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dangerouswhensober
4th December 2014, 16:28
An article in the Times yesterday very accurately described the motivation behind the HMRC 'crackdown' on both individual and corporate tax avoidance. It's worth reading, simply to understand (with crystal clarity) the motivation behind the persecution we are experiencing.

The article is titled "Osborne 'relies on tax cash to fill black holes'" and appears on page 45 of the Times yesterday (Monday 3rd December 2014). I cannot reproduce the whole article (for copyright reasons), but, I have summarised below - and, for those who subscribe to the Times on-line, here is the link to the full article:

Osborne (http://www.thetimes.co.uk/tto/business/economics/autumnstatement/article4285576.ece)

The article states that the Office for Budget Responsibility (OBR) will publish a review into whether the government's revenue-raising estimates from anti-avoidance measures can be relied upon. The OBR is expected to raise concerns about the Treasury's growing reliance on these measures to balance the nation's books. The articles states that George Osborne has used anti-avoidance increasingly to bolster the public finances in each of his budgets and autumn statement's since 2012. The Chancellor has leaned heavily on tax avoidance income to fill the black hole in public finances, which the OBR (said yesterday) has grown by about £10 billion this year - and is expected to unveil another £1-£2 billion (yesterday). In a letter to the Treasury last June, Robert Chote (Chairman of the OBR) said: "The yield from anti-avoidance measures is generally more uncertain than that from other policy measures". Chris Sanger, head of tax policy at EY, said: “It is right that the OBR is raising questions about these revenues, as they are inherently difficult to estimate".

There are two inescapable conclusions:

(1) No matter what the Government or HMRC may say to the contrary, the over-riding motivation behind the oppression that we are experiencing from HMRC is not a legal objection (i.e. tax planning and avoidance breaks laws), neither is it a moral objection (i.e. tax avoiders don't pay a fair share) - it is financial (i.e. the Government needs to balance the budget ...), and political (... because then it will get re-elected).
(2) This Government is gambling that receipts from this persecution will go a long way to balancing future budgets.

In my opinion:

(A) The Government and HMRC may find that alienating 40,000+ intelligent, hard-working, honest voters (plus the employees of 10,000+ companies under threat) will have serious legal and political consequences both next May and beyond, and

(B) The OBR is correct - the revenues ultimately realised will be fraction of that estimated by the Government/HMRC. I say this with some (minor) inside knowledge - I personally know six contractors who are being chased for tax as a result of membership of EBT schemes. Of those, one has settled (for a relatively small amount), one will probably settle when the FN/APN arrives, and the other four (including myself) will not pay (mostly because they can't, and never will be able to) and they will tough it out to the bitter end - which may include personal bankruptcy and/or moving abroad permanently.

Thoughts ?

StrengthInNumbers
5th December 2014, 10:19
100% agree. A small percentage will settle for small amounts but these settlers help HMRC greatly by giving them sample data for each scheme. Where HMRC has not done a good job and has missed documents, using the sample pool they will estimate. This will be massively beneficial when coming to issue APNs.

This SO is not for contractors as no benefit at all compared to paying an APN (if you can settle you can definitely pay APN and retain the right to recover) but a big opportunity for HMRC for data collection. These small amount settlers will fill and provide all documentation which HMRC might not ask for again legally.

At APN time everyone with assets will have to pay or go for bankruptcy. HMRC does not care. Only a small percentage will be able to move abroad to countries with no treaties in place with uk and risk all assets and visits to uk in future. HMRC knows this and this is where the black holes in government finances will be filled.

Some correctly implemented schemes will fight through the courts and might even eventually win. But by that time refunding that money will be someone else's problem rather then Mr Osborne. This government would have won the next election by that time.

This is tax and nothing moral about it. It is everything to do with politics. Contractors are on the wrong side and easy target for government to meet its political objectives. As simple as that.

