Cry me a puddle

[BrilloPad]

Technically I don't think this is retrospective. This is more tax advisor picks plan, HMRC fights case and (remarkably wins). HMRC then picks up the rule book and discovers this hits a different calculation method than the other schemes - oops.

I would agree that these people are being hit very very hard but I don't think it's retrospective. I just think the advisors were being both greedy and clever and that cleverness has come back to bite them

Agreed. Its not retrospective in THIS case.

[eek]

Exactly this. HMRC should pursue the creators and advisors for 10,000% of the tax due where the legislation does not work.

That should not include retrospective legislation. Which is legal in only a few countries in the world. Its even illegal in Zimbabwe.

Technically I don't think this is retrospective. This is more tax advisor picks plan, HMRC fights case and (remarkably wins). HMRC then picks up the rule book and discovers this hits a different calculation method than the other schemes - oops.

I would agree that these people are being hit very very hard but I don't think it's retrospective. I just think the advisors were being both greedy and clever and that cleverness has come back to bite them

[BrilloPad]

The neat one about this is that the scheme involved leverage, so although the subscribers save, e.g.100K of tax, because the scheme now doesn't work, they're liable for 1M tax - or more.

Of course the creators of the scheme, HSBC IIRC, get away scot free.

Exactly this. HMRC should pursue the creators and advisors for 10,000% of the tax due where the legislation does not work.

That should not include retrospective legislation. Which is legal in only a few countries in the world. Its even illegal in Zimbabwe.

[nomadd]

What I meant if you want to ensure you get your debt repaid from your debtors making them bankrupt isn't going to do it.

I doubt very few of those involved will actually go bankrupt. But still, that doesn't make a great "news" headline, so we get the sob stories instead...

And even if a few of them do go bankrupt, at least some of the money will have been recovered. The alternative of leaving them alone or putting them on repayment plans usually ends up costing honest tax payers - i.e., your typical Contractor - even more.

[eek]

What I meant if you want to ensure you get your debt repaid from your debtors making them bankrupt isn't going to do it.

HMRC's viewpoint is that the money is theirs. If you've spent it (or in this case loaned it out in exchange for some film rights) that's your problem, HMRC want the money you owe them... And they can't make exceptions because if HMRC have bankrupted people in the past (and they have and will be doing so in the future (including some who've posted in the HMRC Enquiries forum here) they can't treat people different. Tax bill you cannot pay by any foreseeable means - make bankrupt take what you can.

As for the publicity, HMRC don't seem to have been the ones making this public. It seems to be one of the scheme organizers in a desperate attempt to fix the issue. Sadly it ain't going to work - the organizer created a scheme that falls into the loaned income tax calculator rather than the film investment calculator - it just means the starting figure is so much higher..

[cojak]

What I meant if you want to ensure you get your debt repaid from your debtors making them bankrupt isn't going to do it.

But that's not the real point of this exercise. The point is to make an example of them (even better if they're celebrities for publicity purposes) to remind others not to do it.

[SueEllen]

What I meant if you want to ensure you get your debt repaid from your debtors making them bankrupt isn't going to do it.

[eek]

Bit stupid of HMRC.

Nope the rules are clear on loan schemes. The money loaned to you is treated as income after tax (look at any of the HMRC enquiry threads and you will see the logic.

Loan amount £30,000 (treated as if after tax).
Income required to receive £30,000 after tax = £50,000.
Tax owed £50,000 - £30,000 = £20,000.

Ni is also then required but I'm not going to calculate the figures.

So the real problem here is that the members joined a scheme of type a (film investment) which also incorporated a loan element for which there are clear cut rules for calculating the tax owed.

The fact the loan was leveraged rather than a just returning "loaned" income is irrelevant to HMRC, to them it just a failed loan scheme so the tax being charged is based on the member being part of a failed loan scheme.

At least as with the publicity this is going to get its in the news and people may think - tax avoidance when I don't fully understand the scheme - that may not be such a good idea.

[NotAllThere]

The neat one about this is that the scheme involved leverage, so although the subscribers save, e.g.100K of tax, because the scheme now doesn't work, they're liable for 1M tax - or more.

Of course the creators of the scheme, HSBC IIRC, get away scot free.

[SueEllen]

Bit stupid of HMRC.

[vetran]

Celebrities including Sir Alex Ferguson and Sven-Goran Eriksson face huge tax bills | Daily Mail Online

Hundreds of celebrities including Sir Alex Ferguson and Sven-Goran Eriksson face huge tax bills after being ordered to repay up to 20 times their investment in an avoidance scheme
Football managers among the 780 investors spread across 39 partnerships
£2.2b poured into film investment schemes to exploit industry tax breaks
HMRC revealed it will be demanding sums far in excess of those invested
One adviser claimed as many as 700 of the 780 involved could go bankrupt

Oh Dear!