Reply to: Government to ban avoidance scheme users

[malvolio]

If the GAAR makes it to Budget 2013, it will be labelled General Anti-Abuse Regulations. The target is the misuse or abuse of schemes meant for one purpose (EBTs, film investments and the like) by an articial construct aimed at avoiding tax. Most of Paerliament, except, perhaps the Shadow Economics Secretary*, have worked out that avoidance per se is not illegal, so rather than try and redraft several thousand regualtions and laws to limit it, they will create a seaparate mechanism to declare a given practice is unacceptable and you'll get done for using it.

The point is OurCo's conventional arrangements are demonstrably not artificial so won't be in scope.



*who is a poor deluded bint who asked in the House recently how many cases HMRC had taken to court over tax avoidance, only to be told that since avoidance is not illegal the total is precisely zero.

[escapeUK]

I start to read the link

"New rules that will allow government departments to ban companies and individuals which take part in failed tax avoidance schemes from being awarded Government contracts"

And thought doesnt apply. Providing services via a ltd company and paying yourself via dividends is not a failed tax avoidance scheme.

[ready_to_leave]

So where are all the HMRC staff going to sit from now on?
They lease most their buildings from the Mapley trust based in Bermuda.
HMRC explains offshore property 'mess': ePolitix.com

Maybe they will have to exempt themselves temporarily so they have an an office to sit in to then make an example of themselves.

The HMRC draft guidance does mention

"This new policy will apply to all central government above-threshold contracts advertised from 1 April 2013."

What the above threshold contract value is I don't know, but I seem to remember reading something somewhere about it being 2 million pounds.

Of course I won't stop some jobsworth issuing all contracts under the guidance

[BolshieBastard]

Remember that this is a consultation document.

The target is suppliers who are deemed to have used aggressive tax avoidance schemes, the target of GAAR etc. So clearly, if a contractor has used one of these offshore schemes, they are likely to be a target, subject to minimum values.

Contractors who legitimately trade through a limited company in the normal manner, ie, basically paying a salary, usual expenses and dividends etc, will not have an issue with regards to this legislation.

I admire your optimism.

The next question then becomes what is an acceptable salary in these anti avoidance enlightened times!

[Nixon Williams]

Remember that this is a consultation document.

The target is suppliers who are deemed to have used aggressive tax avoidance schemes, the target of GAAR etc. So clearly, if a contractor has used one of these offshore schemes, they are likely to be a target, subject to minimum values.

Contractors who legitimately trade through a limited company in the normal manner, ie, basically paying a salary, usual expenses and dividends etc, will not have an issue with regards to this legislation.

[LisaContractorUmbrella]

The HMRC draft guidance does mention

"This new policy will apply to all central government above-threshold contracts advertised from 1 April 2013."

What the above threshold contract value is I don't know, but I seem to remember reading something somewhere about it being 2 million pounds.

Of course I won't stop some jobsworth issuing all contracts under the guidance

£130k for supplies and services

[Acme Thunderer]

The HMRC draft guidance does mention

"This new policy will apply to all central government above-threshold contracts advertised from 1 April 2013."

What the above threshold contract value is I don't know, but I seem to remember reading something somewhere about it being 2 million pounds.

Of course I won't stop some jobsworth issuing all contracts under the guidance

[LisaContractorUmbrella]

I put a link in the public sector thread about this.

It applies (or will do) to companies and individuals.

Should imagine they'd have great difficulty getting anyone eligible to work for them unless they give some sort of amnesty!

Thanks BB

Yep does make you wonder doesn't it - can't see there being a Starbucks franchise in Government buildings any time soon

[BolshieBastard]

I believe this is aimed at the large professional bodies such as Price Waterhouse Coopers, KPMG etc rather than small operators, so I am confident it will not apply to most contractors.

The operators of offshore schemes are also unlikely to be affected as they are probably not trying to obtain government contracts!

I do think that it is evidence of the government's attack on aggressive tax avoidance schemes, I am sure we will see more in the Budget next month!

Its says companies and individuals so I dont think small opertors will be exempt.

[BolshieBastard]

from Public Sector Contract New rules use government buying power against tax avoidance - HM Treasury

Reading through the guidance, the supplies can be from individuals, partnerships or companies

I put a link in the public sector thread about this.

It applies (or will do) to companies and individuals.

Should imagine they'd have great difficulty getting anyone eligible to work for them unless they give some sort of amnesty!

[LisaContractorUmbrella]

Don't give them ideas!!

Just reading through the guidance notes again - this will apply to 'sub-contractors performing a significant part of the contract' . Just wondered what the position would be with contractors working through an agency - will the agency's tax position be at issue or will it be agency and contractors>

[Nixon Williams]

Along the lines of 100% of all earnings are payable to the Government who will then distribute it accordingly

Don't give them ideas!!

[LisaContractorUmbrella]

I believe this is aimed at the large professional bodies such as Price Waterhouse Coopers, KPMG etc rather than small operators, so I am confident it will not apply to most contractors.

The operators of offshore schemes are also unlikely to be affected as they are probably not trying to obtain government contracts!

I do think that it is evidence of the government's attack on aggressive tax avoidance schemes, I am sure we will see more in the Budget next month!

Along the lines of 100% of all earnings are payable to the Government who will then distribute it accordingly

[Nixon Williams]

I believe this is aimed at the large professional bodies such as Price Waterhouse Coopers, KPMG etc rather than small operators, so I am confident it will not apply to most contractors.

The operators of offshore schemes are also unlikely to be affected as they are probably not trying to obtain government contracts!

I do think that it is evidence of the government's attack on aggressive tax avoidance schemes, I am sure we will see more in the Budget next month!

[The Spartan]

I'm past caring. Won't be working for the governemnet again till they bring in a flat rate tax and get rid of NI. Or I may just leave the country. And take all my cash with me. Thre's plenty of places you can make a living and not need to work as much to keep yourself afloat. Especially if you don't need to go back to the UK again. Not so good if you intend to keep property.

Very true, be aware that new rules come into play in April to determine residency. Seeing as you mentioned property I can't remember what they are off hand but I know Lisa created a post with a link to the PDF draft

EDIT:
Found it
http://www.hmrc.gov.uk/budget-update...-test-note.pdf