Reply to: Political motivation for tax persecution

[jbryce]

Take your head out of the sand and realise that no matter what party wins the next election as a scheme user you are and will remain firmly in the firing line until you either settle or win in court, that can also apply to your descendants if their wizard wheeze of making the loans liable to Inheritance Tax sticks.

Yup - we're going to get kicked from one end of the park to the other.

BUT just because HMRC don't like a scheme doesn't mean that its ineffective. At some point it will reach a court of law. IHT is really complex and doesn't apply to all schemes.

It's also worth pointing out that not all schemes will fall under the current APN legislation and will have to be pursued via the GAAR - for which, post 2013, the fines will be punative.

[TykeMerc]

Arguably Labour started the trend towards retrospective taxes by introducing BN66/Section 58.

I certainly wouldn't bank on them having a lighter touch.

You might need to protect your balls if Balls gets into Number 11.

Indeed, if you honestly think that a Labour Government would take a different approach to pursuing users of tax avoidance schemes then you're sadly deluded.
Avoidance has become a target for many reasons, quite apart from the raising of revenue the rich and famous people being identified and vilified by the press for using avoidance has plenty of positive political mileage.

As DonkeyRhubarb said the BN66 time warp technology was invented by a Labour Government and while I despise the scheme that it knobbles I hate the total lack of natural justice that retrospective legislation represents far more.

Take your head out of the sand and realise that no matter what party wins the next election as a scheme user you are and will remain firmly in the firing line until you either settle or win in court, that can also apply to your descendants if their wizard wheeze of making the loans liable to Inheritance Tax sticks.

[DonkeyRhubarb]

Arguably Labour started the trend towards retrospective taxes by introducing BN66/Section 58.

I certainly wouldn't bank on them having a lighter touch.

You might need to protect your balls if Balls gets into Number 11.

[jbryce]

What is the consensus of a Labour Governments approach to EBT and Tax avoidance?

I know of one person who settled because his biggest fear was a Labour Government would be even more brutal in it's approach to using retrospective legislation

I think they'll increase the fines, however there is a very real danger of the tax system grinding to halt if a significant percentage of users move to an FTT for their cases. If 50% of existing users cannot pay, then several thousand bankruptcy cases will follow. It will start to look like a mess and whilst avoiders are an easy target, HMRC will start to look ridiculous and, by implication, HMG.

[StrengthInNumbers]

And also I don't know of a labour policy doing this sort of crap. They want to increase GAAR penalties but this is clearly after government has been so vocal about these schemes.

[StrengthInNumbers]

I will be voting labour as conservative bastards did this to me but all are the same. The more they can collect more they can spend on getting votes. Nothing is going to change. But by not voting the current lot it will do what is in my power to say I am against this.
Only solution is courts.

[LandRover]

What is the consensus of a Labour Governments approach to EBT and Tax avoidance?

I know of one person who settled because his biggest fear was a Labour Government would be even more brutal in it's approach to using retrospective legislation

[StrengthInNumbers]

Mr Davis is being heard by no one at the moment.

[Boobetty]

Mr Davis also notes that "HMRC was spectacularly incompetant

Not sure we need a politician to tell us what we know already.

[dangerouswhensober]

Criticism of Government tax policy from it's own MPs

I made the original posting on this thread on December 4th.

I have just found this link (on the NTRT thread) describing a apeech made by (Tory) David Davis on the same day.

Tory veteran David Davis attacks government tax avoidance crackdown as threat to the rule of law | City A.M.

Mr Davis states that:
"The government has become the biggest threat to the rule of law ..."

He also says:
" ... there was a serious risk to the rule of law in Britain today coming from the government because these measures fundamentally departed from the conventional understanding of British justice".

This is very useful - if senior and respected members of the governing party think that the current drive against tax avoiders is unjust (and even illegal), then there is certainly hope for a rational reconsideration of the FN/APN legislation at some point in the future.

