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View Full Version : If you cant pay an APN, would the judge rule in favour of bankruptcy



chr16v
15th April 2015, 14:27
Ok so this thread is born out of a converstion started in on http://forums.contractoruk.com/hmrc-scheme-enquiries/105661-how-you-settling.html

The scenario is:
- you were in an EBT scheme,
- you have an APN, its a lot more than you can afford because you stopped being a contractor years ago and live a normal life again,
- you dont have enough credit to borrow beg or steal the amount required
- BUT you do have a house with some equity, say its in joint names with her in-doors.

I understand the HMRC "time to pay" offer for upto 2 years can only be assumed if you can prove you are able to pay the money back in this time.

My question is: What happens if its clear as day that i cannot afford to pay it back in 2 years?? Would i be exptected by a court to sell the family home, what type of forced action should a now PAYE employee expect to experience in HMRC`s pursuit of this money?


What does HMRC do? push you towards the court judge and bankruptcy? How can they if they have no firm grounds for destroying someone.........


Disclaimer first - I am not a lawyer - but I do have some previous experience af the bankruptcy process.

IMO - Any petition by HMRC to make an APN non-payee bankrupt would not be looked on favourably by a judge - but not for the the reasons (a) and (b) above. The real reason that judges might be favourable to defendents is because any claimed "debt" in the bankruptcy process has to be proven by the petitioner. In the case of EBT scheme members, HMRC would have a hard job proving that there was actually a debt owed, given that they haven't won an EBT case yet, so can't use any as a precedent. Net result would be stalemate for HMRC - their least desireable outcome ...

Any informed comment from a passing insolvency practitioner on this subject would be very welcome ...

BrilloPad
15th April 2015, 14:37
Based on my discussion with NTRT liquidation company, HMRC would have great trouble getting a judge to make you bankrupt.

Have you thought about getting your wife to divorce you and putting the house in her name?

dangerouswhensober
15th April 2015, 14:52
Ok so this thread is born out of a converstion started in on http://forums.contractoruk.com/hmrc-scheme-enquiries/105661-how-you-settling.html

The scenario is:
- you were in an EBT scheme,
- you have an APN, its a lot more than you can afford because you stopped being a contractor years ago and live a normal life again,
- you dont have enough credit to borrow beg or steal the amount required
- BUT you do have a house with some equity, say its in joint names with her in-doors.

I understand the HMRC "time to pay" offer for upto 2 years can only be assumed if you can prove you are able to pay the money back in this time.

My question is: What happens if its clear as day that i cannot afford to pay it back in 2 years?? Would i be exptected by a court to sell the family home, what type of forced action should a now PAYE employee expect to experience in HMRC`s pursuit of this money?


What does HMRC do? push you towards the court judge and bankruptcy? How can they if they have no firm grounds for destroying someone.........

The following is a quote from these boards from the late (lamented) Rob99, who is a tax professional, but who now doesn't post here as it would conflict with his day job:

Quote:
"If you decline to pay the tax due, bankruptcy is not automatic. HMRC may consider that if you have a job and an income, that they will apply for an order effectively docking your income at source to pay the tax. They may take a charge on an asset (usually property) so that on sale they get a cut. They may seize assets (walking distraint order). They have a whole range of weapons and a couple of hundred years of practice in this."

The preferred option for HMRC in each individual case is the option which will - in all probability - yield the most money to them. This does not, therefore, mean they prefer bankruptcy - especially given the uncertainty of the judiciary. I have no experience of HMRC in relation to judicial orders for docking income, or charge on assets, or walking distraint orders - but I suspect that (again) they would have to persuade the appropriate judiciary that a "debt" is in fact owed in order to be granted the appropriate orders.

This is one reason why (IMO) HMRC have been pushing Settlement Offers hard - they don't want the uncertainty of court.

(BTW - Seems to me that a charge on assets would be a good option for most people - that means HMRC only get the money when you sell your property - in 20 years time :-))

Same disclaimers apply - I'm not a lawyer ...

flamel
15th April 2015, 14:57
Have you thought about getting your wife to divorce you and putting the house in her name?

My ex-wife managed this very successfully!

flamel
15th April 2015, 15:10
My question is: What happens if its clear as day that i cannot afford to pay it back in 2 years?? Would i be exptected by a court to sell the family home, what type of forced action should a now PAYE employee expect to experience in HMRC`s pursuit of this money?


What does HMRC do? push you towards the court judge and bankruptcy? How can they if they have no firm grounds for destroying someone.........

That is my question too - my own tax advisor (ex HMRC inspector) can't answer as he says he's never seen this type of mess in his lifetime. His advice is to carry on as normal until all APNs for all years actually arrive and then take it from there.

So to add to the long list of questions:
a) Do I save up a warchest for times when I'm not contracting (as HMRC are going to raid this).
b) Do I bother to continue putting money into a personal pension (HMRC may raid this too).
c) Do I continue paying off the mortgage (HMRC may take my (minimal) share of the house - effectively I'm just saving up to pay HMRC something)
d) Shall I just throw in the towel now, admitting to whatever liability HMRC wants for all years they have a problem with and get it over with (they won't get their money as I haven't got it and wouldn't be able to pay even with 10 years TTP arrangements).

My motto has been "SAYE" - spend as you earn but now I'm on the bench this is not quite as clever as I thought.

Am I doomed to live out the rest of my life in penury?