DonkeyRhubarb
5th December 2014, 13:21
Remember, APNs are not just about contractors. This affects anyone who has used a notifiable scheme in the past 10 years. There are stamp duty schemes, film partnerships and all manner of other arrangements.

And YES this is primarily about the money. If it was just intended to reduce avoidance then there would be no need to apply it to past transactions.

Unfortunately the country is strapped for cash and tax avoiders are an easy target.

StrengthInNumbers
5th December 2014, 22:39
What I am speculating about is if you run away or hide money from HMRC, knowingly don't give them your details or move assets to another person etc it can lead to serious shit and even criminal case against you. I am not a lawyer and am not sure about this but have heard from someone. Until the tax is under dispute it is a civil matter and once it becomes due as per APN and u knowingly run away from authorities, I don't think it will be pleasant situation to be in.

DonkeyRhubarb
6th December 2014, 09:17
If someone hides abroad for long enough they may be ok.

Will debt become statute barred if I do not pay for 6 years (http://www.bankruptcyspecialist.co.uk/news-articles/will-debt-become-statute-barred-if-I-do-not-pay-it-for-six-years.htm)

There's probably a limit to how hard HMRC would chase a debt outside the UK, especially when there are much easier pickings ie. the rest of us poor sods who still live here.

I say good luck to anyone who escapes the bastards.

turbowoowoo
6th December 2014, 09:35
If someone hides abroad for long enough they may be ok.

Will debt become statute barred if I do not pay for 6 years (http://www.bankruptcyspecialist.co.uk/news-articles/will-debt-become-statute-barred-if-I-do-not-pay-it-for-six-years.htm)

There's probably a limit to how hard HMRC would chase a debt outside the UK, especially when there are much easier pickings ie. the rest of us poor sods who still live here.

I say good luck to anyone who escapes the bastards.

I believe NI can be statute barred after 6 years, but Tax remains collectable for at least 30 years...

Whereas debts can become statute barred after a period of 6 years the Crown assets are not included in this law

StrengthInNumbers
6th December 2014, 09:40
I doubt it would be this easy but will get some professional advise on this soon. This can be a solution for lot of us if it is that straight forward - just need to find work abroad for 6 years and done.

malvolio
6th December 2014, 10:24
I doubt it would be this easy but will get some professional advise on this soon. This can be a solution for lot of us if it is that straight forward - just need to find work abroad for 6 years and done.
Might be an idea to research mutual taxation agreements first though. Don't think there's much work in Patagonia...

DonkeyRhubarb
6th December 2014, 10:38
I believe NI can be statute barred after 6 years, but Tax remains collectable for at least 30 years...

Whereas debts can become statute barred after a period of 6 years the Crown assets are not included in this law

There is conflicting information about this but I think you are right.

http://www.moneywise.co.uk/files/debtwizard-la.pdf

"4. Income tax and VAT
You can always be pursued for debts owed to HM Revenue & Customs no matter how old they are."

Although they've got to find you first. :glasses

StrengthInNumbers
6th December 2014, 11:21
My personal view on this is (and it is just my view) running away and trying to dodge is digging your grave yourself. Most of us are highly skilled and should own up and pay what is due.

I joined a scheme thinking it is more legal than limited company - was new in the county. No cash component and all declared in return and HMRC not saying a word for year after year cemented my view.

Now I will pay up what government will ask but will go to the courts to ensure it is legally due. Until now I cannot see a court decision telling me a loan based contractor scheme was illegal in any way and thus I will fight through the courts. On top of that HMRC officials on settlement offer help line lying to me face and completely broken my trust in them - thus I don't believe a word they are saying. Fortunately promoters were good and are organising all this.

Running away from government in western world will be very difficult. And migrating my family to Middle East or back to Asia does not sound like a good decision to me. Neither I want to be away from my family for long period.

jbryce
6th December 2014, 12:16
My personal view on this is (and it is just my view) running away and trying to dodge is digging your grave yourself. Most of us are highly skilled and should own up and pay what is due.

