HMRC does something sensible

[LisaContractorUmbrella]

It seems that they will now be concentrating some of their efforts on making life difficult for the promoters of tax avoidance schemes with fines to run to up to £1 Million International Adviser: HMRC £1m tax avoidance fines 'sudden and unprecedented escalation'

[ASB]

It seems that they will now be concentrating some of their efforts on making life difficult for the promoters of tax avoidance schemes with fines to run to up to £1 Million International Adviser: HMRC £1m tax avoidance fines 'sudden and unprecedented escalation'

I'm not sure it is sensible. Whilst I think promoters of schemes which turn out to fail ought to be able to be sanctioned I don't think this is necessarily a good way of going about it.

In effect it seems to me that the proposals is roughly as follows:-

a) I dream up a scheme
b) I flog it
c) HMRC get wind of it and with nothing than their own opinion issue me with a fine and in effect a "desist notice"

At this point the validity of the scheme has not be questioned in any meaning ful way other than HMRC getting the hump.

d) I think, "No, this does work and pass the tests"
e) I get fined a cool million.

I wouldn't be worried about the above process if at some point in the process the scheme was actually tested.

That is the fundamental problem with this all out movement against aggressive avoidance. It is not really governed by any form of judicial oversight, in many cases HMRC are incredibly reluctant to let things get oversight.

It is simply oppression and control.

To be fair though, if all the promoters decide it is too risky to carry on in business that will probably save a lot of people future heartache.

[DonkeyRhubarb]

I expect those promoters who are determined to continue will just move their operations to some jurisdiction where they can't be touched.

A lot of these measures, like the DOTAS "pay now, argue later" rule, will just drive avoidance underground.

[jbryce]

I expect those promoters who are determined to continue will just move their operations to some jurisdiction where they can't be touched.

A lot of these measures, like the DOTAS "pay now, argue later" rule, will just drive avoidance underground.

I've been chatting to my local MP - who has done a lot of background reading. He's keen for HMRC to aggressively, and proactively, chase tax schemes.
Interestingly, he's also keen to sort out IR35 and has suggested that companies should be compelled/persuaded to employ contractors through recognised Umbrellas.

[cojak]

I've been chatting to my local MP - who has done a lot of background reading. He's keen for HMRC to aggressively, and proactively, chase tax schemes.
Interestingly, he's also keen to sort out IR35 and has suggested that companies should be compelled/persuaded to employ contractors through recognised Umbrellas.

I don't trust any middle-man with the money I've earned and my company owns. And that has nothing to do with IR35. My accountant will be the one I will employ should they 'sort out' IR35.

Forgetting the tax perspective. I'm not a disguised employee of a client or agent and I certainly don't want to be an employee of an umbrella. I want to work for myself, promote myself and succeed or fail because of my own efforts, not through any misplaced trust of a third party.

(Although that sentiment may not be quite the done thing in this sub-forum )

[centurian]

Yeah, "sort out" IR35 does not necessarily mean continuing to pay the same levels of tax that many contractors are used to.

Side-tracking briefly - the Taxpayers Alliance regularly trot out the "simplify the tax system" at every opportunity (often with good justification).

Recently there was a report about people "forgetting" to declare CGT on sales of second homes. Cue the TA - "simplify the tax system" as a reflex reaction.

Someone responded that CGT is not particularly complicated - it's the exemptions which make it complicated - and in this case, the exemption on primary homes. So the best way to simplify CGT - is for everyone to pay CGT on every house they sell, with no exceptions whatsoever.

Somehow I don't think that's what the TA had in mind.

So back to IR35 - when someone says they want to simplify it, or "take away the uncertainty"...

[DonkeyRhubarb]

Two words politicians never consider.

Unintended consequences

If it hadn't been for IR35, would we have seen the proliferation of contractor schemes over the past 13 years?

[LisaContractorUmbrella]

Two words politicians never consider.

Unintended consequences

If it hadn't been for IR35, would we have seen the proliferation of contractor schemes over the past 13 years?

I think you're probably right DR - trouble is that HMRC don't like contractors because they don't fit in the traditional employer/employee boxes so they try to force them into one or the other through misguided legislation.