:suicide:

webberg
15th April 2015, 21:03
The following is a quote from these boards from the late (lamented) Rob99, who is a tax professional, but who now doesn't post here as it would conflict with his day job:

Quote:
"If you decline to pay the tax due, bankruptcy is not automatic. HMRC may consider that if you have a job and an income, that they will apply for an order effectively docking your income at source to pay the tax. They may take a charge on an asset (usually property) so that on sale they get a cut. They may seize assets (walking distraint order). They have a whole range of weapons and a couple of hundred years of practice in this."

The preferred option for HMRC in each individual case is the option which will - in all probability - yield the most money to them. This does not, therefore, mean they prefer bankruptcy - especially given the uncertainty of the judiciary. I have no experience of HMRC in relation to judicial orders for docking income, or charge on assets, or walking distraint orders - but I suspect that (again) they would have to persuade the appropriate judiciary that a "debt" is in fact owed in order to be granted the appropriate orders.

This is one reason why (IMO) HMRC have been pushing Settlement Offers hard - they don't want the uncertainty of court.

(BTW - Seems to me that a charge on assets would be a good option for most people - that means HMRC only get the money when you sell your property - in 20 years time :-))

Same disclaimers apply - I'm not a lawyer ...

The above view remains valid. I've been trying to get HMRC to make some public statement as to their policy in relation to how they intend to collect debts from people who are NOT the high and ultra high net worth investors seen in film and similar schemes.

I would though say that this is a specialist area. I know people in this field and they have some good ideas and some great contacts with HMRC and they may have a better opinion. I'll approach one or two and see if they want to review the forum and contribute something.

[Rob79 was a construct that I and a colleague used whilst we were working for a company we were hoping to convince to become involved in the tax side of contractor schemes. That firm declined our plan. One result is that neither of us work for that firm any more. I now run my own tax consultancy specialising in complex tax avoidance schemes. I have certain views on the current contractor settlement opportunity and the likely direction of travel for the litigation and ultimate outcome. If I'm honest (and I like to think I am) there is not much I can do for contractors at the moment. I think once the settlement opportunity has expired and HMRC realise that they need a different analysis, then I may be able to help. In the meantime I offer what help I can.

I am in contact with some members of the forum who run groups etc and some individuals. However in terms of whether my business can offer a cost effective plan that will mitigate the current HMRC view of liability on the slate of EBT/loan schemes, I doubt it. Can I do that in say 6 months? Perhaps. I'm happy to expand on my views but perhaps not here.

So, apologies for Rob79 - his day has gone. My alter ego here though is the same and I hope some find it useful.

dangerouswhensober
16th April 2015, 11:11
Welcome back Son-Of-Rob - or should that be FrankenRob (created out of more than one person) or even DracuRob (then man who can never die or be killed ...) :-)

Never mind Webburg - I for one am glad that you are still monitoring these boards and contributing valuable informed advice.

A couple of quick queries, if you have a spare moment:

(1) You said "The above view remains valid." - Did you mean your quote, or my opinion on the judicial process ?

(2) You said a few days ago (on another thread) that "HMRC are currently about two years behind where they wanted to be ..." - can you clarify that ? Do you mean that HMRC are behind in chasing-up tax avoiders, or in their collections processes, or what ?

BrilloPad
16th April 2015, 11:14
Am I doomed to live out the rest of my life in penury?


At the very least there is uncertainty. 7 years now and now end in sight.

chr16v
16th April 2015, 12:40
This is a good informative thread guys, lets keep it going because i have no idea what percentage of APN recievers cannot afford to pay, especially if they no longer contract, but it must be sizable percentage.

i have an association with a local magistrate through work contacts and asked him today if any APN cases have filtered down to the dock for non payment and he hasnt heard of any, but he admited he isnt even aware of the whole DOTAS shebang.

I for one (even though i started the thread) havent yet recieved APN although i keep reading it must be on its way because my fellow ex-employees in the Edge/Norla group people are getting them. I guess its just a matter of time for me.

If we could highlight the ins & outs of the debt collection tatics that could be likely used by HMRC then this would surely equip and brace a lot of forum readers.

i for one only have equity in the family house, its in joint names and my wife doesnt want to divorce me :tongue , so can anyone divulge how the APN debt "could" be extracted from me?

dangerouswhensober
16th April 2015, 13:04
... i have no idea what percentage of APN recievers cannot afford to pay, especially if they no longer contract, but it must be sizable percentage.

A poll was conducted on this forum over last Xmas/New Year ...

From a very small sample of 50 voters, 34 declared that they would not be able to pay (68%) - i.e. over 2/3 of those who answered.

Extrapolate that proportion to the advertised number of APNs that HMRC initially claimed they would send out (40,000+ to individuals and 10,000+ to companies) and you see another reason why they want to avoid court action (aside from the possibility of adverse judicial rulings) - at present, they just don't have the resources to engage in 30,000+ court cases ...

IMO - something has to give ...

The poll is here:

http://forums.contractoruk.com/hmrc-scheme-enquiries/103581-poll-could-you-afford-pay-apns.html

flamel
16th April 2015, 15:05
At the very least there is uncertainty. 7 years now and now end in sight.

It's only two years and a bit for me - and many more years to come by the look of it. I honestly don't know how you've coped.

webberg
16th April 2015, 16:20
Welcome back Son-Of-Rob - or should that be FrankenRob (created out of more than one person) or even DracuRob (then man who can never die or be killed ...) :-)

Never mind Webburg - I for one am glad that you are still monitoring these boards and contributing valuable informed advice.

