IOM's Post Budget

[DonkeyRhubarb]

It's not quite what I said either. I said or implied that:
1. it is now viewed as wrong, just as if it were illegal
2. the definition of wrong is now based not on legality but on your effectiveness in reducing tax take from what they think it should be
3. they will legislate to make it illegal as they find it (or retrospectively "clarify" it)
4. they will allocate their resources to investigating you for it
5. they will regard those who do it as being more worthy of investigation in general (a threat if ever I heard one).

In my view, there are only 3 circumstances where it would be worth considering a scheme:

1) Your working practises are unquestionably caught by IR35 ie. LTD has a worse risk/return than using a scheme. (However, you would still be taking a chance if you spent the money.)

2) You intend to invest the tax "saved" for many years so you are covered in the event of having to pay it back (+interest)

3) You intend to bugger off abroad, somewhere HMRC's tentacles can't reach, and never come back

When I joined the Montpelier scheme in 2001, (1) seemed a certainty. However, with all the insurance, contract review services available now, it seems a lot easier to circumvent it.

I took option (2) to cover my backside.

I know a few people who have gone down route (3).

[expat]

Err that is not what they say at all.

Avoidance is LEGAL. They are just going to actively discourage and try and shut all avoidance down.

Again big difference.

Avoidance may result in HMRC asking for money to be repaid.

Evasion will result in HMRC taking legal action and a criminal record.

Nowhere does HMRC say avoidance is now illegal.

It's not quite what I said either. I said or implied that:
1. it is now viewed as wrong, just as if it were illegal
2. the definition of wrong is now based not on legality but on your effectiveness in reducing tax take from what they think it should be
3. they will legislate to make it illegal as they find it (or retrospectively "clarify" it)
4. they will allocate their resources to investigating you for it
5. they will regard those who do it as being more worthy of investigation in general (a threat if ever I heard one).

[BlasterBates]

Yes but the interest payments are very high.

The other thing is how legal is it? HMRC may choose to challenge it and then it becomes evasion, with penalties. Each scheme is slightly different, and if the accountant is not sufficiently expert enough, he may just cross over. You never know.

Many European contractors are now finding their tax avoidance schemes are tax evasion schemes. However compared to the Belgian or German aurthorities, HMRC is more lenient and tends to classify them as tax avoidance.

[prozak]

I've said this before: look at http://www.hmrc.gov.uk/avoidance/vision-strategy.htm and you will see that the old idea that avoidance is legal and therefore is allowed, no longer applies.

Err that is not what they say at all.

Avoidance is LEGAL. They are just going to actively discourage and try and shut all avoidance down.

Again big difference.

Avoidance may result in HMRC asking for money to be repaid.

Evasion will result in HMRC taking legal action and a criminal record.

Nowhere does HMRC say avoidance is now illegal.

[expat]

I've said this before: look at http://www.hmrc.gov.uk/avoidance/vision-strategy.htm and you will see that the old idea that avoidance is legal and therefore is allowed, no longer applies. Now you have an obligation to pay the amount of tax that HMG think you ought to pay: any way of reducing that will be treated as wrong, even if it is legal.

Avoidance, roughly speaking any action, whether legal at the time or not, which aims to reduce tax paid, and has the effect of making a "difference between the tax collected and the tax we think ought to be collected", will be targeted actively by HMRC:

The ways to achieve the strategy will include the following.

• We will quickly and expertly prevent and close down avoidance by effective legislation
• We will engage with our customers about how we address avoidance
• We will know what avoidance schemes or bespoke arrangements are being marketed and used
• We will know which organisations and individuals are more likely to carry out avoidance and organise our resources accordingly
• We will treat those who avoid their tax obligations as higher risk than organisations and individuals who do not

[prozak]

Not that I am a fan if IOM schemes, but they are not tax evasion, they are tax avoidance....

I agree.

Avoidance is very very different.

Promoting evasion schemes would not be legal and I imagine would be closed quick smart with prosecution of all involved.... instead of the avoidance where there is money repaid if HMRC win their arguments.

[blacjac]

Not that I am a fan if IOM schemes, but they are not tax evasion, they are tax avoidance....

[Bengal]

I don't think this is what was meant. What the government are trying to do is obtain agreements with other countries under which those countries will provide details of any bank accounts held in their jurisdiction by UK resident individuals so as to then tax the UK individual on monies earned/held off-shore.

The IOM structures are being attacked already and legislation was introduced last budget to tackle these - short various other posts on the forum.

[Crusoe101]

That they would be seeking out all tax evasion etc..etc

[sal626]

What specifically (in the budget) signals thier death?

Isn't too clear to me really....

[Crusoe101]

Does this signal the death of all IOM schemes?

Are they seen as even more risky than the previously have been?

What are your views?