Does BN66 matter?

[DonkeyRhubarb]

Retrospection for IR35 probably isn't quite so far fetched, but the problem is implementation. Each case has to be argued on it's merits. The problem with BN66 is that you have herded yourselves into collective groups that make a juicy target for HMRC.

IR35 was anti-avoidance legislation, closing what HMRC/Labour perceived as a loophole.

Many people are now exploiting loopholes in IR35 itself to circumvent it.

On this basis, HMRC would no doubt argue that it was ripe for retrospective clarification so it achieved its purpose ie. what was originally intended.

It's only on a practical level, and because it would be a PR disaster, that it would be a total non-starter.

[OnYourBikeGB]

At 100% + interest + 2%, it's already pretty ruinous, although the government are increasing that to 200% for certain cases, so that measure already exists.

I didn't know about the 200% penalties, that's interesting, but I'm not surprised. I was thinking along the lines of minimum penalties etc, so the could make pursuing even more marginal cases worthwhile, heavy penalties if you dispute their demand and lose etc, things like that. But it's conjecture of course.

[sal626]

The dangerous thing about BN66 is that a win for HMRC will set a precedent. They may not be planning to apply retro for anything else. And they may never do, but it provides them an option (backed by case law).

Who’s to say they will never use it in the future?

[malvolio]

I think the justification for the BN66 retrospection is also its biggest weakness if you try and apply it elsewhere. The "correction" was to some wording that was ambiguous, but the intent of the underlying legislation - basically, that no tax due elsewhere should not mean that no tax is due here as well - was sufficiently prersuasive to make the retropective clarification supportable. That is a long way away from changing the intent of the original ruling, which is what people are assuming BN66 implies may happen.

It is possible there are other similar cases out there, but certainly IR35 isn't one of them; there is way too much case law in place to doubt the intent of the legislation.

FTAOD I've always said that while the BN66 ruling was always likely to be accepted by the courts, its effect should not have been applied prior to the recent change.

[NotAllThere]

IR35 was anti-avoidance legislation, closing what HMRC/Labour perceived as a loophole.

Many people are now exploiting loopholes in IR35 itself to circumvent it.

On this basis, HMRC would no doubt argue that it was ripe for retrospective clarification so it achieved its purpose ie. what was originally intended.

It's only on a practical level, and because it would be a PR disaster, that it would be a total non-starter.

The other reason an IR35 retrospection would be a non-starter is the immense difficulty in "clarifying" it. A government minister said, very early on, that no clarification was necessary. A question was asked in the House of Commons, pointing out that the uncertainty over whether you're affected or not was causing difficulty for tax-payers. "There is no uncertainty - it's quite clear", said Dawn, "if you are caught by this legislation, you have to pay it".

[malvolio]

"There is no uncertainty - it's quite clear", said Dawn, "if you are caught by this legislation, you have to pay it".

Which goes to show just how stupid that woman really is. The question she was asked was "How do you tell if you're caught?". 12 years on and we still don't have an answer.

[smalldog]

Which goes to show just how stupid that woman really is. The question she was asked was "How do you tell if you're caught?". 12 years on and we still don't have an answer.

Which is how I ended up in the scheme in the first place, the scheme gave me a level of certainty in what was otherwise at the time a very uncertain IR35 infested world.

Personally I think its the thin end of the wedge, retro case law may not be used widespread but Im pretty sure HMRC will pull it out of their back pocket in the future to help target other low hanging fruit, who and when is anyones guess.

Ive been out of the scheme for 5 years and have been LTD, i just know whats going to happen though....We will lose BN66 appeal in the SC and then HMRC will go back over LTD's and pop some new retro rule in place to get me not only for using the scheme but for the time Ive been in an LTD too!!!! call me a pessimist. I can just see it.

[LisaContractorUmbrella]

The other reason an IR35 retrospection would be a non-starter is the immense difficulty in "clarifying" it. A government minister said, very early on, that no clarification was necessary. A question was asked in the House of Commons, pointing out that the uncertainty over whether you're affected or not was causing difficulty for tax-payers. "There is no uncertainty - it's quite clear", said Dawn, "if you are caught by this legislation, you have to pay it".

[DonkeyRhubarb]

It is possible there are other similar cases out there, but certainly IR35 isn't one of them; there is way too much case law in place to doubt the intent of the legislation.

Agreed.

If BN66 does set a precedent then this is the sort of thing one could expect:
http://www.taxation.co.uk/taxation/a...-repo-loophole