Reply to: Murray Group decision 5th July

[Fred Bloggs]

HMRC wants it to be a sham!
No wait, they want the loan to be real!
Ah, no probs - it can be a sham and real at the same time.

But this is nothing new is it? Intermediaries legislation charges you corporation tax and VAT like a business. And NICs as an employer/employee too. I'm afraid the guys at HMRC and HMG get to make up whatever rules they like. Nothing new in that at all.

[centurian]

I can't find the link but me and BP discussed this a short while ago and the limitation act kicks in surprisingly late to the extent that its probably not started in many cases...

Yeah, I see the point...

[BrilloPad]

HMRC wants it to be a sham!
No wait, they want the loan to be real!
Ah, no probs - it can be a sham and real at the same time.

HMRC can instruct their puppet MPs to make it so. The courts already confirmed HMRC can make any law they want to.

[jbryce]

I suppose you can fight all the way to the Supreme court and get the loan declared a sham.

HMRC wants it to be a sham!
No wait, they want the loan to be real!
Ah, no probs - it can be a sham and real at the same time.

[BrilloPad]

Is that really a bigger concern. I realise it may be concerning to many people, but in a practical sense, should people be that worried.

Won't the Limitation Act mean that the debt is unenforceable - which is kind of HMRC's point about these being "loans".

I suppose you can fight all the way to the Supreme court and get the loan declared a sham.

[ASB]

I can't find the link but me and BP discussed this a short while ago and the limitation act kicks in surprisingly late to the extent that its probably not started in many cases...

I think - but am not certain - that limitation clock only starts after an attempt is made to get payment. I.e. the event which triggers the debt.

This is assuming there is no date for repayment and there is an "on demand" provision.

[eek]

Is that really a bigger concern. I realise it may be concerning to many people, but in a practical sense, should people be that worried.

Won't the Limitation Act mean that the debt is unenforceable - which is kind of HMRC's point about these being "loans".

I can't find the link but me and BP discussed this a short while ago and the limitation act kicks in surprisingly late to the extent that its probably not started in many cases...

[centurian]

It could be employer or loan company. However it depends on the scheme.

A bigger concern is the loan company asking for their money back.

MP already asked for 10% back.

Is that really a bigger concern. I realise it may be concerning to many people, but in a practical sense, should people be that worried.

Won't the Limitation Act mean that the debt is unenforceable - which is kind of HMRC's point about these being "loans".

[centurian]

Sure.

1. HMRC may not be get income tax from the borrower if the employer should have operated PAYE. But I don't do that for a living.
2. The decision has no practical impact for the current disguised remuneration rules or for the expected April 2019 rules.

Thanks - so now the dust is settling, it's looking like the landscape (for contractors) is much the same as it was before the judgement. Not much better, not much worse.

[BrilloPad]

So, for the sake of my sanity,...

I worked for ClientCo who, via a tortuous route, saw X cash deposited in my account.
Who is liable for the tax?
Me as the Employee?
ClientCo as the Employer?
The loan company? (who didn't even ask me to sign loan documents until after payments were made)

Or - are we all liable?

It could be employer or loan company. However it depends on the scheme.

A bigger concern is the loan company asking for their money back.

MP already asked for 10% back.

[jbryce]

My sanity.

So, for the sake of my sanity,...

I worked for ClientCo who, via a tortuous route, saw X cash deposited in my account.
Who is liable for the tax?
Me as the Employee?
ClientCo as the Employer?
The loan company? (who didn't even ask me to sign loan documents until after payments were made)

Or - are we all liable?

[Iliketax]

However, as you point out "liable to deduct" implies the liability falls with the employer even if they simply got it wrong.

Yes.

By transfer of liability, I mean that the obligation to operate PAYE moves to the employee. HMRC are thinking about doing that if (i) the employer is bust, (ii) the employer cannot afford to pay it, or (iii) where there is an obligation on the end user because of the host employer rules. They are going to have a think about what to do, including the practicalities (e.g. how do you know an employer cannot afford it). At the end of the day, no one knows how this will work for the April 2019 charge yet.

[Iliketax]

Mind posting a summary for thickos like me.

Sure.

1. HMRC may not be get income tax from the borrower if the employer should have operated PAYE. But I don't do that for a living.
2. The decision has no practical impact for the current disguised remuneration rules or for the expected April 2019 rules.

[webberg]

Whilst I'm sure "I like tax" is quite capable of speaking for her/himself, my takeaway was that if tax should have been deducted from a payment, then the recipient of the payment is entitled to a credit for that, regardless of whether HMRC has collected it.

With the caveats mentioned in her/his post, I would agree. (I could add some further caveats perhaps).

Clearly that is a position that will be unwelcome in HMRC and they are sure to be using all the present tools at their disposal (and perhaps some new, retrospective ones) to continue their campaign against individuals.

(My apologies if my summary is inaccurate).

[centurian]

This is not my area but for the purposes of self-assessment, I think.....

TLDR.

Sorry, I am sure what you say is technically sound, but I couldn't get my head around it with specific references to judgements and tax law - the overall point you were trying to make was lost on me. Mind posting a summary for thickos like me.