Reply to: Edge group litigation lost at FTT

[webberg]

There are a number of distinct but related arguments here.

The usual money chain for a contractor involved in a scheme is:

End client > agency #1 > agency #2 > promoter > third party > individual

Money which is remuneration is subject to PAYE.

For there to be PAYE there needs to be an employer (collector and payer of tax).

In most situations of employee/er that is simple.

In the above situation, perhaps not.

Where the "employer" is offshore, HMRC has the ability/power/discretion to ask the end client to pay. This is the s 684 argument. Despite Hoey and Addo there are still legs in this.

Where the arrangement with the agency permits, it is possible that section 44 applies. This essentially says that the agency is de facto employer.

Could both arguments apply? Possibly.

Could only one apply at the exclusion of the other? Possibly.

As for details of individual cases, heard and pending, either I don't know or I cannot say.

[More Lamb]

It means "The Agency Argument" - I will leave it to others to explain it in more detail if anyone wants to as I'm sure I would get it wrong

This is how I understand it but I may have got it wrong.

If an agency supplies a worker, and there is any supervision, direction or control, then the engagement is covered by the "agency legislation" and the agency must treat the worker as an employee (PAYE).

The agency legislation doesn't apply if the worker is provided to the agency by a Ltd Co. If the Ltd Co is a PSC then the separate IR35 legislation kicks in instead.

[webberg]

Just for information.

HMRC's ToAA argument, already demolished in FTT cases has just suffered another blow in a case called Fisher.

[lowpaidworker]

It means "The Agency Argument" - I will leave it to others to explain it in more detail if anyone wants to as I'm sure I would get it wrong

thanks.

[eek]

TAA ... transfer assets aborad I assume ?

Not sure I get the finer point of the arguement here. Is this all going back on the Rangers case ?

Also stakes high.. does that mean HMRC going down one route that might limit other cases ?

Sorry its a mine field but I guess you need to understand some of the basic principals if your caught up.

It means "The Agency Argument" - I will leave it to others to explain it in more detail if anyone wants to as I'm sure I would get it wrong

[lowpaidworker]

TAA ... transfer assets aborad I assume ?

Not sure I get the finer point of the arguement here. Is this all going back on the Rangers case ?

Also stakes high.. does that mean HMRC going down one route that might limit other cases ?

Sorry its a mine field but I guess you need to understand some of the basic principals if your caught up.

[More Lamb]

True but HMRC aren't the ones who need to find money to move to the next stage of appeal - the Edge Group members do...

There is that, although supposedly it does get a bit cheaper because most of the ground work/prep will have been done for the FTT. They'll probably still need to budget a few hundred £k to take it all the way to the Supreme Court, which won't be too onerous if there are enough members to spread the cost.

[eek]

1. HMRC's (Tom Moore) counter-argument to TAA is that they claim to have the discretion to decide whether UK companies should have complied with the PAYE regs.
2. In the case of schemes, they're deeming that the UK companies didn't have to comply, and therefore scheme users are not entitled to any tax credit.
3. They're even giving a free PAYE pass to any UK intermediaries which were part of the scheme!
4. The stakes are very high for HMRC now. They'll take this all the way to the Supreme Court if necessary.

True but HMRC aren't the ones who need to find money to move to the next stage of appeal - the Edge Group members do...

[More Lamb]

TAA

1. HMRC's (Tom Moore) counter-argument to TAA is that they claim to have the discretion to decide whether UK companies should have complied with the PAYE regs.
2. In the case of schemes, they're deeming that the UK companies didn't have to comply, and therefore scheme users are not entitled to any tax credit.
3. They're even giving a free PAYE pass to any UK intermediaries which were part of the scheme!
4. The stakes are very high for HMRC now. They'll take this all the way to the Supreme Court if necessary.

[DealorNoDeal]

It almost feels like this TAA has become a bit like a scheme. (Backed by QC opinion, no doubt )

Starts off small.
Then there's a bandwagon effect, with others copying it.
Snowballs out of control.

Which usually ends with HMRC going all nuclear.

[DealorNoDeal]

HMRC issued APNS to all scheme users as far as I am aware.

Is this FTT then just to solidify that. I mean an APN is just a payment on account so the result if it was final is not going to bring additional revenue for HMRC.

It was the Edge users who took the case to the FTT, not HMRC. If they'd won I presume the APNs would have fallen away and HMRC would have had to refund the advance payments.

[lowpaidworker]

Edge. I know it included 2009.

HMRC issued APNS to all scheme users as far as I am aware.

Is this FTT then just to solidify that. I mean an APN is just a payment on account so the result if it was final is not going to bring additional revenue for HMRC.

[webberg]

So the Agency argument (for that is what I think it was called on here) was rejected in this case..

As I said, I suspect that this a lot more complex than it appears.

Also a loss in FTT is hardly fatal (unless the money runs out).

[DealorNoDeal]

Interesting. Edge ceased to exist and became Redstone aroudn 2011. Anyone who used Edge pre 2011 used EBT's and were issued with APNs.

So are you saying this is Redstone (post 2011 roughly) or is this Edge up to 2011.

Edge. I know it included 2009.

[DealorNoDeal]

So the Agency argument (for that is what I think it was called on here) was rejected in this case..

From what webberg said above, it sounds like more groups are jumping on this bandwagon.

That probably means HMRC will throw everything at it to stop it succeeding.