BN66 - HMRC Admit Retrospection

[smalldog]

I received an email back from the treasury committee following my email to them asking on the situation. They pointed me to the written report in the previous posts link. I asked them if that now means its the end of the matter and that they accept the governments response, here is what they replied:

While the Committee publishes the Government's response to our reports it does not automatically mean we accept their view. With respect to double taxation treaties, the Committee has decided to look into this matter further as part of our inquiry into Offshore Financial Centres. I attach the press notice announcing this inquiry. The first public evidence session for this inquiry will take place on 1 July

for anyone thats interested here is the inquiry:

30 April 2008: For Immediate Release

Treasury Committee announces new inquiry into Offshore Financial Centres
and invites written evidence

New inquiry
The Treasury Committee has decided to undertake an inquiry into Offshore Financial Centres, as part of its ongoing work into Financial Stability and Transparency.
Invitation to submit written evidence
The Treasury Committee invites written evidence as part of its inquiry into Offshore Financial Centres. Suggested areas which written evidence might address are given below. Written evidence should reach the Treasury Committee by 12 noon on Thursday 19 June 2008.
Information about topics for written evidence
The Committee would welcome, in particular, written evidence that relates to the following questions:
• To what extent, and why, are Offshore Financial Centres important to worldwide financial markets?
• To what extent does the use of Offshore Financial Centres threaten financial stability?
• How transparent are Offshore Financial Centres and the transactions that pass through them to the United Kingdom’s tax authorities and financial regulators?
• To what extent does the growth in complex financial instruments rely on Offshore Financial Centres?
• How important have the levels of transparency and taxation in Offshore Financial Centres been in explaining their current position in worldwide financial markets?
• How do the taxation policies of Offshore Financial Centres impact on UK tax revenue and policy?
• Are British Overseas Territories and Crown Dependencies well-regarded as Offshore Financial Centres, both in comparison to their peers and international standards?
• To what extent have Offshore Financial Centres ensured that they cannot be used in terrorist financing?
• What are the implications for the policies of HM Treasury arising from Offshore Financial Centres?
• What has been and is the extent and effect of double taxation treaty abuse within Offshore Financial Centres?
• To what extent do Offshore Financial Centres investigate businesses and individuals that appear to be evading UK taxation?

[smalldog]

montp don't think any penalty will be due - all monies have been disclosed and the scheme itself been disclosed under the disclosure legislation back in 2004. HMRC have agreed so far.

thats exactly why I think they are on a sticky wicket trying to retro back further than 2004.

[BrilloPad]

For me the most important thing now is finding out if penalties are going to be applied. If demands are issued from HMRC next month, surely we are more likely to incur penalties if we refuse to pay.

40% of 250k doesn't sound good to me!!

I cannot believe that MONTP are still operating these avoidance scheme's that blatently are not going to work under the current labour government.

montp don't think any penalty will be due - all monies have been disclosed and the scheme itself been disclosed under the disclosure legislation back in 2004. HMRC have agreed so far.

[helen7]

"Pay up or we will charge you more!!"

Erm, this is the british government you are talking about here. I wouldn't be surprised if we get a note saying pay up now or 100% fine.

[smalldog]

For me the most important thing now is finding out if penalties are going to be applied. If demands are issued from HMRC next month, surely we are more likely to incur penalties if we refuse to pay.

40% of 250k doesn't sound good to me!!

I cannot believe that MONTP are still operating these avoidance scheme's that blatently are not going to work under the current labour government.

Helen, I doubt appealing against an assessment yields a penalty, just ignoring or refusing to pay maybe, but using their own appeals process surely doesnt.....that would be tantamount to bribery...

"Pay up or we will charge you more!!"

[helen7]

For me the most important thing now is finding out if penalties are going to be applied. If demands are issued from HMRC next month, surely we are more likely to incur penalties if we refuse to pay.

40% of 250k doesn't sound good to me!!

I cannot believe that MONTP are still operating these avoidance scheme's that blatently are not going to work under the current labour government.

[DonkeyRhubarb]

The Inland Revenue first learned of a scheme in 2001, successfully settling their enquiries with one of the original promoters of the scheme who in 2003 ultimately accepted that the income should be taxed in the UK.

I believe this refers to the Alan Jones scheme that he "stole" from MTM. He probably settled because he realised he didn't have the legal clout to defend it, and MTM were already gunning for him in the courts. As I recall, the people who joined his scheme were right p*ssed off for being sold down the river.

However, it begs the question. If they were successful with this promoter, then why not litigate against the other promoter(s)?

[smalldog]

Well, it seems we are going to be paying back this tax no matter what now.

what makes u say that? This is the governments formal response to treasury questioning the strategy. It doesnt mean it will happen....we have JR's etc to go thru yet..My actual point is more regarding the slight change of stance by HMRC, not their overall view. We have known they think its payable since the bill came out

[helen7]

Well, it seems we are going to be paying back this tax no matter what now.

[smalldog]

checkout this link, published 10th June. Written response to the treasury, cant be any doubting now that HMRC deem this retrospection and not clarification as they initially suggested, page 22:

http://www.parliament.the-stationery...sy/689/689.pdf

Interestingly they also admit 2004 was the date they decided to start action and that the course promoters admitted in 2003 it was taxable in the UK???!!! what the F?!!!!! Also interesting they only expect the retrospection to go back to 2001/2