Reply to: Directors will be held personally responsible

[Pragmatist]

Because you are making no sense. You keep mixing up definitions and drawing conclusions based on unrelated information.
That’s how I read it. Maybe that’s my fault rather than yours but it’s what I see.

If you point out which definitions I've mixed up, I will try to clear those up.

[Lance]

Why are you arguing?

Because you are making no sense. You keep mixing up definitions and drawing conclusions based on unrelated information.
That’s how I read it. Maybe that’s my fault rather than yours but it’s what I see.

[Pragmatist]

Fraud is a criminal offence.

Agreed.

Its is the "intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right."

Agreed -

Tax evasion = fraud.
Tax avoidance != fraud.

A charity demanding a criminal fraud investigation does not make loan schemes fraudulent. They are accusing the scheme promoters of fraud which is very different. An individual promoter may well act fraudulently to sell a scheme but that does not make the scheme fraudulent. That's the whole damn point of these schemes.

As I understand it, the "whole damn point of the schemes" is that they were legal loopholes - not criminal fraud.
i.e. They were tax avoidance, not tax evasion.


Many people who used loan schemes realised that receiving pay via a loan is a form of tax avoidance not intended by the government and have consequently settled their loans with HMRC

Human rights has nothing to do with fraud. You're conflating again. Stop watching so much TV and read a book FFS.

Where did I conflate previously?
Thanks.

An argument has been made that retrospective laws are a breach of human rights. Which may or may not be true, it's yet to be tested.

Retrospective legislation is not prohibited by human right law.
Retrospective Criminalisation is
This has been tested. (I have posted the link for you above with a British precedent)

The Huitson case was not considered against human rights law because....

I didn't assert that it was, I actually posted an extract for you demonstrating the opposite:
The judge also pointed out that retrospective legislation was not prohibited by human rights law, although there is a strong presumption against it.



It's illegal to make retrospective criminal laws. It's a violation of the ECHR.
Retrospective Criminalisation is against Article 7 of the Human Rights Act 1998 (which the Tories are going to scrap)

All you've done is cherry pick a few articles that you think are linked (god knows why you think that but there we go).
What is your point now other than you think loan schemes are fraud even though it is patently obvious they aren't.

So you are saying that it's patently obvious they aren't fraud - then explain can you have a criminal fraud investigation for a tax avoidance scheme?

And how have you jumped form governance of PLCs to loan schemes?

Let's try to understand each other on this first. I'm not interested in having an argument. Thanks

And why the chuff am I bothering to argue with a sockie?

I don't know what that means, and I don't know why you are arguing either. Why are you arguing?

[Lance]

This is probably a better example of what I mean:






Conservatives plan to replace "Human Rights Act 1998" with a "Bill of Rights", even if it means leaving the Council of Europe/ECHR

you're going round in circles.


Fraud is a criminal offence. Its is the "intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right."
A charity demanding a criminal fraud investigation does not make loan schemes fraudulent. They are accusing the scheme promoters of fraud which is very different. An individual promoter may well act fruadulently to sell a scheme but that does not make the scheme fraudulent. That's the whole damn point of these schemes.

Human rights has nothing to do with fraud. You're conflating again. Stop watching so much TV and read a book FFS.
An argument has been made that retrospective laws are a breach of human rights. Which may or may not be true, it's yet to be tested.
The Huitson case was not considered against human rights law because....

Human rights law did not, he [the judge] said, prohibit backdating in a case like this, where the arrangements were artificial and their only purpose was to minimise tax.

All you've done is cherry pick a few articles that you think are linked (god knows why you think that but there we go).

What is your point now other than you think loan schemes are fraud even though it is patently obvious they aren't.
And how have you jumped form governance of PLCs to loan schemes?
And why the chuff am I bothering to argue with a sockie?

[Pragmatist]

They were arrested for fraud. Not for loan charges.
A loan charge is not fraud in and of itself, but fraud is fraud. You can commit fraud while buying a potato.
Don’t conflate the two things. It’s over simplistic and wrong.

This is probably a better example of what I mean:

Loan charge: Tax compliance charity demands criminal fraud investigation into scheme promoters
Loan charge: Tax compliance charity demands criminal fraud investigation into scheme promoters

Tax compliance think tank TaxWatch is calling for a criminal fraud investigation to be launched into the promoters of disguised remuneration schemes to curb the continued proliferation of new tax avoidance arrangements

United Kingdom
Retrospective criminal laws are prohibited by Article 7 of the European Convention on Human Rights, to which the United Kingdom is a signatory, but several noted legal authorities have stated their opinion that parliamentary sovereignty takes priority even over this.

Conservatives plan to replace "Human Rights Act 1998" with a "Bill of Rights", even if it means leaving the Council of Europe/ECHR

UK Human Rights Act is at risk of repeal – here's why it should be protected – News and Events, Bangor University
If, in repealing the act and introducing a “British bill of rights”, the UK leaves the Council of Europe, it could cause a dangerous unravelling of the UK’s constitution. It could also remove another layer of international protection for the UK’s constitutional values. To do so at a time when much uncertainty remains (following the UK leaving the EU) would have far reaching consequences for protecting citizens’ rights against the state.

BBC News - Will retrospective taxes affect us all?
But the Huitson case is nevertheless worrying.

Is it the thin end of a very dangerous wedge, allowing HMRC to get its own way without bothering to argue its case in the courts?
Or will retrospection be used only exceptionally, most commonly in response to artificial tax planning schemes?

What is certain is that backdating legislation is a cheap, quick and certain way of closing a tax loophole, and it may be irresistibly tempting for the government to use the same method again.

