Reply to: APN or CLSO - What to accept ?

[DonkeyRhubarb]

doctorate in taxation

Saying you "don't work for HMRC" was redundant.

[Dylan]

Mumsnet is down.

Planning for a doctorate in taxation. Not quite sure where I want to focus yet but probably the economics, behaviours, biases and culture around tax avoidance and evasion. You certainly get more of that stuff on here than on mumsnet.

Just to be clear: while I work in tax, I don't work in the contractor area, have no intention of trying to get fees from contractors and don't work for HMRC.

By the time you've finished writing it tax planning, avoidance and evasion will all be considered the same thing

[Iliketax]

Talking about motives, what's yours for spending so much time here?

Mumsnet is down.

Planning for a doctorate in taxation. Not quite sure where I want to focus yet but probably the economics, behaviours, biases and culture around tax avoidance and evasion. You certainly get more of that stuff on here than on mumsnet.

Just to be clear: while I work in tax, I don't work in the contractor area, have no intention of trying to get fees from contractors and don't work for HMRC.

[DonkeyRhubarb]

Also, some people would appear to have additional motives...

Talking about motives, what's yours for spending so much time here?

[DonkeyRhubarb]

If I pay the APN does this mean Interest stops getting added from the point of paying APN.

Yes.

[bstar1]

If I pay the APN does this mean Interest stops getting added from the point of paying APN.

[StrengthInNumbers]

Mine is based on simple risk. HMRC has not won a case yet and my promoter is taking the case to FTT. By paying and APN and not settling I get a free shot at getting money back. Why not have it?
At this HMRC has best 50% chance of winning with cases in courts until now not doing HMRC any favours. This is not going as HMRC planned.
On a side note people don't realise that how government is taking away our basic rights. In time this will not end well for HMRC or government.

[DotasScandal]

And now its the turn of others to shoot me down...

I'm checking in not to shoot you down, but just to point out that for many individuals, settlement is not an option as the sums demanded are simply unpayable. No cognitive bias or "business decision" to be made here, just unescapable mathematical facts. What are these people to do?

[webberg]

Just to be clear, I am not saying that the rational business decision in any particular case is to settle or not. But I think some people have cognitive biases (in the technical sense of the term) that can influence their own decision. Also, some people would appear to have additional motives in suggesting that settling is bad (e.g. in drumming up future work or because they believe that the more people who 'fight' HMRC, the more chance of getting the government or HMRC to change its approach). And for others it is a point of principle.

And now its the turn of others to shoot me down...

There is a lot of truth in the above.

The sort of business that used an EBT for cash extraction (or circulation) was probably very well aware that the scheme was designed for a particular purpose and should have been aware of the risks. HMRC moved against this type of corporate scheme and won some cases. The business decision was therefore a lot clearer.

The position for many contractors (not all) is subtly different. Many were not aware of the risks and consequences. You can argue that they should have been, but ultimately they were not. Many subsequently feel that they have been betrayed by providers and importantly that HMRC should (and could) have taken action sooner to prevent the situation arising.

Being one of those obliquely mentioned as having additional motives (with the implication of commercial gain?), again your view is a potentially valid criticism. The only true answer will be known when the dust settles and we see if my approach or that of the litigation groups or that of ostrich group prevails. I do however feel obliged to respond.

HMRC finds itself in an interesting position here. They have no clear case win of general application, have potentially thousands of individual litigation cases, have a settlement opportunity that has probably not attracted a high percentage of takers due to uncertainty and cost, has a number of litigations in process, including one backed by an opinion from a respected FTT judge. There may also be a subtle shift in policy going on as HMG turns its attentions upon big business, with the inevitable bleeding of HMRC resources to that line.

So my view is that the situation for contractors is not quite as objective as the EBT position, or indeed the situation on film and IP schemes. As such I consider that there is a realistic prospect of a different outcome here.

As for those pursuing litigation or other strategies, I cannot answer.

[jbryce]

I'd agree that paying the APN either in one sum or instalments should be done if possible.
.....

Paying the APN is a no-brainer - it needs to be done as for the SO? I guess the point is - is there any chance that HMRC will find themselves in a position where a more pragmatic approach to settlement can be taken?

[Iliketax]

Last year when I posted that an independent advisor had recommended I settle, everyone who replied shot that 'advice' down. But now it seems some are in favour of settling? Or am I misunderstanding?

