HMRC Consultative Document - marketed tax avoidance schemes

[LisaContractorUmbrella]

Only one question: Which “substantially similar” case will HMRC use to send follower notices to all EBT users? Boyle? Which was not a EBT! will become “substantially similar” to an EBT? May be Lisa Keeble can answer this as well for us.

If HMRC is going this route they should change their name to “substantially similar” to Loan sharks

They don't need case law for EBT's, these were outlawed under the disguised remuneration legislation which came in in 2011 http://www.hmrc.gov.uk/specialist/ebt-faqs.pdf. If they were to use case law to crack down further under the new legislation they could refer to Aberdeen Asset Management Employee Benefit Trusts: Another Win For HMRC - Brodies LLP Legal Resource Area

[varunksingh]

They don't need case law for EBT's, these were outlawed under the disguised remuneration legislation which came in in 2011 http://www.hmrc.gov.uk/specialist/ebt-faqs.pdf. If they were to use case law to crack down further under the new legislation they could refer to Aberdeen Asset Management Employee Benefit Trusts: Another Win For HMRC - Brodies LLP Legal Resource Area

Aberdeen Asset Management was paying Bonus through EBT not loans. Why Rangers case is not being referred here?

[Saleos]

Or Dextra? Or Sempra Metals? Or Scotts Atlantic?

Aberdeen Asset Management was paying Bonus through EBT not loans. Why Rangers case is not being referred here?

[LisaContractorUmbrella]

Aberdeen Asset Management was paying Bonus through EBT not loans. Why Rangers case is not being referred here?

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).

[mrs t]

Settlements

Even if, one was to settle, a lot of people myself included received a letter for 2010/2011 that quoted an absurd amount...5 times the amount on the previous years. That amount is completely inaccurate especially as I discontinued using the scheme in Dec 2010. How could that amount be disputed?

[LisaContractorUmbrella]

Even if, one was to settle, a lot of people myself included received a letter for 2010/2011 that quoted an absurd amount...5 times the amount on the previous years. That amount is completely inaccurate especially as I discontinued using the scheme in Dec 2010. How could that amount be disputed?

Have HMRC provided a breakdown for the calculation? If not you can request one.

[Gavtrudi]

Have HMRC provided a breakdown for the calculation? If not you can request one.

I'm in the same boat here with the HMRC quoting a huge amount for 2010 - 2011 even though I was only employed through Edge for 5 months of that period. Its a bit worrying that we might be asked to pay up the whole amount requested even though the figure is way off the mark, then having to fight to claim it back.?

[LisaContractorUmbrella]

I'm in the same boat here with the HMRC quoting a huge amount for 2010 - 2011 even though I was only employed through Edge for 5 months of that period. Its a bit worrying that we might be asked to pay up the whole amount requested even though the figure is way off the mark, then having to fight to claim it back.?

It may be that the notice you've received does not just include what HMRC perceive to be the underpaid amount of tax, it could also include interest and penalties

[convict]

Well I've responded to the consultation and urge other to do the same.

1. What happens if someone enters into scheme and is forced to pay, cannot and is bankrupted. The person now cannot continue in their line of business due to being bankrupt and is unemployed and their career is wrecked. Later it turns out the scheme was ruled legitimate. Will you pay them compensation for ruining their life?

"It is proposed, therefore, that HMRC will issue a Payment Notice to the best of
their judgement. "

2. HMRC have an opinion and an estimate of tax. So now they can make a guess, demand money and then maybe give it back depending on what they think:

"Where accelerated payments have been
demanded and paid, HMRC will repay if the taxpayer succeeds in litigation and
HMRC pursues an appeal, subject to an additional rule that will enable HMRC to
withhold a repayment on the grounds that HMRC has reasonable grounds for
believing that the tax may be at risk. "

The whole thing looks like a massive land-grab by HMRC who will resist amending this as much as possible. They've put the stake in the ground, and then put a building on top of it.

[ssbahra]

Like all of you guys, I'm seriously concerned about this recent legislation which stands to bankrupt me.

What also concerns me is the complete lack of responsibility by the providers of these EBT schemes who on the most part, have simply closed the shutters and started again somewhere else with absolutely no hint of support for the 1000's they have left out in the cold. I (like many others), used, and indeed paid to use, an EBT scheme in good faith as an efficient tax vehicle which claimed no risk / "100% compliance" with tax laws and legislation. You may argue that the legislation is "retrospective" but surely these companies must be held to account for their actions? After all, it was not us that invented or sold these schemes.

In my particular case, the EBT provider is still in existence (at the moment anyway and is trading with a different service) but i'd be particularly interested in anyone else who has raised this subject with their provider. Was there any hint of financial support in this type of situation? Surely their Professional Indemnity policy could cover this type of thing???

Its a complete joke. These companies are still in existence today, some under a different name and HMRC are going after the people who took out these schemes. What about closing down the companies that offered them? I am not paying them anything until they close down the company I was with. It is the fault of HMRC/governemnt that let these companies crop up in the first place. There wouldnt be this mess of these companies were not around.