HMRC Consultative Document - marketed tax avoidance schemes

[warlord]

I think I would not necessarily agree with Mr Warlord.

HMRC want the process to be a success. By that they want to agree with a large number of people that a very large amount of tax is due. That tax does not necessarily have to be paid immediately, so long as it's on the books as due. That way the Government can spend it on no doubt worthy projects even if it has yet to be collected.

At the same time they don't want a lot of sob stories getting into the press. Forcing a celeb into paying a million or so sells newspapers, but equally forcing members of "hard working families" into bankruptcy, benefits etc is not a good story for them. My personal view is that you'll find DMB reasonable and perhaps 3 year plans might become the norm.

Be warned though, if you had earnings of say £200,000, paid tax of £10,000 (fees of £10,000 paid will be ignored) and HMRC want say £70,000, they will assume that the tax saved has been used to acquire some form of asset. Might be second home, time share, car, jewels etc. In that case they would expect such asset to be sold to pay the tax. You would get time for that.

Above was also mentioned the possibility of a loan. There are a number of peer to peer lenders emerging in this area. I would expect those to multiply because this is potentially good business. It may be that specialist groups of lenders particular to sectors also appear - I can see the sense in that. It would be worth keeping your eyes open.

(And no, I don't work for or represent any such group, have no access to such funds and am not on any commission or retainer to direct anybody to such funds and in fact don't know of any active in this sector).

I cannot see ANY vendor lending me 100k to pay a tax bill (when I have no assets). But please if you find any post them here.

[retrodeath]

3 years would see me having to pay back 70k a year. After tax.

I don't have a house or tangible assets. I spent way too much when I did have money.

Maybe you're right, HMRC will offer TTP up to a certain length after which you're at the mercy of the loan sharks.

More than 3 years, unless you can spread it over a mortgage like term, is just going to leave you under immense pressure for whatever those years were.

Since my first letter back in 2009? I've had sleepless nights. I sought advice and was repeatedly told my position was water tight. No one could have forecast FN and APNs

Unless HMRC can come to a reasonable agreement I will be looking to sleep more easily at night. I'd rather be bankrupt and start again without the millstone.

[Rob79]

I cannot see ANY vendor lending me 100k to pay a tax bill (when I have no assets). But please if you find any post them here.

As I said, I don't know of any sufficiently advanced parties who do this.

Peer to peer lending in the area of lending to SME's etc are common (Google is your friend). Such lenders range from those just above Wonga to those who lend for specialist purposes such as high end residential bridging. Again, not suggesting that they are the entire answer.

Worth remembering that HMRC will charge you 3% interest. Even if you get no tax relief on that, it would be no more than say 5.5%. That is probably lower than most loan companies?

[Rob79]

3 years would see me having to pay back 70k a year. After tax.

I don't have a house or tangible assets. I spent way too much when I did have money.

Maybe you're right, HMRC will offer TTP up to a certain length after which you're at the mercy of the loan sharks.

More than 3 years, unless you can spread it over a mortgage like term, is just going to leave you under immense pressure for whatever those years were.

Since my first letter back in 2009? I've had sleepless nights. I sought advice and was repeatedly told my position was water tight. No one could have forecast FN and APNs

Unless HMRC can come to a reasonable agreement I will be looking to sleep more easily at night. I'd rather be bankrupt and start again without the millstone.

See my comment above on lenders/loan sharks etc.

If you have sought advice from a party who was regulated it's possible that you have a case against them and/or the Government. A legal case against an adviser who may not even still be around is perhaps a bit of a long shot. Going to the Government for statutory compensation involves various time limits being complied with. In the UK, a claim to the Financial Ombudsman Service should be started within 3 years of becoming aware that the advice was incorrect. That might be 3 years from your last advice that you were "water tight". If the adviser is not in the UK, then you need to investigate further.

In either event you should get some advice.

There are a number of "claims management" companies out there. Google is your friend.

Good luck

[flamel]

HMRC want the process to be a success.

My personal view is that you'll find DMB reasonable.

HMRC will assume that the tax saved has been used to acquire some form of asset.

In that case they would expect such asset to be sold to pay the tax. You would get time for that.

Don't make me laugh!
Let's have an analogy. I go to work and earn £20 which I spend on beer. The next day the govt changes its mind and says to pay back £10 and that I should have saved the money.
Oh dear. I just spent all my assets on beer, as I couldn't have foreseen the change of policy. The nature of economic transactions are such that I wouldn't have undertaken the work for £10 and the beer transaction wouldn't have occurred either. Now it's too late.
And that is the problem with retrospective action - the past can't be changed.