A couple of quick queries, if you have a spare moment:

(1) You said "The above view remains valid." - Did you mean your quote, or my opinion on the judicial process ?

(2) You said a few days ago (on another thread) that "HMRC are currently about two years behind where they wanted to be ..." - can you clarify that ? Do you mean that HMRC are behind in chasing-up tax avoiders, or in their collections processes, or what ?

Thank you for the kind words. I like "Son of Rob" (rather than Rob's b**tard) but will stick with webberg for now.

1. Only my view can I stand by. Your views on the legal side I am not in a position to answer on really.

2. If you look at the history of how HMRC go about challenging "schemes", it runs:

a.Start date is receipt of first tax return with "offensive" scheme.
b. Identify problem and collate internal data - say 6 months to 12 months from start.
c. Call for information - 12 months to perhaps 5 years
d. Consider response - 5 years to 8 years
e. Consider which case to challenge and run litigation - 8 years to 12 years
f. Litigate and win - 12 to 14 years

There is usually an "offer" between d and f.

In the case of contractors, HMRC lost Jones/Garnett and Murray group. therefore I think phase e above has been delayed by 2 years, perhaps more.

BrilloPad
16th April 2015, 17:23
It's only two years and a bit for me - and many more years to come by the look of it. I honestly don't know how you've coped.

I have a shrink. The shrink is preparing to write to HMRC.

On the other hand things could be worse. Every scheme provider for the double taxation stuff except Montpelier has closed up. At least they have stood by us. And the head of Montp(WG) has an outstanding record against them! I still think he will win for us - in 5/10 years time!

flamel
16th April 2015, 18:47
I have a shrink. The shrink is preparing to write to HMRC.

On the other hand things could be worse. Every scheme provider for the double taxation stuff except Montpelier has closed up. At least they have stood by us. And the head of Montp(WG) has an outstanding record against them! I still think he will win for us - in 5/10 years time!

I need one too - if nothing else just to remind me that they can't take your soul etc. My provider is still around too and is preparing to fight so I know it's a question of toughing it out. I've no real intention of caving in.

chr16v
17th April 2015, 09:54
right then,

you cant pay an APN because your contracting days and financial rewards were part of a bygone era, so HMRC want their money but how are they going to get it?

questions i think are relavent:

- can they force you to sell your famiy home under joint names to release equity?
- can they extract money from your pension?
- can they deduct regular money from your salary at source? (using what type of calculation?)
- can they make you sell any other assets like cars, etc
- what if you are on benfits? that would be interesting !!!

i await your informed feedback

BrilloPad
17th April 2015, 10:07
right then,

you cant pay an APN because your contracting days and financial rewards were part of a bygone era, so HMRC want their money but how are they going to get it?

questions i think are relavent:

- can they force you to sell your famiy home under joint names to release equity?
- can they extract money from your pension?
- can they deduct regular money from your salary at source? (using what type of calculation?)
- can they make you sell any other assets like cars, etc
- what if you are on benfits? that would be interesting !!!

i await your informed feedback

Any response is going to be entirely speculation. They can try anything. You can resist and get them to go the bankruptcy route.

1. Family home. There are plenty of precedents for this. So they probably can. If there are minors living in the house they will have to wait until they are 18 or finished education.
2. Pension. No precedents. Some people have speculated that recent pension changes might make HMRC more likely to go after pensions. But they probably cannot touch this.
3. I believe they can get salary at source. You should be left enough to live on.
4. Other assets can be sold.
5. They cannot touch benefits.

You get what you pay for and all advice on here is free. If you asked 10 different insolvency agents you would get 11 different opinions. Sorry but there will be no certainty for you.

Personally I suggest you get divorced, give the house to your wife, pay her alot of spousal maintenance or live on benefits. Get a shrink.They have lots of lovely drugs these days! And talking about what you are thinking of doing to HMRC is very therapeutic!

I feel for you. I really do.

flamel
17th April 2015, 10:20
right then,

you cant pay an APN because your contracting days and financial rewards were part of a bygone era, so HMRC want their money but how are they going to get it?

questions i think are relavent:

- can they force you to sell your famiy home under joint names to release equity?
- can they extract money from your pension?
- can they deduct regular money from your salary at source? (using what type of calculation?)
- can they make you sell any other assets like cars, etc
- what if you are on benfits? that would be interesting !!!

i await your informed feedback

I don't think anyone can answer these questions at this time, as there has yet to be a case of debt enforcement proceedings for an APN.
In theory, though, yes to all of the above. Remember your wife etc are separate entities so they can't grab her share. Pension grab is unclear after a recent case.
The advice I've had is don't do anything stupid (like transferring all your assets to someone else) as these transactions can be reversed by a court, don't keep all your cash for a rainy day (they'll potentially raid it) and as usual, get professional advice from an insolvency practitioner/tax advisor/accountant who is well versed in these matters.
....and get divorced in London, it's the world's leading place for wives getting the lot, if you get my drift.

smeg35
17th April 2015, 11:26
Get divorced in London. Great advice
After taking part in a part in a scheme that is circumspect the best thing is to follow this with further circumspect steps

How about pay the HMRC what is due like most if the British public

dangerouswhensober
17th April 2015, 11:42
right then,

you cant pay an APN because your contracting days and financial rewards were part of a bygone era, so HMRC want their money but how are they going to get it?

questions i think are relavent:

- can they force you to sell your famiy home under joint names to release equity?
- can they extract money from your pension?
- can they deduct regular money from your salary at source? (using what type of calculation?)
- can they make you sell any other assets like cars, etc
- what if you are on benfits? that would be interesting !!!

i await your informed feedback

At the risk of sounding like a record with a sticking needle - HMRC can probably do most of these things, but THEY HAVE TO GO TO COURT FIRST !

