Reply to: Is using an agency subject to DOTAS registration?

[eek]

So HMRC wait 5 years to get their act together and the scheme suppliers ride the train for another five years? That's truly cr@p.

It's called life but is why some of us on here are happy to point people in the direction of this forum when the need arises...

And make things as hard as possible for Garraway and other scam merchants...

[jbryce]

YES

So HMRC wait 5 years to get their act together and the scheme suppliers ride the train for another five years? That's truly cr@p.

[Rob79]

But five years??? That means that the current raft of schemes will continue to attract the gullible for a while longer and that their pain will be even greater when HMRC bites.

YES

[jbryce]

You are correct in that the GAAR is not retrospective. It applies to "arrangements" after 17 July 2013. Note that it's not "tax" arrangements, just arrangements.

A key question therefore will be "Did the arrangements exist before the key date and payments etc made after that date are as a result of those arrangements, or is EACH occasion of payment a separate arrangement allowing GAAR to kick in from the due date?"

I don't know the answer to that question. Common sense tells me that if you arranged to be paid in a particular way several years ago and have not changed them, then it should be safe from GAAR.

Legal analysis tells me that if something happens to change the previous arrangements, no matter how minor, then arguably they are new, possibly post July 13, arrangements. So would a minor change be for instance, changing a bank account or could that be ignored as not being part of the arrangement? Would asking your intermediary to bill a new contractor be a minor change but enough to trigger the rules? Where is the line?

It will be a minimum of 5 years before we see GAAR deployed in anger. Even then I would expect it to apply to post July 13 schemes to begin with in order to avoid losing the above point and perhaps a dozen others that might invalidate the issue. HMRC will want a big bang and a "safe as houses" application as no doubt the taxpayer on the other end will want to throw the proverbial at it if they have the means.

I fear that a lot of "non DOTAS'able" schemes presently in the market are going to be prime targets.

But five years??? That means that the current raft of schemes will continue to attract the gullible for a while longer and that their pain will be even greater when HMRC bites.

[Rob79]

Not sure I get you (but having been in a scheme does illustrate that I'm not the sharpest).

For the sake of argument, say a scheme has been whirring away for several years unchallenged by HMRC. At some point it is submitted to the GAAR and is deemed an avoidant scheme.

Now the GAAR accepts that arrangements are put in place to gain an advantage and it will rule on arrangements that are abusive. The GAAR is not retrospective. It only applies to tax arrangements entered into on or after 17 July 2013.

So what happens when the GAAR views one of the current schemes as abusive?

You are correct in that the GAAR is not retrospective. It applies to "arrangements" after 17 July 2013. Note that it's not "tax" arrangements, just arrangements.

A key question therefore will be "Did the arrangements exist before the key date and payments etc made after that date are as a result of those arrangements, or is EACH occasion of payment a separate arrangement allowing GAAR to kick in from the due date?"

I don't know the answer to that question. Common sense tells me that if you arranged to be paid in a particular way several years ago and have not changed them, then it should be safe from GAAR.

Legal analysis tells me that if something happens to change the previous arrangements, no matter how minor, then arguably they are new, possibly post July 13, arrangements. So would a minor change be for instance, changing a bank account or could that be ignored as not being part of the arrangement? Would asking your intermediary to bill a new contractor be a minor change but enough to trigger the rules? Where is the line?

It will be a minimum of 5 years before we see GAAR deployed in anger. Even then I would expect it to apply to post July 13 schemes to begin with in order to avoid losing the above point and perhaps a dozen others that might invalidate the issue. HMRC will want a big bang and a "safe as houses" application as no doubt the taxpayer on the other end will want to throw the proverbial at it if they have the means.

I fear that a lot of "non DOTAS'able" schemes presently in the market are going to be prime targets.

[jbryce]

Because GAAR is retroactive. Until a scheme has been actually executed, a GAAR cannot apply.

Not sure I get you (but having been in a scheme does illustrate that I'm not the sharpest).

