Reply to: Government Consultation on tax avoidance schemes

[GB9]

Most of these schemes are evasion rather than avoidance so I can't see any problem with this. Anyone who uses some bizarrely concocted scheme to pay themselves deserves what they get.

[Zero Liability]

Not without looking into how widely they are used and why, no. It doesn't stop me from wondering what analysis to this effect HMRC and the government have to show, however.

[AtW]

I do wonder who actually sits there doing a cost-benefit analysis in terms of the impact on the economy for this sort of thing, though.

Do you forsee a major negative impact on the economy resulting from enforcement of existing tax laws?

I mean other than tax "avoidance" industry taking a big hit.

[Zero Liability]

They're a bunch of thugs in suits there to collect revenue for the government. To a degree, they have to abide by legal strictures, like the government itself does - to a degree. They have to or else there won't even be a semblance of the rule of law. I think there isn't much push-back against them when harassing contractors because we're a tiny minority of the population and we also don't have armies of lawyers to battle HMRC and ultimately humiliate them. They'll only bully people they can get away with.

I do wonder who actually sits there doing a cost-benefit analysis in terms of the impact on the economy for this sort of thing, though.

[TykeMerc]

Bear in mind this is a proposal but yes I stand corrected it does look as though they will send payment notices to users of DOTAS provided that there is already an ongoing appeal or enquiry - there is a comment:

"most structures that are notified under DOTAS have characteristics or hall marks of avoidance"

Certainly would seem that we are heading towards a guilty till proven innocent scenario

I've never been a scheme user (always smacked of too good to be true and I'm a cynic), but that bit is not only alarming, it's plain not on. Admittedly HMRC have already shown they're a bit short on the natural justice front by employing Tardis type legislation, but I don't see how they can apply a punishment regime without evidence of acknowledged wrongdoing.

[AtW]

It's easier just to slap everyone with a payment notice then it doesn't matter how long cases take.

This is the direct result of some people using stalling strategies - HMRC got tired of it, which was an entirely predictable thing, the only suprising element is why it took them so long to do it.

[DonkeyRhubarb]

It's not the "follower" measure that really troubles me. Yes, that's open to abuse but the proposed extensions on page 15 onwards are much more sinister.

"The application of accelerated payment to ‘follower notice’ cases, where the
underlying legal principle has been addressed by the court or tribunal, goes some
way towards rebalancing the economics of entering into avoidance schemes by
requiring some users to pay up front, but it does not go far enough. Therefore, as
announced at Autumn Statement, the Government wants to consult on widening
the criteria by which taxpayers are required to pay disputed tax earlier in the
process."

[CDJ]

I don't necessarily have a problem with this.. if there is sound legal principle that one scheme is materially the same as another, then sure..

But who judges that.. HMRC??

That doesn't seem fair to me.. where is the due process that all citizens have a right too? An independent judiciary that reviews a case and says yes this a follower.. fine.. but an arbitrary.. well it looks the same and we want the cash.. thats not due process.. that's tyranny..

Case in point - the Boyle case that HMRC is trumpeting - this is materially different to the typical EBT Scheme on many significant legal points - but in HMRC's view all EBTs are like Boyle.. (but not like the Rangers case - which they lost)..

This is dangerous stuff .. but who will speak on Contractor's behalf?? any industry bodies willing to consult with HMRC on this?

[DonkeyRhubarb]

HMRC's problem is that the 65,000 backlog will take forever to clear if they have to wait for cases to go to court.

It's easier just to slap everyone with a payment notice then it doesn't matter how long cases take.

I don't know what would happen in the situation where individuals would be bankrupted or forced to sell their home to pay the bill.

[LisaContractorUmbrella]

Yes but HMRC will fight tooth and claw for it because it will clear most of the 65,000 open case backlog in one fell swoop.

Even the DOTAS stipulation is woolly, see 4.6 bullet point 3.

"Who should have entered a SRN, or should have appeared on a ‘client list’ but
have not done so – either because the scheme was not disclosed as it should
have been, or the taxpayer has not entered the SRN when they should have
done so."

They will just say everyone "should have"

I am not sure where they would stand with that though - this almost creates a circular scenario - if a scheme, in HMRC's opinion, should have had a SRN but it didn't because the promoter did not believe it was an avoidance vehicle then HMRC would have to revert back to proving that it was a reworking of a scheme that had already failed in court. I don't think they can just arbitrarily say everyone has to cough up what they think should be coughed up based on the theory that any disclosed scheme is legally unsound. Mind you, saying that, is it just me or does this seem to be changing the law to make tax avoidance, as well as evasion, unlawful???

[DonkeyRhubarb]

Bear in mind this is a proposal

Yes but HMRC will fight tooth and claw for it because it will clear most of the 65,000 open case backlog in one fell swoop.

Even the DOTAS stipulation is woolly, see 4.6 bullet point 3.

"Who should have entered a SRN, or should have appeared on a ‘client list’ but
have not done so – either because the scheme was not disclosed as it should
have been, or the taxpayer has not entered the SRN when they should have
done so."

They will just say everyone "should have"

[newcastle]

What happened to innocent until proven guilty?

I'm not going to defend the people that use these schemes - it's their choice and they take that risk - but if HMRC can point the finger and destroy your life without needing to prove you have done anything wrong aren't we getting a bit close to 1984?

[LisaContractorUmbrella]

I'm not so sure Lisa. Have another read of 4.4 through 4.13

Bear in mind this is a proposal but yes I stand corrected it does look as though they will send payment notices to users of DOTAS provided that there is already an ongoing appeal or enquiry - there is a comment:

"most structures that are notified under DOTAS have characteristics or hall marks of avoidance"

Certainly would seem that we are heading towards a guilty till proven innocent scenario

[DonkeyRhubarb]

I don't think, from what I have read, that they will be able to issue payment notices where a scheme hasn't previously been tested but it seems that they can (and will) issue 'conduct notices' for DOTAS schemes - there is more on all of this here: https://www.gov.uk/government/consul...-tax-avoidance which I am still trying to plough through - check out pages 78 onwards

I'm not so sure Lisa. Have another read of 4.4 through 4.13

[LisaContractorUmbrella]

The "follower" stuff is the same as announced back in December.

The extension Section 4 (page 15) is more ominous. I read it that this would allow HMRC to start issuing notices before a related scheme has ever been tested in court.

"As with the proposals in Chapter 3, these additional proposals would come into
effect from Royal Assent to Finance Bill 2014 and would permit HMRC to begin
issuing notices immediately after that date.

...

HMRC will then issue, in time for Royal Assent, a list
of DOTAS schemes where a Payment Notice will be issued."

I don't think, from what I have read, that they will be able to issue payment notices where a scheme hasn't previously been tested but it seems that they can (and will) issue 'conduct notices' for DOTAS schemes - there is more on all of this here: https://www.gov.uk/government/consul...-tax-avoidance which I am still trying to plough through - check out pages 78 onwards