HMRC are NOT above the law - they cannot unilaterally do nasty things to you - they have to have specific legal authorisation to take specific practical measures against an individual.

[Because the process government of the UK is seperated into three branches - legislative (national & regional Parliaments), executive (Civil Service and other agencies, including HMRC) and Judicial (the various Court systems, leading up to the Supreme Court). Each branch is there to act as check-and-balance on the other two. So, for example, Judicial Reviews are one method used by the judiciary to check that legislature is 'fair' and workable.]

Any specific measure that HMRC wants to take against an individual has to be legally sanctioned - and that's where you get to argue your case.

For example - if HMRC wants to seize your assets, they have to get a 'Walking Distraint Order' against you specifically from a court - and you (or your lawyer) can argue why they shouldn't be granted this order (because no debt exists to justify the order). HMRC would have to argue to a judge why they think a debt exists - which (I have said before) would (at present) be difficult for HMRC to do if your "debt" was from membership of an EBT scheme.

Another example - if HMRC wants to attach your earnings, they have to obtain an 'Attachement Of Earnings Order' from a court - and, again, you (or your lawyer) can argue why they shouldn't be granted this order (because you believe no debt exists). (HMRC cannot just tell your employer to send them a proportion of your earnings - they don't have this power !!)

Same thing with bankruptcy - as discussed in an earlier post.

BTW - If, at some time in the future, HMRC are given the powers to take money directly from debtors bank accounts, this also will be subject to the appropriate court order - it won't be just a case of them finding out your account details and then siphoning-off the money - they will need to show your bank the appropriate legal paperwork.

So please understand that you can continue to oppose HMRC in all of their recovery efforts (including bankruptcy) - just because HMRC have these 'powers' doesn't mean they can do things unilaterally.

Once again - I am not a lawyer - and I would welcome informed comment on this from more knowledgable people ...

MercladUK
17th April 2015, 11:44
Get divorced in London. Great advice
After taking part in a part in a scheme that is circumspect the best thing is to follow this with further circumspect steps

How about pay the HMRC what is due like most if the British public

I see, you are asking if we can pay more tax so you can get an education which includes spelling and grammar ?

chr16v
17th April 2015, 12:16
Get divorced in London. Great advice
After taking part in a part in a scheme that is circumspect the best thing is to follow this with further circumspect steps

How about pay the HMRC what is due like most if the British public

i might be relatively new on this forum but posting your reply with only 6 prior posts suggests you dont have an understanding of what we are talking about. I will somehow pay the tax i am supposed to pay, but not everyone can magic tens of thousands of pounds out of thin air (within 3 months) in relation to a debt from 10 years ago that is not even proven to be owed.

flamel
17th April 2015, 13:20
i might be relatively new on this forum but posting your reply with only 6 prior posts suggests you dont have an understanding of what we are talking about. I will somehow pay the tax i am supposed to pay, but not everyone can magic tens of thousands of pounds out of thin air (within 3 months) in relation to a debt from 10 years ago that is not even proven to be owed.

Do not engage with this type of troll - ever. You'd be wasting precious seconds of your life.
Unless you can come up with an equally pernicious statement to rile him/her.

flamel
17th April 2015, 13:21
Get divorced in London. Great advice
After taking part in a part in a scheme that is circumspect the best thing is to follow this with further circumspect steps

How about pay the HMRC what is due like most if the British public

:zzzz:

DonkeyRhubarb
17th April 2015, 13:33
Do not engage with this type of troll - ever. You'd be wasting precious seconds of your life.
Unless you can come up with an equally pernicious statement to rile him/her.

He/she started off on an entirely different tack in this thread.

http://forums.contractoruk.com/umbrella-companies/103579-up-90-a-8.html#post2080034

Probably a wind-up merchant.

flamel
17th April 2015, 13:49
As I said in another thread:


Can I set up a sockie and say "This 'ere contracting malarkey seems like a right good idea. I came across "Dodd Gee (IoM) Shedloadsamoolah" umbrella company and they say I don't have to pay any tax at all. Do you think it's a good idea? I feel like a right plonker not being a contractor, paying all that PAYE.....etc".

I wonder who would do that sort of thing?

smeg35
17th April 2015, 15:07
I apologise for my post, wasn't trying to troll. Maybe my naivety got the better of me (much like my spelling and grammar).

I am new to this contracting world and it's hard to understand the complexities when reading the posts as on one hand you get told:
- if it sounds too good to be true, it probably is

But on the other hand get message:
- it's tax efficiency and within the rules


Was not my intention to derail the forum topic. I will continue reading as ultimately I want to contract in the most tax efficient manner but with little to no risk of being stung.

My post was probably due to frustration of reading the forums for the past couple of days and realising that contracting now (which I have just started) is probably too late to maximise tax savings which were available a few years back - but still that's no excuse for poor behaviour on my part.

TykeMerc
17th April 2015, 15:43
My post was probably due to frustration of reading the forums for the past couple of days and realising that contracting now (which I have just started) is probably too late to maximise tax savings which were available a few years back - but still that's no excuse for poor behaviour on my part.