For the sake of argument, say a scheme has been whirring away for several years unchallenged by HMRC. At some point it is submitted to the GAAR and is deemed an avoidant scheme.

Now the GAAR accepts that arrangements are put in place to gain an advantage and it will rule on arrangements that are abusive. The GAAR is not retrospective. It only applies to tax arrangements entered into on or after 17 July 2013.

So what happens when the GAAR views one of the current schemes as abusive?

[Rob79]

GAAR makes more sense - and, in theory, is a lightweight way of getting clarity on a scheme.
If the GAAR rules on a scheme then one would know what is coming, however, again in theory, the GAAR would not apply retrospectively.

So why aren't they using the GAAR to challenge the current crop of schemes? It seems a clearer way than stating an arrangement is 'advisable'.

Because GAAR is retroactive. Until a scheme has been actually executed, a GAAR cannot apply.

[Rob79]

Although the law is not intended to go after LtdCo contractors operating outside IR35 - and it would be a real stretch for them to try that - .

I would not be confident of that position.

Anti avoidance rules have force against taxpaying entities. That could be individuals, companies, trusts, partnerships etc. I know of no limitation on DOTAS or any other AA law that limits them.

[StrengthInNumbers]

That is precisely how the law has been phrased though - it gives HMRC a very wide margin to decide for themselves what constitutes as disclosable - and then issue an APN for which there is no right of appeal.

You do have recourse - you take them to court to prove your underlying arrangements are valid - and get the APN money back, plus interest. But you can't appeal the decision of the APN itself, so you have to stump up the cash first.

Although the law is not intended to go after LtdCo contractors operating outside IR35 - and it would be a real stretch for them to try that - I am not aware of anything which will actually prevent them from giving it a punt - because there is no mechanism to appeal whatever they decide - you would need pay the APN and then take HMRC to court to prove you are outside IR35.

Saying this is not popular here but no reason HMRC will stop here. Ltd company and everything else - HMRC will decide what is due, not law. They send an APN and you have to pay. To prove its not due, come up with a big sum of money for a proper QC. If you go unprepared without a good QC HMRC wins easy and sets precedence - FTT or UTT does not matter. It has been set in such a way that HMRC will get what they want.

As I was reading somewhere the other day, people paid in blood to get the freedoms which we enjoy but this government has undone a bit of that and trying to do even more. At some point it will start to roll back but how much damage would have been done by then who knows.

I hope all those think this will never apply to Ltd Co. are correct but even with running a Ltd Co. I feel it will not be the case.

[jbryce]

GAAR ooo ARRRR!

Or they try GAAR ! ?

GAAR makes more sense - and, in theory, is a lightweight way of getting clarity on a scheme.
If the GAAR rules on a scheme then one would know what is coming, however, again in theory, the GAAR would not apply retrospectively.

So why aren't they using the GAAR to challenge the current crop of schemes? It seems a clearer way than stating an arrangement is 'advisable'.

[centurian]

But this means they can apply it to anything that realises a tax advantage as they can decide what is disclosable without recourse to the tax courts.

That is precisely how the law has been phrased though - it gives HMRC a very wide margin to decide for themselves what constitutes as disclosable - and then issue an APN for which there is no right of appeal.

You do have recourse - you take them to court to prove your underlying arrangements are valid - and get the APN money back, plus interest. But you can't appeal the decision of the APN itself, so you have to stump up the cash first.

Although the law is not intended to go after LtdCo contractors operating outside IR35 - and it would be a real stretch for them to try that - I am not aware of anything which will actually prevent them from giving it a punt - because there is no mechanism to appeal whatever they decide - you would need pay the APN and then take HMRC to court to prove you are outside IR35.

[Rob79]

Or they suspect malpractice in some other, earlier or later tax year?

All true but dependent upon circumstances.

[malvolio]

Or they suspect malpractice in some other, earlier or later tax year?

[regron]

Or they try GAAR ! ?

[lastManStanding]

unless a discovery assessment is issued, in which case 4 years?