[Rob79]

Don't make me laugh!
Let's have an analogy. I go to work and earn £20 which I spend on beer. The next day the govt changes its mind and says to pay back £10 and that I should have saved the money.
Oh dear. I just spent all my assets on beer, as I couldn't have foreseen the change of policy. The nature of economic transactions are such that I wouldn't have undertaken the work for £10 and the beer transaction wouldn't have occurred either. Now it's too late.
And that is the problem with retrospective action - the past can't be changed.

Playing devil's advocate for a while, HMRC might argue "well if those on PAYE earned £30 and after tax had £10 to spend on beer and did, they were prudent. If you earned £30 but after tax had £20 it might have occurred to you that you had an unfair advantage and as such it would have been prudent to spend only £10 on beer until you know whether the difference was real".

The Government here argues that they have not changed their mind. They say the rules were always what they thought they were but some chose to believe a different interpretation. Until a Court says A or B is correct, we won't know. However in the meantime HMRC wants to hold the tax. Therefore it's not the tax rules that have changed but policy on holding tax in dispute.

Make no mistake, I think HMRC have got this wrong but unfortunately they have convinced both major parties that this is the way to go.

[flamel]

Playing devil's advocate for a while, HMRC might argue "well if those on PAYE earned £30 and after tax had £10 to spend on beer and did, they were prudent. If you earned £30 but after tax had £20 it might have occurred to you that you had an unfair advantage and as such it would have been prudent to spend only £10 on beer until you know whether the difference was real".

Therefore it's not the tax rules that have changed but policy on holding tax in dispute.

Make no mistake, I think HMRC have got this wrong but unfortunately they have convinced both major parties that this is the way to go.

If only HMRC made clear policy and laws it would be ok. Right now if I used a tax scheme I would have to put money aside to be prudent. This is different to five years ago when there was no such warning.
Sadly now, there are no assets, no provisions for potential losses etc as this wasn't foreseen by most.
Retrospective action like this has rarely been tried and will largely fail due to lack of available funds as HMRC just didn't think it through and didn't get their sums right.
Add to this the litigation costs and what we have is an "omnishambles".
For HMRC litigation costs see Rangers case - what a waste of time and money, and that's not the only case (see Singapore pension case - the judge referred to HMRC as "deceitful").
And in the Rangers case, if HMRC had won, how much money would they have received? Approximately zippo.

[malvolio]

If only HMRC made clear policy and laws it would be ok. Right now if I used a tax scheme I would have to put money aside to be prudent. This is different to five years ago when there was no such warning.
Sadly now, there are no assets, no provisions for potential losses etc as this wasn't foreseen by most.
Retrospective action like this has rarely been tried and will largely fail due to lack of available funds as HMRC just didn't think it through and didn't get their sums right.
Add to this the litigation costs and what we have is an "omnishambles".
For HMRC litigation costs see Rangers case - what a waste of time and money, and that's not the only case (see Singapore pension case - the judge referred to HMRC as "deceitful").
And in the Rangers case, if HMRC had won, how much money would they have received? Approximately zippo.

Let's get a couple of things straight...

HMRC doesn't fight cases to get the money back, they do it to set precedents to apply to other cases; Arctic cost an awful lot and was actually over around £7k in taxes. Losing Rangers merely means that (a) they will appeal the decision and (b) they will start another case with a slightly different target.

APNs are actually a valid tool and are nothing to do with retrospective charges. They relate to disputed tax (non-)payments and the basic idea is to safeguard the money before the defendant can move it offshore where they can't reach it. You guys are merely caught in the backwash.

And all schemes have been under threat for some years, and being actively prosecuted for at least the last two. Rightly or wrongly, the writing has been on the wall for a long time so claiming poverty simply doesn't wash.

[flamel]

APNs for future cases - agree it's a valid tool.
Applying them to the past is a waste in terms of cash collection as many just couldn't pay whatever the arrangements.
Settlement on beneficial terms where they may get something - or bankrupt people where they get even less is also a waste of time and money. What's the point?

[malvolio]

APNs for future cases - agree it's a valid tool.
Applying them to the past is a waste in terms of cash collection as many just couldn't pay whatever the arrangements.
Settlement on beneficial terms where they may get something - or bankrupt people where they get even less is also a waste of time and money. What's the point?

What's the point of any law?