The deadline for the EBT settlement opportunity is tomorrow (different settlement opportunity to the contractors one). My understanding is that a large number of people have settled and there is likely to be a deluge of agreements signed tomorrow. Those that I am aware of have taken a business decision to settle. And I emphasis business decision. There are many who have decided not to settle, again based on a business decision using their facts and circumstances. But I am not aware of any in either group that have decided to settle, or not, based on emotion when the business decision said the opposite. My evidence on this is not limited to the EBT settlement opportunity but also to other ones that have been offered to businesses.

As an outsider looking in, the contractors settlement opportunity seems to have a very different response in that there is a large amount of emotion tied up in the decision to settle. At one level, I can understand that. But from a business perspective, that does look strange, especially compared with the EBT settlement opportunity. I can understand that the IHT uncertainty makes the business decision harder than it might otherwise be. But that can be factored into any decision.

Just to be clear, I am not saying that the rational business decision in any particular case is to settle or not. But I think some people have cognitive biases (in the technical sense of the term) that can influence their own decision. Also, some people would appear to have additional motives in suggesting that settling is bad (e.g. in drumming up future work or because they believe that the more people who 'fight' HMRC, the more chance of getting the government or HMRC to change its approach). And for others it is a point of principle.

The key thing from my perspective is that whatever you choose to do should be right for your circumstances rather than based on what other people on a self-selecting internet forum say.

And now its the turn of others to shoot me down...

[webberg]

Thank you Graham et al for your replies.

Rest assured, I do understand that the APN doesn't finalise things (and that nor does the CLSO) however what I've read on the forum all points to i) paying the APN and ii) joining a fighting group (eg, BG). Who knows, judge might find in your favour and you might get some ££ back. Last year when I posted that an independent advisor had recommended I settle, everyone who replied shot that 'advice' down. But now it seems some are in favour of settling? Or am I misunderstanding?

In my case looking at the numbers, surely the £6k difference is better off in my pocket (ie, invested or at the very least earning interest in the bank (suffice to say I'm not in the UK)) for the time being - rather than giving it to Hector now by "settling"?!

P.S. I try to keep up with relevant threads on the forum but with two young children to look after it's impossible to read them all.

Thanks again for your time

I'd agree that paying the APN either in one sum or instalments should be done if possible.

My personal opinion (others are available) is that this weapon is not going to be deflected by legal challenge or if it is, it will be temporary and make no difference to those already in issue.

I'd agree with an earlier poster that acquiring a CTD for the expected difference is sensible. These stop interest accruing at 3% pa. To earn that amount, post tax, means making 3.75% pa. If you can earn that, great. If not, consider a CTD.

Professional opinion in the settle/litigate/negotiate camps remains uncertain.

There is anecdotal evidence that some who were advocating resistance (unspecified) are now saying "settle". I could speculate as to why this change of heart has occurred but that would be unfair. Only those involved know the answer.

To the best of my knowledge those who had litigation in mind are still of that view. They may be fighting APN at the moment, but long term plans to bring a case to Court appear to be moving forwards.

The negotiate camp is newer and is based on principles arising out of the wider tax avoidance picture where even the existence of a judicial decision does not prevent negotiation with HMRC.

Which is best?

It's very subjective. I cannot hope to capture the views expressed here over the past few years. Suffice to say it comes down to personal choice.

[MrsB1974]

Thank you Graham et al for your replies.

Rest assured, I do understand that the APN doesn't finalise things (and that nor does the CLSO) however what I've read on the forum all points to i) paying the APN and ii) joining a fighting group (eg, BG). Who knows, judge might find in your favour and you might get some ££ back. Last year when I posted that an independent advisor had recommended I settle, everyone who replied shot that 'advice' down. But now it seems some are in favour of settling? Or am I misunderstanding?

In my case looking at the numbers, surely the £6k difference is better off in my pocket (ie, invested or at the very least earning interest in the bank (suffice to say I'm not in the UK)) for the time being - rather than giving it to Hector now by "settling"?!

P.S. I try to keep up with relevant threads on the forum but with two young children to look after it's impossible to read them all.

Thanks again for your time

[webberg]

I'm sorry, where do I say that it settles the matter? I was merely pointing out that in a case where the APN is less that what the final amount is likely to be that a CTD for the difference is worth looking at to stop interest accruing.

My apologies as I was really directing my frustration at an earlier post, not yours.

I agree totally with your position.

[flyinghaggis]

AAARGGGHHH

Paying an APN DOES NOT settle the matter.

The APN is just a payment on account. The final bill might be higher or lower.

I'm sorry, where do I say that it settles the matter? I was merely pointing out that in a case where the APN is less that what the final amount is likely to be that a CTD for the difference is worth looking at to stop interest accruing.