Those "tax savings" were always a very high risk strategy, however a lot of the punters who bought into them and are now being badly beaten up by HMRC were one or all of:- naive and failed to do proper due diligence on the schemes or they simply believed the scheme providers or frankly they were greedy and assumed they would get away with it.

The scheme users who truly understood that there was a lot of risk put aside a lot of the extra income as a reserve just in case.

The days of the schemes were never a "golden time" they just stored up a lot of severe pain which is being realised now. Anyone that has signed up for a scheme in the last 5 years deserves every bit of the pain they have coming as it's been obvious for a long time that HMRC will do their best to bury them.

DotasScandal
17th April 2015, 16:02
Anyone that has signed up for a scheme in the last 5 years deserves every bit of the pain they have coming as it's been obvious for a long time that HMRC will do their best to bury them.

How about those that have signed up before the last 5 years? Do they deserve 50% of the pain? Please do enlighten us, o great judge.
And congrats on your 20/20 hindsight

MercladUK
17th April 2015, 16:09
Those "tax savings" were always a very high risk strategy, however a lot of the punters who bought into them and are now being badly beaten up by HMRC were one or all of:- naive and failed to do proper due diligence on the schemes or they simply believed the scheme providers or frankly they were greedy and assumed they would get away with it.

The scheme users who truly understood that there was a lot of risk put aside a lot of the extra income as a reserve just in case.

The days of the schemes were never a "golden time" they just stored up a lot of severe pain which is being realised now. Anyone that has signed up for a scheme in the last 5 years deserves every bit of the pain they have coming as it's been obvious for a long time that HMRC will do their best to bury them.

Why are you trolling this forum with rubbish like this? Can you not see that many people lives on the line with this retrospective action? We all wish in hindsight we didn't enter such arrangements, but very poor form coming on these boards gloating.

Next time you are tax planning your ISA, pension, trusts or even thinking about gifting to your kids any assets you are trying to avoid tax!!

TykeMerc
17th April 2015, 16:31
I'm not trolling those are realities, I've been contracting for several decades and examined many of the schemes as they were offered to me by salesmen and recommended by other contractors.
I looked at them all as too high a risk strategy at the time (which is a view that I'm eternally grateful I took) and stayed with straight Umbrellas and MyCo Ltd's, I've planned my tax affairs quite carefully but in a risk averse manner.
Every scheme I looked at all smelled not only of being too good to be true, but quite honestly reeked of taking the mickey, it was obvious they would be targeted at some juncture and the scheme providers would take their money and leg it leaving the punters to fight.

As for the last 5 years comment, it's no mystery that HMRC went on the warpath BIG time in 2008 it was well advertised, anyone daft enough to sign up for a scheme in recent years needs their heads examined.

I've not posted here to gloat, you will possibly be aware that I've actively supported the BN66 crowd, not because I support their scheme, but because they are being attacked with retrospective legislation which I consider to be an offence against natural justice.

DotasScandal
17th April 2015, 17:38
So... You are against retrospective legislation and for natural justice, but APNs going back 10 years (the legal equivalent of "shooting first and asking questions later") are cool and we deserve it.
Ok...

Surely, with your experience and years, you do understand it's not about the merits of the schemes (which, by the way, were not created equal), but about the principle of crushing someone financially and psychologically with the objective of leaving that someone too destitute to seek their day in court.

As has been already repeated ad nauseum, 99% of people will pay gracefully if the debt is proven in court. A debt that is merely alleged by HMRC is a different matter entirely.

MercladUK
17th April 2015, 18:27
I'm not trolling those are realities, I've been contracting for several decades and examined many of the schemes as they were offered to me by salesmen and recommended by other contractors.
I looked at them all as too high a risk strategy at the time (which is a view that I'm eternally grateful I took) and stayed with straight Umbrellas and MyCo Ltd's, I've planned my tax affairs quite carefully but in a risk averse manner.
Every scheme I looked at all smelled not only of being too good to be true, but quite honestly reeked of taking the mickey, it was obvious they would be targeted at some juncture and the scheme providers would take their money and leg it leaving the punters to fight.

As for the last 5 years comment, it's no mystery that HMRC went on the warpath BIG time in 2008 it was well advertised, anyone daft enough to sign up for a scheme in recent years needs their heads examined.

I've not posted here to gloat, you will possibly be aware that I've actively supported the BN66 crowd, not because I support their scheme, but because they are being attacked with retrospective legislation which I consider to be an offence against natural justice.

This may be so, but WHY post in this thread? How did you think your "you are all stupid and deserve it" post would be seen?

I don't understand why you would want to post what you did other than to take the high ground. Just seems really pointless...

TykeMerc
17th April 2015, 18:35
I posted in response to the guy who was bemoaning the fact that he missed the boat in tax avoidance terms.

He clearly had no appreciation that he didn't miss the boat, he dodged a very large and indiscriminate bullet however from another thread on CUK it's clear he'd quite like to get into a scheme now....

If you chose to believe that telling the truth about schemes was an attack on yourself, then there's very little which can be done about that.

webberg
17th April 2015, 20:00
right then,

you cant pay an APN because your contracting days and financial rewards were part of a bygone era, so HMRC want their money but how are they going to get it?

questions i think are relavent:

- can they force you to sell your famiy home under joint names to release equity?
- can they extract money from your pension?
- can they deduct regular money from your salary at source? (using what type of calculation?)
- can they make you sell any other assets like cars, etc
- what if you are on benfits? that would be interesting !!!

i await your informed feedback

Subject to usual caveat about this not being my main area.

