HMRC Consultative Document - marketed tax avoidance schemes

[Dylan]

Think HMRC are unsecured creditors in the event of bankrupcy, ie the lowest status in terms of getting paid.

[DonkeyRhubarb]

+1. Hector is using the public's current dislike of / the publicity around big corporate tax avoiders to railroad through fundamental changes. They seem to have got their timing intentionally perfect....

Although the writing has been on the wall for while.

Some people back in 2008 said that BN66 was just a one-off...

[lfcynwa]

Question from a Simpleton

1) As it stands currently, if say HMRC has sent a bill for e.g £24k and appeal (EBT) fails, would it be possible to re-pay directly to HMRC at say £1000 per month for 2 years (plus interest) and would it incur penalty charges also !?

2) If above bill goes through does everything have to be paid within 90 days or can you offer a re-payment like I detail in item 1 above!?

Surely if appeal fails must be better for HMRC to have an agreement with each individual that can be paid rather than have to go bankrupt!?

[eek]

1) As it stands currently, if say HMRC has sent a bill for e.g £24k and appeal (EBT) fails, would it be possible to re-pay directly to HMRC at say £1000 per month for 2 years (plus interest) and would it incur penalty charges also !?

2) If above bill goes through does everything have to be paid within 90 days or can you offer a re-payment like I detail in item 1 above!?

Surely if appeal fails must be better for HMRC to have an agreement with each individual that can be paid rather than have to go bankrupt!?

2 would be reliant on good will from HMRC to avoid those penalty clauses being invoked. I think you would be better to find a loan, pay all the tax within the 90 days and then start paying that loan off....

3) HMRC will probably not mind a few people going bankrupt (and may publicize it as they do on the qt when celebs go that way). They want the money, they don't care about the subsequent pain (and loss of tax revenue) that it may cause....

[lfcynwa]

would be reliant on good will from HMRC to avoid those penalty clauses being invoked. I think you would be better to find a loan, pay all the tax within the 90 days and then start paying that loan off....

Is that the answer / suggestion only if the 90 day bill is passed? and yes appealing to goodwill....wish us luck!

[malvolio]

Think HMRC are unsecured creditors in the event of bankrupcy, ie the lowest status in terms of getting paid.

No, the sequence is the liquidators (if any), then HMRC, then secured creditors, then everyone else.

Most of these points would be a lot clearer if you work on the correct assumption that tax is HMG's money, not yours or YourCo's. How much tax that represents, of course, is a different question.

[Saleos]

Cojak

The failure notice provisions and DOTAS extension are not limited merely to those arrangements involving EBTs but would capture any arrangement where there has been a FTT decision (or higher) where HMRC believe the principles laid down in that decision would apply to the arrangements in question or anything that was, or should have been, disclosed in DOTAS.

So before anyone not involved in EBTs rests comfortably on laurels consider this.

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.

There was a debate on this thread last night which I have moved to http://forums.contractoruk.com/accou...trusts-17.html

If you want to continue the debate, do it there. Any further debate here will be removed and sanctions may be deployed.

[Saleos]

I think you fail to point out that many on this forum were in arrangements BEFORE Part 7A ITEPA 2003 was introduced.

I agree that after 9 Dec 2010 EBT schemes are highly likely to be caught by the disguised remuneration rules but those provisions DO NOT apply to loans made before that date (unless something further is done to create a relevant step).

The Rangers case is significant and is not currently an HMRC victory but, regardless, the disguised remuneration legislation will apply to loans through EBT's:

The legislation applies where (s 554A):

there is an arrangement which relates to an existing, former or prospective employee;
it is, in essence, a means of providing rewards, recognition or loans in connection with employment;
the 'relevant third party' operating the arrangement takes a 'relevant step; and
it is reasonable to suppose that, in essence, the step is pursuant to the arrangement or there is some other connection between them.
When the legislation applies, the value of the cash or assets which are the subject of the 'relevant step' is treated as employment income (s 554Z2), subject to PAYE and NIC (s 687A and s 695A).

[cojak]

HMRC Consultative Document - marketed tax avoidance schemes

Cojak

The failure notice provisions and DOTAS extension are not limited merely to those arrangements involving EBTs but would capture any arrangement where there has been a FTT decision (or higher) where HMRC believe the principles laid down in that decision would apply to the arrangements in question or anything that was, or should have been, disclosed in DOTAS.

So before anyone not involved in EBTs rests comfortably on laurels consider this.

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.

Then I suggest you post a summary of the issues at stake in the Accounting/Legal forum, in a manner to interest those not in EBTs, as most posters won't bother reading anything in this forum.

IR35 is what interests most on here - look at the issue from that pov.

[Dylan]

No, the sequence is the liquidators (if any), then HMRC, then secured creditors, then everyone else.

Unless I'm reading this wrong you are 10 years out of date.

Final Distribution and application of assets in bankruptcy cases

Specifically "Abolition of crown preference and remaining preferential creditors"

and

"HMRC are non-preferential ordinary unsecured creditors"