CUK Exclusive Interview: No To Retro Tax’s Alistair Renshaw

On Thursday June 20th, members of parliament discussed an amendment to the Finance Bill tabled by Steve Baker MP which, if accepted by the government, would have had the effect of removing the retrospective element of Section 58(4) of the Finance Act 2008.

Ahead of the debate, the No To Retro Tax (NTRT) campaign, which represents people affected by the retrospective element of Section 58(4), actively lobbied MPs on the Finance Bill Committee and urged them to support the campaign.

Hundreds of freelancers and contractors, many of whom are facing bankruptcy or homelessness as a result of backdated tax demands, contacted MPs through social networking websites, email, telephone and by letter to request that they adopt the amendment.

The NTRT campaign was active in Westminster right up until the debate, meeting with Shadow Treasury Minister Catherine McKinnell MP and others on the committee to brief them on the devastating impact of this retrospective change to tax law.

After a 50-minute debate, during which several MPs highlighted the repercussions of Section 58(4) for their constituents, Exchequer Secretary David Gauke announced that the government did not accept the case for amending the BN66 legislation and consequently Mr Baker withdrew his amendment.

The debate has left those affected by Section 58(4) wondering what comes next. ContractorUK met with NTRT campaign chairman Alistair Renshaw, who was happy to answer questions about Mr Baker’s amendment, the impact of Section 58(4) and the next steps for the NTRT campaign.

Many of those affected by Section 58(4) were listening to the debate in the Finance Bill Committee and were disappointed that the Exchequer Secretary did not support Steve Baker’s amendment. Does that mean that the campaign has been defeated?

Not at all. We always understood that it would be difficult to get the government to agree to the amendment at this stage, so we fully anticipated the Exchequer Secretary to take the position he did and whip MPs to vote against it, that Steve Baker would withdraw his amendment. The debate on Mr Baker’s amendment was a positive boost for the campaign. It was the longest and most substantial debate on Section 58(4) in parliament since the BN66 legislation was first discussed back in 2008.

For the first time, parliament recognised that those who entered into the tax planning arrangement in question and who were doing no more than following the law as it stood at the time are victims of retrospective legislation. The justification for retaining the retrospective element of Section 58(4), which was provided to the Exchequer Secretary by HMRC, was shown during the debate to be very weak. That several MPs highlighted the impact on their constituents shows that there is awareness of the distress people are going through and demonstrates that there is a need to come to a sensible solution, such as amending the retrospective element of the legislation.

Some people have said they found it frustrating that Mr Baker merely accepted Gauke’s position rather than challenging it. Why didn’t MPs question David Gauke more after his response to the amendment, and why was it withdrawn rather than put to a vote?

The reason the debate did not run longer was the timing – it is our understanding that the Committee was keen to hear one more amendment in the ten minutes it had remaining and this is why the discussion ended when it did. The amendment was withdrawn instead of being put to a vote because Mr Baker knew that it did not have government support. Had it been pushed to a vote at that point it would have been defeated. Instead, by leaving the question open it creates the opportunity for us to push again in subsequent legislation, and there will be other opportunities for us to secure questioning and probing around the inconsistencies that HMRC has fed to the minister. It is important to understand that the withdrawal of the amendment was a tactical retreat rather than a defeat, and we need to look at it within the wider context of how far we’ve come in a short space of time.

Every victim of Section 58(4) should be incredibly grateful to Steve Baker for tabling the amendment and then speaking to it with such clarity. While we don’t necessarily agree with his entire analysis of the situation, he withstood pressure from his party whips and the minister to probe on this matter and challenge the government’s position. Unlike some other MPs, he took the time to do a lot of background reading into our case and form his own views based on independent research. We are grateful to him for supporting our campaign.

Gauke’s latest comments suggest that the NTRT research is not reflective of the overall population affected by BN66; how can that perception be overcome?

Gauke’s comments reflect the weakness of HMRC’s position. Hundreds of MPs have been lobbied by victims of Section 58(4). Many of them have met with people affected by the legislation and heard their stories. While HMRC through the minister might seek to suggest for political purposes that our research is not representative, MPs will base their decision on the experiences of their constituents – that is why it is important that every NTRT member continue to lobby and meet with their MP so the full impact of HMRC’s actions can be put beyond doubt. Over the next few weeks we will be preparing additional materials to help members engage with their MPs following the debate.

During the debate several MPs, including Brooks Newmark, Sheryll Murray and Mark Menzies, highlighted individual cases that their constituents had raised with them. As the chairman of the NTRT campaign, you must have come into contact with lots of people who have been affected by Section 58(4). Can you tell us more about what the real impact of Section 58(4) has been?

At the end of last year NTRT carried out a random survey of members to help inform an Impact Assessment which could be used to guide our discussions with HM Treasury and HMRC about the impact of Section 58(4). Our research suggested that 38% will be bankrupted by retrospective tax demands and 47% will only be able to pay if they sell their homes. These results are within the 95% confidence interval meaning that the results, applied to all users, are within 7% of the actual values.

However, these figures on their own do not give an accurate picture of the devastating human impact that Section 58(4) has had on ordinary people who did nothing more than enter into legal and recognised tax planning arrangements with legitimate expectation. During the campaign we’ve come across people who have suffered from stress, worry, depression and anxiety about the huge retrospective demands they are facing. I’ve spoken to members whose marriages have broken up, who face losing not just their savings and homes, but their entire livelihoods. We are aware of at least one victim who has committed suicide. The cold reality for HMRC is that many victims simply will not be able to pay the crippling and punitive demands that are being asked of them.

Now that the amendment to remove Section 58’s retrospective elements has failed, does it mean that the taxman will come knocking for liabilities in the next few months? About £220m is said to be outstanding to HMRC, so when, precisely, will the Revenue approach to collect this?

It’s important to understand that there is a long legal process that we still need to go through. The First Tax Tribunal cases for Huitson and Shiner are now underway, but as with all legal cases, progress will be slow and we expect them to be heard in 2014. The process has a number of stages to go through: First Tier, then the Upper Tier Tribunals, before going to the Court of Appeal. The case is already with the European Court of Human Rights and an appeal to the European Court of Justice is also likely. These cases are likely to be lengthy, protracted and fought hard, even under the post-Section 58 legislation, and the outcome is by no means certain either for victims or for HMRC. In the meantime, we would urge anyone who receives a demand from HMRC to contact their promoter so they can challenge it.

What are the next steps for the NTRT campaign?

Alongside the legal process mentioned above, there is now a case being prepared ready to be referred to the Adjudicator for review before it goes to the Parliamentary Ombudsman. We have a large, cross-party group of MPs who are willing to support a complaint to the Ombudsman and we have clear and irrefutable evidence – which has not yet been fully submitted – of maladministration and misconduct on the part of HMRC with regards to their handling to claims for exemptions. Again, this is likely to be a lengthy process requiring a forensic investigation of HMRC’s actions and could take as long as eighteen months following submission.

The political lobbying will also continue. More and more NTRT members are meeting their MPs, talking them through their situation and winning the argument that Section 58(4) is unjust and punitive retrospective legislation. Earlier this year we had eighteen MPs from five different political parties sign a letter to George Osborne calling on him to amend the retrospective element of Section 58(4). Following last month’s debate we are seeing more MPs come on board and we can expect to see more and more questions being asked about HMRC’s misconduct in recommending to ministers that they breach parliamentary protocol by implementing BN66 retrospectively. We are working with MPs to shine a bright light on HMRC’s conduct and ensure that they are held to account for their actions.

Thursday 4th Jul 2013
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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