1. I think not
2. See 3 below - not until it's being drawn
3. yes - they will calculate what you need to live on and take the rest
4. Possibly - depends what they are
5. Don't know.

BrilloPad
17th April 2015, 20:39
I apologise for my post, wasn't trying to troll. Maybe my naivety got the better of me (much like my spelling and grammar).

I am new to this contracting world and it's hard to understand the complexities when reading the posts as on one hand you get told:
- if it sounds too good to be true, it probably is

But on the other hand get message:
- it's tax efficiency and within the rules


Was not my intention to derail the forum topic. I will continue reading as ultimately I want to contract in the most tax efficient manner but with little to no risk of being stung.

My post was probably due to frustration of reading the forums for the past couple of days and realising that contracting now (which I have just started) is probably too late to maximise tax savings which were available a few years back - but still that's no excuse for poor behaviour on my part.

If you had any decency you would f**k off now and not return.

I am stunned your posts have remained and you have not been perma banned.

BrilloPad
17th April 2015, 20:44
I posted in response to the guy who was bemoaning the fact that he missed the boat in tax avoidance terms.

He clearly had no appreciation that he didn't miss the boat, he dodged a very large and indiscriminate bullet however from another thread on CUK it's clear he'd quite like to get into a scheme now....

If you chose to believe that telling the truth about schemes was an attack on yourself, then there's very little which can be done about that.

And I agree entirely with you. Anyway trying any sort of scheme now is asking for it.

With hindsight any poor people trying to use a scheme designed for the rich was asking for it. No-one thought retrospective legislation would come along.

NotAllThere
18th April 2015, 04:40
If you had any decency you would f**k off now and not return.

I am stunned your posts have remained and you have not been perma banned.

We'll see where he goes from now. Naivety and ignorance aren't grounds for banning, and he's apologised fulsomely.

NotAllThere
18th April 2015, 04:46
This may be so, but WHY post in this thread? How did you think your "you are all stupid and deserve it" post would be seen?

I don't understand why you would want to post what you did other than to take the high ground. Just seems really pointless...

In this thread http://forums.contractoruk.com/accounting-legal/105135-no-retro-tax-ongoing-battle-against-s58-fa2008.html TykeMerc's comments (and smeg35's) would not be permitted. Anywhere else, so long as within the general rules of the professional forums and not deliberate trolling, it's fair game. Even if it upsets people. It's clear also that TykeMerc was responding specifically to smeg35's queries. His response was entirely legitimate and appropriate.

cojak
18th April 2015, 08:52
In this thread http://forums.contractoruk.com/accounting-legal/105135-no-retro-tax-ongoing-battle-against-s58-fa2008.html TykeMerc's comments (and smeg35's) would not be permitted. Anywhere else, so long as within the general rules of the professional forums and not deliberate trolling, it's fair game. Even if it upsets people. It's clear also that TykeMerc was responding specifically to smeg35's queries. His response was entirely legitimate and appropriate.

WNATS

He didn't post in the specific EBT or the NTRT threads. This was a question thread.

ASB
18th April 2015, 09:36
In terms of taking the house it may depend in some ways if you are:

Joint tenants - in which case it is jointly owned reverting to remaining joint tenants as others die.
tenants in common - which needs a deed; where independent shares are individually owned.

all joint assets (eg a bank account) are like the above.

assuming the debt is enforceable I would be mightily hacked off if a creditor could get their hands on a joint asset which I had funded; simply because of my joint tenants debt.

I believe there is not entire clarity in this area so would be trying to take advice. Possibly considering whether a notice of disassociation might help. Or a change in tenancy.

chr16v
18th April 2015, 21:30
I'm not trolling those are realities, I've been contracting for several decades and examined many of the schemes as they were offered to me by salesmen and recommended by other contractors.
I looked at them all as too high a risk strategy at the time (which is a view that I'm eternally grateful I took) and stayed with straight Umbrellas and MyCo Ltd's, I've planned my tax affairs quite carefully but in a risk averse manner.
Every scheme I looked at all smelled not only of being too good to be true, but quite honestly reeked of taking the mickey, it was obvious they would be targeted at some juncture and the scheme providers would take their money and leg it leaving the punters to fight.


Personally i think many of the scheme users would share the same caveats that i am i am guilty of.
I am a techy, i work in IT, i dont posses the sharpness in all areas of my life (as does anyone?) and I can be nieve without being greedy. But when choosing a scheme in 2005 i didnt understand or realise that even though a scheme could be legitamately sold to me, and HMRC happliy accept the annual return, i honestly had no clue this was risky. I say it again I work in IT not risk managment or accounting and the scheme looked as genuine as any umbrella or ltd company at the time.
I think some people here who are more savy in these areas are failing to understand that not everyone is blessed with the same set mindset. I think very few ebt users would honestly want to fall foul of HMRC and choose to use a scheme that was likely to blow up in their face with interest.

fielder
19th April 2015, 08:57
I can relate to your post chr16v, without giving to much info away I was a fairly young adult in an Umbrella company with a similar mind set. HMRC don't care though as we are liable no matter what apparently.

StrengthInNumbers
19th April 2015, 12:56
I was new to UK. In my home country if it is illegal tax thing, it will be cash transaction. As no cash transactions were involved and all declared to HMRC I thought it has to be legal.