(BTW - Mr Davis also notes that "HMRC was spectacularly incompetant ...")

[StrengthInNumbers]

What I don't get is that HMRC aren't using the tools they have available to target the current crop of schemes. Where's the GAAR in all of this? It should be ruling against the current crop of schemes, for example Garraway.

I'm also not too sure that the current avoidance strategy is winning many votes, Google and Starbucks still avoid it and all the strategy does is highlight that.

Not using the tools because if unacceptable avoidance is stopped in roots, how will they keep their jobs? Disclose avoidance so that we sleep over it for decade and then come back to destroy you. You are morally wrong for disclosing but we are morally correct as finally we took our finger our - utter crap

Very short term view - in medium to long term - they will lose votes. Companies will go where they can efficiently do business, government will not be able to twist their arms to pay what government wants. As companies will go so the jobs will go - it is a cycle. Government could have controlled financial crises just by increasing the reserve ratios and what is counted as reserve but did nothing - they were on the gravy train and now only banks are being targeted when real culprits were regulators. Banks did what they were meant to i.e. make profit - it was for regulators to ensure the system stays healthy not bank's responsibility. Wait and see - this will come back and bit government in its arse

[StrengthInNumbers]

A little pedantic perhaps, but strictly speaking, such a scheme wasn't operating within the letter of the law then, given that the law has always given judges this latitude - which I agree they only seem to be recently using.

A scheme is only "legal" if it passes the specific items of law which it is exploiting, and also, the wider law in relation to tax matters.

Scheme providers seem to be become fixated on making sure their schemes pass the first part, while not giving enough focus to the second part - in part due to the way that judges were rendering judgements, causing them to take their eye off the ball.

That's why we may see "poorly implemented" schemes fail, while other very similar schemes succeed. The hard part is - how do you know whether your scheme was poorly implemented or not. The providers are not going to tell you they screwed up.

Providers will not but their actions will.

[Zero Liability]

The Government may not control the courts but they (and public opinion) certainly influence them.

The courts are part of the government, but I am guessing you guys mean the executive & legislative arms.

[jbryce]

A little pedantic perhaps, but strictly speaking, such a scheme wasn't operating within the letter of the law then, given that the law has always given judges this latitude - which I agree they only seem to be recently using.

A scheme is only "legal" if it passes the specific items of law which it is exploiting, and also, the wider law in relation to tax matters.

Scheme providers seem to be become fixated on making sure their schemes pass the first part, while not giving enough focus to the second part - in part due to the way that judges were rendering judgements, causing them to take their eye off the ball.

That's why we may see "poorly implemented" schemes fail, while other very similar schemes succeed. The hard part is - how do you know whether your scheme was poorly implemented or not. The providers are not going to tell you they screwed up.

What I don't get is that HMRC aren't using the tools they have available to target the current crop of schemes. Where's the GAAR in all of this? It should be ruling against the current crop of schemes, for example Garraway.

I'm also not too sure that the current avoidance strategy is winning many votes, Google and Starbucks still avoid it and all the strategy does is highlight that.

[centurian]

It is not necessarily enough anymore to show that an arrangement was within the letter of the law. Judges are increasingly adopting a more purposive approach and taking into account what Parliament would have intended.

A little pedantic perhaps, but strictly speaking, such a scheme wasn't operating within the letter of the law then, given that the law has always given judges this latitude - which I agree they only seem to be recently using.

A scheme is only "legal" if it passes the specific items of law which it is exploiting, and also, the wider law in relation to tax matters.

Scheme providers seem to be become fixated on making sure their schemes pass the first part, while not giving enough focus to the second part - in part due to the way that judges were rendering judgements, causing them to take their eye off the ball.

That's why we may see "poorly implemented" schemes fail, while other very similar schemes succeed. The hard part is - how do you know whether your scheme was poorly implemented or not. The providers are not going to tell you they screwed up.