I joined a scheme thinking it is more legal than limited company - was new in the county. No cash component and all declared in return and HMRC not saying a word for year after year cemented my view.

Now I will pay up what government will ask but will go to the courts to ensure it is legally due. Until now I cannot see a court decision telling me a loan based contractor scheme was illegal in any way and thus I will fight through the courts. On top of that HMRC officials on settlement offer help line lying to me face and completely broken my trust in them - thus I don't believe a word they are saying. Fortunately promoters were good and are organising all this.

Running away from government in western world will be very difficult. And migrating my family to Middle East or back to Asia does not sound like a good decision to me. Neither I want to be away from my family for long period.

There's no point in running, but maybe some point in fighting. I'm moving from settling to getting the APN, negotiating TTP and then applying for an FTT.

StrengthInNumbers
6th December 2014, 12:18
Jbryce exactly - 100% agree

Zero Liability
6th December 2014, 13:12
Agree with the OP, there is nothing "moral" (in a way that we would recognise the word) or economically sensible about this and even the finances behind it are shoddy. It's all about the fact that successive governments have overspent, have failed to balance the books and now seek to foist the costs of this onto people who don't have significant political representation, and then have the nerve to inject morally charged language in it as well, painting those they target as "parasites", missing the irony involved given that they are purely funded by taxes. They are trying it on with the banks and MNCs, now, but the banks are an even easier target and have sufficient political connections to rebound later on, and MNCs possess very formidable legal and accounting teams who will probably run circles around HMRC; plus, they contribute immensely to the economy by doing business here. As do contractors, but without the clout of MNCs and the government's fear of chasing those away. Never used one of these schemes but I can sympathise with people who did, given the level of deception to which the government has resorted.

jbryce
6th December 2014, 14:42
Agree with the OP, there is nothing "moral" (in a way that we would recognise the word) or economically sensible about this and even the finances behind it are shoddy. It's all about the fact that successive governments have overspent, have failed to balance the books and now seek to foist the costs of this onto people who don't have significant political representation, and then have the nerve to inject morally charged language in it as well, painting those they target as "parasites", missing the irony involved given that they are purely funded by taxes. They are trying it on with the banks and MNCs, now, but the banks are an even easier target and have sufficient political connections to rebound later on, and MNCs possess very formidable legal and accounting teams who will probably run circles around HMRC; plus, they contribute immensely to the economy by doing business here. As do contractors, but without the clout of MNCs and the government's fear of chasing those away. Never used one of these schemes but I can sympathise with people who did, given the level of deception to which the government has resorted.

I had reached the point of agreeing an amount and deciding to settle. My accountant had initially advised me to and it seemed like a way of getting some peace and a bit of relief from the feeling that I was a scum tax avoider.
However. The scheme suppliers and HMRC just want this to go away - as do I. Well tough.

So my accountant mused that if I accept an APN, HMRC would not be able to apply NICs or penalties - only an FTT could do that and an FTT would be unlikely to rule in favour of NICs. Penalties may be difficult to apply and finally an FTT would not be able to take into account my decline of the settlement offer as it was made without prejudice by HMRC, and therefore can't be viewed as non cooperation.

So his thinking now is wait for and negotiate TTP for the APN, let the case proceed to FTT. If 1/3 of people do this, then that's 20,000 cases in the backlog. It'll take a pretty good scrum master to get through that. Further HMRC will win some, but they will lose some too and their 80% number may be hit.
I can't pay the APN in a one-er so I'll have to negotiate TTP - say there are 10,000 doing that - then there are those who will need to be chased through the bankruptcy courts - say 5,000.

They're going to be busy.