Second as I was not a high spender but saver with pension a husband wife limited companies with fixed rate vat was giving better take home. Scheme was a bit less. Again made me think this must be more legal and compliant as run by accountants rather then me running a ltd where accounts are my responsibility. Also if take home is less made me think just because of reduced risk.

Today I know inside out and see where I when wrong. If HMRC would have written to me after my first tax return, I would have known at that time where I went wrong. But with HMRC not saying a work, I never dig into the law or visited these forums. Each year enforced my view it was all compliant. Got my first letter in nov 12 and in feb 13 out of scheme.

But since then I am working 7 days a week, lived in a house without heating with family ( have a 5 year old daughter) and saving every where. Finally I will be able to pay off when HMRC comes knocking. But I definitely feel I am being punished because of HMRC not taking their finger out earlier and writing to us early rather years after being in schemes. This is not fair and not just.

DotasScandal
19th April 2015, 14:34
I was new to UK. In my home country if it is illegal tax thing, it will be cash transaction. As no cash transactions were involved and all declared to HMRC I thought it has to be legal.
And to this day, it has not been proven otherwise!!
Many foreign citizens that came into the UK to contribute to the economy followed the same reasoning as you.



Second as I was not a high spender but saver with pension a husband wife limited companies with fixed rate vat was giving better take home. Scheme was a bit less. Again made me think this must be more legal and compliant as run by accountants rather then me running a ltd where accounts are my responsibility. Also if take home is less made me think just because of reduced risk.

Spot on. A VERY large proportion of mid-level contractors did not enter into schemes because of "greed", but because of what they perceived as a good balance between convenience (admin taken care of by scheme), certainty with regard to IR35, and level of take-home pay.
The fact that schemes were DOTAS-registered, now cynically used to paint a target on our backs, played into this false sense of compliance.


Today I know inside out and see where I when wrong. If HMRC would have written to me after my first tax return, I would have known at that time where I went wrong. But with HMRC not saying a word, I never dig into the law or visited these forums. Each year enforced my view it was all compliant.


Exactly. The view held by some of the accounting / tax specialists posting in here is that we should have known it all from the onset. But from the perspective of someone operating in a completely different field (engineering, medical, etc.) the above was completely logical reasoning .

centurian
19th April 2015, 17:11
Spot on. A VERY large proportion of mid-level contractors did not enter into schemes because of "greed", but because of what they perceived as a good balance between convenience (admin taken care of by scheme), certainty with regard to IR35, and level of take-home pay.

Mmm... Not sure I agree with "VERY large proportion"

A lot of contractors remained in the schemes long after the opening salvos of HMRC upping the ante.

And a reasonable number are still in the schemes to this very day.

BrilloPad
19th April 2015, 17:41
And a reasonable number are still in the schemes to this very day.

Quite a few trying to recuperate losses on earlier schemes!

webberg
19th April 2015, 17:47
Mmm... Not sure I agree with "VERY large proportion"

A lot of contractors remained in the schemes long after the opening salvos of HMRC upping the ante.

And a reasonable number are still in the schemes to this very day.

Not in a position to comment on proportions or numbers. Clearly a lot of contractors bought in to the weasel words used in the providers materials and did not apply much in the way of critical analysis to how they could achieve better take home pay than an equivalent salaried employee.

That's not so different to people buying houses is it? When we make that purchase, we all want a good price. We all organise ourselves such that the vendor might sell to us for a lower price that others can have. Might be because we have cash, want to move soon, have a mortgage ready, etc. We all seek advantage.

I don't condemn people for seeking a better deal. I do very much condemn those who take advantage of that basic desire in order to profit unreasonably. That condemnation is enhanced when I see some of the documents and words used. They come very close to outright lies and certainly in some cases, cross that line.

Should users have realised earlier that there was a war on their schemes?

Easy for me to say "yes" because I spend hours a day immersed in tax. The war began in 2002 and has increased in intensity every year since and will do for a while yet. HMRC arguably did not make a declaration of war but rather either had a deliberate plan to be stealthy or more likely just fell into that mode when pressured by politicians.

(It is the latter who have most blame in this situation in my opinion, but I'll forego the rant for now).

In fact, if you asked the man on the Clapham Omnibus in 2004, 2006, 2008, 2010, if contractors tax arrangements were offensive, he would probably say "no" on the grounds that a) he could not grasp the detail and b) nothing said or done by HMRC flagged the issues.

That test remains valid and a Court will eventually ask it.

So, I generally have sympathy for those caught in this mess and who started before say 2011. After that, less so but I believe that HMRC has not acted in an honourable nor sometimes legal manner and therefore should shoulder a lot of blame and not visit the consequences of their ineptitude upon others. I will therefore use every tactic I can think of to prevent an unwarranted excursion into the pockets of users.

Anybody in a scheme now should be asking HARD questions of providers before leaving. Or, just leave. Or, don't join.

Is there an emoticon for climbing off a soapbox?

DotasScandal
19th April 2015, 22:06
Mmm... Not sure I agree with "VERY large proportion"

A lot of contractors remained in the schemes long after the opening salvos of HMRC upping the ante.

And a reasonable number are still in the schemes to this very day.

This is of course subjective, and was based on the (relatively large) population that got in touch with us.
Agree that there are still people in schemes - as far as we're aware these fall into two categories: those that have their head in the sand still, and those who think they are neck deep in this sh*t anyway, think they are doomed, and don't know what to do next (they are in a sort of paralysis, if you will).

Both groups need help and not "you deserve every bit of pain that's coming your way" judgements....