[Pragmatist]

They were arrested for fraud. Not for loan charges.
A loan charge is not fraud in and of itself, but fraud is fraud. You can commit fraud while buying a potato.
Don’t conflate the two things. It’s over simplistic and wrong.

I'm not sure if you read the article:

Officers are investigating a number of alleged offences, including
conspiracy to cheat the public revenue;
conspiracy to evade income tax and national insurance contributions (NICs);
fraud by abuse of position and conspiracy to transfer, disguise and/or convert criminal property.

The interventions are the latest in a series where HMRC is investigating fraud offences related to disguised remuneration tax avoidance schemes.

Disguised remuneration schemes are contrived arrangements that pay loans in place of an ordinary remuneration, usually through an offshore trust, with the purpose of avoiding income tax and NICs. The loans are provided on terms that mean they are not repaid in practice, HMRC said.

[Lance]

Thanks - Just to be clear, I was aware of this, many countries have equivalents.

I was pointing out how it is adapted for use beyond it's original purpose and that HMRC have been doing similar things, in particular the rather infamous and increasing use of Ex Post Facto laws. ( I believe they have been criticised by the Counil of Europe for this)

For example:


My understanding was that the loan charge scheme was a grey area of taxation - not a crime and not fraud.
Admittedly, my grasp of the specifics of the whole loan charge business is weak

As an aside, you may find this interesting:

They were arrested for fraud. Not for loan charges.
A loan charge is not fraud in and of itself, but fraud is fraud. You can commit fraud while buying a potato.
Don’t conflate the two things. It’s over simplistic and wrong.

[Pragmatist]

No. Fraud has to be proven. HMRC have never, to my knowledge attempted to push fraud as well as IR35. They have little enough success winning IR35 cases and the burden of proof for criminal activity is far higher.

RICO is not a think in the UK. It's American.
If you want the UK equivalent it's called unexplained wealth. And HMRC have nothing to do with it.

Thanks - Just to be clear, I was aware of this, many countries have equivalents.

I was pointing out how it is adapted for use beyond its original purpose and that HMRC have been doing similar things, in particular the rather infamous and increasing use of Ex Post Facto laws. ( I believe they have been criticised by the Counil of Europe for this)

BBC News - Will retrospective taxes affect us all?
Human rights law

The judge also pointed out that retrospective legislation was not prohibited by human rights law, although there is a strong presumption against it.

For example:

HMRC arrests five over loan charge fraud

HMRC arrests five over loan charge fraud | Accountancy Daily

My understanding was that the loan charge scheme was a grey area of taxation - not a crime and not fraud.
Admittedly, my grasp of the specifics of the whole loan charge business is weak

As an aside, you may find this interesting:

U.K. Court Strikes Down "Unexplained Wealth Orders" By Parsing Facts and Making Value Judgments About Meaning of Corporate Complexity | Money Laundering Watch

U.K. Court Strikes Down “Unexplained Wealth Orders” By Parsing Facts and Making Value Judgments About Meaning of Corporate Complexity
The outcome seemed to turn on the inability or unwillingness of the U.K. government to meaningfully engage with, or try to refute, the alternative factual explanations offered by the defense for the (legal) source of the funds for the acquisitions

[Lance]

If one is assessed and found 'Outside IR35', but HMRC disagree, does that count as fraud? ( I appreciate you said PLC, but I'm aware of how the RICO statutes were adapted beyond their original intention for example)

No. Fraud has to be proven. HMRC have never, to my knowledge attempted to push fraud as well as IR35. They have little enough success winning IR35 cases and the burden of proof for criminal activity is far higher.

RICO is not a think in the UK. It's American.
If you want the UK equivalent it's called unexplained wealth. And HMRC have nothing to do with it.

[Scruff]

Limited Companies require no audit, therefore your Accountant does not express an opinion on your Annual Accounts.

[Pragmatist]

Thank you for the answers and clarifications.

Unless you're a director of a PLC indulging in fraud this makes no difference.

If one is assessed and found 'Outside IR35', but HMRC disagree, does that count as fraud? ( I appreciate you said PLC, but I'm aware of how the RICO statutes were adapted beyond their original intention for example)

https://www.taxjournal.com/articles/...-for-enquiries
On 22 October 2019, HMRC published a policy paper, HMRC issue briefing: reform of off-payroll working rules, about the April 2020 IR35 changes in the private sector.

HMRC’s paper states that it will only use information received after April 2020 to open an enquiry if it has ‘reason to suspect fraud or criminal behaviour’. The use of the words ‘fraud’ and ‘criminal behaviour’ are interesting in their own right. HMRC’s ‘behaviour’ categories for errors in its Compliance Handbook do not use these terms: instead, errors are categorised as ‘innocent, careless or deliberate’. In the past, deliberate behaviour was seen as akin to fraud. However, many who manage tax enquiries on a regular basis will testify that this is no longer the case. HMRC’s handbook was updated to remove the word ‘intention’ from the definition of deliberate (see CH81150).

[BlasterBates]

Unless you're a director of a PLC indulging in fraud this makes no difference.

[Lance]

This article is quite clear that it changes responsibly from the board to the directors. Which is not from accountants.

[ladymuck]

It's on a number of news outlets:
UK directors to face fines in major overhaul of audit rules - CityAM : CityAM
UK directors face strict new liability rules under major audit reforms - Eminetra.co.uk
https://www.bloomberg.com/news/artic...form-proposals

It looks like it's an overhaul of the audit sector so, as Lance says, small companies are exempt from audit so this shouldn't be an extra burden for contractors.

[Lance]

The accountant has never had liability unless they act unlawfully as far as I’m aware.

They could potentially be negligent and leave themselves open to a claim, but that’s different to them being liable to begin with.