StrengthInNumbers
6th December 2014, 15:07
I don't know about other schemes but have read a lot in EBT based loan scheme. That's IF properly implemented, HMRC does not have a bit chance in court.
1) loans are income - they have lost all cases until now sempra, UBS, deutche, dextra and rangers (twice)
2) ToAA should not apply to trade income.
3) if EBT is not avoidance in UK, how can it be avoidance in IoM? And if no avoidance, why and how does ToAA applies? It does not
4) awaiting Fisher UTT date to be allocated.
5) other defences against ToAA exist.

No doubt HMRC wants this to go away. If the first couple scheme wins it will become easier even for individuals to go to courts by them selves. HMRC can do now what they want but once things reach courts it will be a different situation.

Zero Liability
6th December 2014, 18:21
So his thinking now is wait for and negotiate TTP for the APN, let the case proceed to FTT. If 1/3 of people do this, then that's 20,000 cases in the backlog. It'll take a pretty good scrum master to get through that. Further HMRC will win some, but they will lose some too and their 80% number may be hit.
I can't pay the APN in a one-er so I'll have to negotiate TTP - say there are 10,000 doing that - then there are those who will need to be chased through the bankruptcy courts - say 5,000.

They're going to be busy.
Indeed, especially when coupled with the new proposed tax treatment of companies like Google added onto this, plus their shrinking budget and increasingly disgruntled staff, and the agency reporting requirements that may come in from July 2015, I can see them stretched beyond all limits.

BrilloPad
6th December 2014, 18:33
(A) The Government and HMRC may find that alienating 40,000+ intelligent, hard-working, honest voters (plus the employees of 10,000+ companies under threat) will have serious legal and political consequences both next May and beyond, and


The government control the courts. They can do what they want.

Those 40,000 were Tory voters anyway. Hanging out those 40,000 to dry might persuade a million or 2 C1/C2 voters(who actually matter) to vote for them.

StrengthInNumbers
6th December 2014, 19:30
I don't think government controls the courts - at least until now though parliament is try to reduce court powers.

SueEllen
6th December 2014, 20:35
I don't think government controls the courts - at least until now though parliament is try to reduce court powers.

The government doesn't control the court though the people in government and judges often know each other quite well....

StrengthInNumbers
6th December 2014, 20:38
Conspiracy is in everything, I believe in courts. Government ha lost a many times.

DonkeyRhubarb
7th December 2014, 09:16
The Government may not control the courts but they (and public opinion) certainly influence them.

The courts approach to tax avoidance definitely seems to have shifted over the past few years. It is not necessarily enough anymore to show that an arrangement was within the letter of the law. Judges are increasingly adopting a more purposive approach and taking into account what Parliament would have intended.

There was a reference to this in the Boyle decision.

"120. In reaching the above conclusions and deciding this appeal we have borne in mind Parliament's intention which is to render liable to tax income which in substance and reality is employment income."

centurian
7th December 2014, 10:07
Those 40,000 were Tory voters anyway. Hanging out those 40,000 to dry might persuade a million or 2 C1/C2 voters(who actually matter) to vote for them.

WHS - it's a simple numbers game - and unfortunately the spreadsheet says "no".

Up to 40,000 votes lost, not all of whom voted Tory anyway - and some may continue to vote Tory anyway, since all the realistic alternatives will probably be just as bad, or even worse - probably net 20,000 votes lost.

Offset that against the potentially hundreds of thousands of votes gained through the appearance of "cracking down on tax dodgers". I think this may be less than they originally calculated because I think the government are not getting as much "credit" as I think they hoped, largely because the big corporations are still getting away with it.

But the numbers were crunched probably several years ago - and t's too late to change course now, or they will lose even more votes.

centurian
7th December 2014, 10:21
It is not necessarily enough anymore to show that an arrangement was within the letter of the law. Judges are increasingly adopting a more purposive approach and taking into account what Parliament would have intended.

A little pedantic perhaps, but strictly speaking, such a scheme wasn't operating within the letter of the law then, given that the law has always given judges this latitude - which I agree they only seem to be recently using.

