

They would also have to cite a final ruling of a court in a related case and explain why it applies.

See "Content of failure notices" on page 5 of Annex A.

Court can be a FTT even when FTT rulings are not Binding.
AND
HMRC word will be last and no appeal possible until Court proves HMRC wrong

[VictorValiant]

Stand Corrected

I am happy to stand corrected.