NotAllThere
20th April 2015, 06:03
Personally i think many of the scheme users would share the same caveats that i am i am guilty of.
I am a techy, i work in IT, i dont posses the sharpness in all areas of my life (as does anyone?) and I can be nieve without being greedy. But when choosing a scheme in 2005 i didnt understand or realise that even though a scheme could be legitamately sold to me, and HMRC happliy accept the annual return, i honestly had no clue this was risky...The reasons I didn't get involved in such schemes was that I saw early on that IR35 would be optional, based on set up, and that I have a fundamental objection to anyone controlling my money other than me (which is why I'd never use a brolly).

Tass1968
20th April 2015, 18:57
Whilst accepting that perhaps I ought to have done a little more due diligence on my scheme, and that in hindsight it is perhaps in the grey area of what is 'morally' right or wrong, it still feels wrong to be screwed on account of somebody changing the mind:

The two things that still baffle me;

First, if I buy a financial product and am given bad advice, I have recourse to compensation for that bad advice. So as HMRC gave my scheme the bad advice initially (i.e. advising that it was legal at the time - or at least that what my scheme told me), can I get compensation from HMRC to pay my retrospective tax bill?

And secondly, the VAT my scheme charged for services each year exceeded my newly arrived tax bill for each year in the scheme. Do HMRC have to refund the VAT if the earnings are now considered income?

webberg
20th April 2015, 19:35
[QUOTE=
The two things that still baffle me;

First, if I buy a financial product and am given bad advice, I have recourse to compensation for that bad advice. So as HMRC gave my scheme the bad advice initially (i.e. advising that it was legal at the time - or at least that what my scheme told me), can I get compensation from HMRC to pay my retrospective tax bill?

And secondly, the VAT my scheme charged for services each year exceeded my newly arrived tax bill for each year in the scheme. Do HMRC have to refund the VAT if the earnings are now considered income?[/QUOTE]

First - HMRC did not initially or subsequently give advice. HMRC did NOT tell anybody the scheme was legal or effective. Your scheme provider lied to you if they let you believe that. You will NEVER prove HMRC gave such advice because they didn't.

If you can prove that and the provider is still around, then you have a legal action.

If the provider was FSA regulated (unlikely) you have access to a statutory compensation claim.

Secondly - very good question.

I assume you mean that your nominal employer (IoM company?) raised an invoice on a UK company and charged them VAT?

Let's assume that the VAT was actually paid to the UK Exchequer. The payer of the VAT would have claimed a credit against VAT it owed on sales. Dependent upon the scheme the payer used it may have been partially exempt (especially if a financial services outfit) and therefore the VAT not wholly recoverable.

In that case, if it can be shown that the Government retained some of the VAT and now wants to charge income tax as well, there is a possible (stress possible, not certain) claim that they have taxed the income twice. This is called unjust enrichment and a Court will normally try to ensure it does not happen.

Quite how you go about proving that is interesting. getting the VAT returns of the payer is not possible but they might be persuaded or obligated to supply the information. Sounds expensive in legal terms.

Interesting line to pursue for a while though.

TykeMerc
20th April 2015, 19:38
The two things that still baffle me;

First, if I buy a financial product and am given bad advice, I have recourse to compensation for that bad advice. So as HMRC gave my scheme the bad advice initially (i.e. advising that it was legal at the time - or at least that what my scheme told me), can I get compensation from HMRC to pay my retrospective tax bill?

And secondly, the VAT my scheme charged for services each year exceeded my newly arrived tax bill for each year in the scheme. Do HMRC have to refund the VAT if the earnings are now considered income?

I think if you check carefully while the scheme providers may have implied or just stated (which would be an actual lie) that HMRC approved the scheme. To the best of my knowledge HMRC have never "approved" any scheme, any promoter saying they have approval is either outright lying or impying so artfully that their mugs customers read it as such.
There's more chance of you winning the Derby without a horse and then being named Pope, Chief Rabbi and Chief Ayatollah on the same day than getting a penny from HMRC in "compensation". It was your choice to arrange your tax matters the way you did.

As to the VAT, well were you registered for VAT at the time? Did you enter the scheme providers invoice on your VAT returns at the time? I'm sure you can work out exactly where that one is going too, your choice to pay a fee to the provider of the scheme.

MercladUK
20th April 2015, 20:15
I think if you check carefully while the scheme providers may have implied or just stared (which would be an actual lie) that HMRC approved the scheme. To the best of my knowledge HMRC ave never "approved" any scheme, any promoter saying they have approval is either outright lying or impying so artfully that their mugs customers read it as such.
There's more chance of you winning the Derby without a horse and then being named Pope, Chief Rabbi and Chief Ayatollah on the same day than getting a penny from HMRC in "compensation". It was your choice to arrange your tax matters the way you did.

As to the VAT, well were you registered for VAT at the time? Did you enter the scheme providers invoice on your VAT returns at the time? I'm sure you can work out exactly where that one is going too, your choice to pay a fee to the provider of the scheme.

Good evening, the curtain twitcher returns with yet more "it was your fault" words of wisdom. Rearrange the words off and bore zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzbd ump

StrengthInNumbers
20th April 2015, 21:52
Quite how you go about proving that is interesting. getting the VAT returns of the payer is not possible but they might be persuaded or obligated to supply the information. Sounds expensive in legal terms.

Interesting line to pursue for a while though.

so if provider is around and Vat was paid between employer in IoM and payroll company in UK it is big plus if all documentation is in order?