A scheme is only "legal" if it passes the specific items of law which it is exploiting, and also, the wider law in relation to tax matters.

Scheme providers seem to be become fixated on making sure their schemes pass the first part, while not giving enough focus to the second part - in part due to the way that judges were rendering judgements, causing them to take their eye off the ball.

That's why we may see "poorly implemented" schemes fail, while other very similar schemes succeed. The hard part is - how do you know whether your scheme was poorly implemented or not. The providers are not going to tell you they screwed up.

jbryce
7th December 2014, 11:30
A little pedantic perhaps, but strictly speaking, such a scheme wasn't operating within the letter of the law then, given that the law has always given judges this latitude - which I agree they only seem to be recently using.

A scheme is only "legal" if it passes the specific items of law which it is exploiting, and also, the wider law in relation to tax matters.

Scheme providers seem to be become fixated on making sure their schemes pass the first part, while not giving enough focus to the second part - in part due to the way that judges were rendering judgements, causing them to take their eye off the ball.

That's why we may see "poorly implemented" schemes fail, while other very similar schemes succeed. The hard part is - how do you know whether your scheme was poorly implemented or not. The providers are not going to tell you they screwed up.

What I don't get is that HMRC aren't using the tools they have available to target the current crop of schemes. Where's the GAAR in all of this? It should be ruling against the current crop of schemes, for example Garraway.

I'm also not too sure that the current avoidance strategy is winning many votes, Google and Starbucks still avoid it and all the strategy does is highlight that.

Zero Liability
7th December 2014, 11:49
The Government may not control the courts but they (and public opinion) certainly influence them.

The courts are part of the government, but I am guessing you guys mean the executive & legislative arms.

StrengthInNumbers
7th December 2014, 22:50
A little pedantic perhaps, but strictly speaking, such a scheme wasn't operating within the letter of the law then, given that the law has always given judges this latitude - which I agree they only seem to be recently using.

A scheme is only "legal" if it passes the specific items of law which it is exploiting, and also, the wider law in relation to tax matters.

Scheme providers seem to be become fixated on making sure their schemes pass the first part, while not giving enough focus to the second part - in part due to the way that judges were rendering judgements, causing them to take their eye off the ball.

That's why we may see "poorly implemented" schemes fail, while other very similar schemes succeed. The hard part is - how do you know whether your scheme was poorly implemented or not. The providers are not going to tell you they screwed up.

Providers will not but their actions will.

StrengthInNumbers
7th December 2014, 22:58
What I don't get is that HMRC aren't using the tools they have available to target the current crop of schemes. Where's the GAAR in all of this? It should be ruling against the current crop of schemes, for example Garraway.

I'm also not too sure that the current avoidance strategy is winning many votes, Google and Starbucks still avoid it and all the strategy does is highlight that.

Not using the tools because if unacceptable avoidance is stopped in roots, how will they keep their jobs? Disclose avoidance so that we sleep over it for decade and then come back to destroy you. You are morally wrong for disclosing but we are morally correct as finally we took our finger our - utter crap

Very short term view - in medium to long term - they will lose votes. Companies will go where they can efficiently do business, government will not be able to twist their arms to pay what government wants. As companies will go so the jobs will go - it is a cycle. Government could have controlled financial crises just by increasing the reserve ratios and what is counted as reserve but did nothing - they were on the gravy train and now only banks are being targeted when real culprits were regulators. Banks did what they were meant to i.e. make profit - it was for regulators to ensure the system stays healthy not bank's responsibility. Wait and see - this will come back and bit government in its arse

dangerouswhensober
9th December 2014, 12:50
I made the original posting on this thread on December 4th.

I have just found this link (on the NTRT thread) describing a apeech made by (Tory) David Davis on the same day.

Tory veteran David Davis attacks government tax avoidance crackdown as threat to the rule of law | City A.M. (http://www.cityam.com/1417710054/tory-veteran-david-davis-attacks-government-tax-avoidance-crackdown-threat-rule-law)

Mr Davis states that:
"The government has become the biggest threat to the rule of law ..."

He also says:
" ... there was a serious risk to the rule of law in Britain today coming from the government because these measures fundamentally departed from the conventional understanding of British justice".

This is very useful - if senior and respected members of the governing party think that the current drive against tax avoiders is unjust (and even illegal), then there is certainly hope for a rational reconsideration of the FN/APN legislation at some point in the future.

(BTW - Mr Davis also notes that "HMRC was spectacularly incompetant ...")

Boobetty
9th December 2014, 13:57
Mr Davis also notes that "HMRC was spectacularly incompetant


Not sure we need a politician to tell us what we know already.

StrengthInNumbers
9th December 2014, 17:55
Mr Davis is being heard by no one at the moment.

LandRover
30th December 2014, 16:08
What is the consensus of a Labour Governments approach to EBT and Tax avoidance?

I know of one person who settled because his biggest fear was a Labour Government would be even more brutal in it's approach to using retrospective legislation:ohwell

StrengthInNumbers
30th December 2014, 18:54
I will be voting labour as conservative bastards did this to me but all are the same. The more they can collect more they can spend on getting votes. Nothing is going to change. But by not voting the current lot it will do what is in my power to say I am against this.
Only solution is courts.

StrengthInNumbers
30th December 2014, 18:56
And also I don't know of a labour policy doing this sort of crap. They want to increase GAAR penalties but this is clearly after government has been so vocal about these schemes.

jbryce
30th December 2014, 19:05
What is the consensus of a Labour Governments approach to EBT and Tax avoidance?

I know of one person who settled because his biggest fear was a Labour Government would be even more brutal in it's approach to using retrospective legislation:ohwell

I think they'll increase the fines, however there is a very real danger of the tax system grinding to halt if a significant percentage of users move to an FTT for their cases. If 50% of existing users cannot pay, then several thousand bankruptcy cases will follow. It will start to look like a mess and whilst avoiders are an easy target, HMRC will start to look ridiculous and, by implication, HMG.

DonkeyRhubarb
30th December 2014, 20:23
Arguably Labour started the trend towards retrospective taxes by introducing BN66/Section 58.

I certainly wouldn't bank on them having a lighter touch.

You might need to protect your balls if Balls gets into Number 11.

TykeMerc
30th December 2014, 20:53
Arguably Labour started the trend towards retrospective taxes by introducing BN66/Section 58.

I certainly wouldn't bank on them having a lighter touch.

You might need to protect your balls if Balls gets into Number 11.

Indeed, if you honestly think that a Labour Government would take a different approach to pursuing users of tax avoidance schemes then you're sadly deluded.
Avoidance has become a target for many reasons, quite apart from the raising of revenue the rich and famous people being identified and vilified by the press for using avoidance has plenty of positive political mileage.

As DonkeyRhubarb said the BN66 time warp technology was invented by a Labour Government and while I despise the scheme that it knobbles I hate the total lack of natural justice that retrospective legislation represents far more.

Take your head out of the sand and realise that no matter what party wins the next election as a scheme user you are and will remain firmly in the firing line until you either settle or win in court, that can also apply to your descendants if their wizard wheeze of making the loans liable to Inheritance Tax sticks.

jbryce
30th December 2014, 21:46
Take your head out of the sand and realise that no matter what party wins the next election as a scheme user you are and will remain firmly in the firing line until you either settle or win in court, that can also apply to your descendants if their wizard wheeze of making the loans liable to Inheritance Tax sticks.

Yup - we're going to get kicked from one end of the park to the other.

BUT just because HMRC don't like a scheme doesn't mean that its ineffective. At some point it will reach a court of law. IHT is really complex and doesn't apply to all schemes.

It's also worth pointing out that not all schemes will fall under the current APN legislation and will have to be pursued via the GAAR - for which, post 2013, the fines will be punative.