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DimPrawn
20th September 2015, 11:07
HMRC uses new powers on contractors: 'I was told to pay '£30,000 within 90 days' - Telegraph (http://www.telegraph.co.uk/finance/personalfinance/tax/11865618/HMRC-uses-new-powers-on-contractors-I-was-told-to-pay-30000-within-90-days.html)


Thousands of contractors and freelancers have become ensnared in a £5.5bn tax grab – aimed initially at wealthy tax dodgers – that allows HM Revenue & Customs to demand backdated taxes to be paid, in full, within a three-month deadline.

Previously, HMRC was forced to pursue its missing billions in costly court battles, prompting the Government to approve the legislation in 2014.

Among them is freelance IT technician Mr Adams (not his real name), who since April has received three demands totalling £27,900 from a job he held seven years ago.

If it’s later found that he was innocent of using an “aggressive avoidance” scheme, he will get a refund. In the meantime he has to find the money within months.

“The latest deadline I’ve been given is the end of September,” said Mr Adams, who explained that the amount was around a third of his yearly salary. “If I don’t get the money, I’ll go bankrupt.”


Good old Tories, they found a cash cow to milk. Letters coming to a doorstep near you soon. :devil

xoggoth
20th September 2015, 11:12
aimed initially at wealthy tax dodgers

It's these perpetual extensions of powers that were initially promoted as being for a specific purpose that should make any sane person wary of any government legislation, no matter how sensible it seems at the time.

DimPrawn
20th September 2015, 11:17
It's these perpetual extensions of powers that were initially promoted as being for a specific purpose that should make any sane person wary of any government legislation, no matter how sensible it seems at the time.

Indeed.

A tax system so complex no one understands, and a tax collection agency with almost unlimited powers, that can now bypass the legal system.

Osborne makes Bliar and Brown look like rank amateurs...

PurpleGorilla
20th September 2015, 11:24
So what happens if Mr Adams doesn't have the money to pay the £27k up front?

DaveB
20th September 2015, 11:44
So what happens if Mr Adams doesn't have the money to pay the £27k up front?

If you don't pay an APN within the 90 days they start adding penalties and interest (penalty is up to 15% of the amount "owed" I believe.) Even if you then prove that tax was not owed you remain liable for the penalty, as that sum was not part of the tax owed but incurred as a result of failure to pay the APN.

So if he can't pay the APN, but subsequently proves the tax was not owed, he will still be let with a bill for £4,050, plus whatever it cost him in accountants / advisors fees to argue the case.

DimPrawn
20th September 2015, 11:46
If you don't pay an APN within the 90 days they start adding penalties and interest (penalty is up to 15% of the amount "owed" I believe.) Even if you then prove that tax was not owed you remain liable for the penalty, as that sum was not part of the tax owed but incurred as a result of failure to pay the APN.

So if he can't pay the APN, but subsequently proves the tax was not owed, he will still be let with a bill for £4,050, plus whatever it cost him in accountants / advisors fees to argue the case.

Tax lawyers are cheap, don't worry. Most are paid min wage, so it's not sweat a give year legal battle in the high court. As long as you have £20m in the war chest to pay upfront legal costs, you'll be fine. Or you can just cave in a agree with the HMR&C tax grab if you don't.

suityou01
20th September 2015, 11:59
Bit sensationalist of you DP. This only affects contractors this invested in an offshore tax avoidance scheme. Those with PSCs, that shoot straight dice are not on the radar.

DimPrawn
20th September 2015, 12:01
Bit sensationalist of you DP. This only affects contractors this invested in an offshore tax avoidance scheme. Those with PSCs, that shoot straight dice are not on the radar.

:laugh

AtW
20th September 2015, 13:29
"Between 2008 and 2010, Mr Adams freelanced at various banks in London. "

Worked for 3 years in a bank and does not have 27 grand cash saved, especially given not having to pay taxes everybody else does? When I had my first proper job in UK on £35k per YEAR I was saving at least £1k after tax every month. That money is the tax element that he should have expected to pay, how come he was so dumb not to put it into HMRC no-questions-asked deposit scheme which would have stopped all penalties and fines in the event of his "scheme" not working the way he was told?

Just how fooking dumb one needed to be to continue to use those schemes AFTER HMRC required those schemes to register and you had to put the number on your tax return? At that point surely it should have been obvious - if it requires a tax scheme number then it should not be touched with a bargepole because it's a fooking SCHEME.

tomtomagain
20th September 2015, 13:51
If only he hadn't signed up to that dodgy tax avoidance scheme and just played it nice and simple like most of the rest of us do.

Invoice his clients. Filled in his tax return. Paid his dues.

He wouldn't have all this stress.

He must be kicking himself now for being so greedy ..... oh no wait ... he's bleating on about it being HMRC's fault.

MicrosoftBob
20th September 2015, 13:56
If only he hadn't signed up to that dodgy tax avoidance scheme and just played it nice and simple like most of the rest of us do.

Invoice his clients. Filled in his tax return. Paid his dues.

He wouldn't have all this stress.

He must be kicking himself now for being so greedy ..... oh no wait ... he's bleating on about it being HMRC's fault.

Until they come after the rest of us, and start using APNs, it's all about fairness after all

tomtomagain
20th September 2015, 14:12
Until they come after the rest of us, and start using APNs, it's all about fairness after all

He was involved in some dodgy scheme.

The tax laws will change. Our tax rates will go up and down. But nobody is coming to come after me and say "You owe 30k".

If you keep it simple then there's nothing to fear.

If on the other hand you have joined a scheme that promises to cut your tax rate to 10% by lending you some money from a fictitious source that you don't have to pay back then you were a fool.

ASB
20th September 2015, 14:30
Perhaps he was foolish.

He certainly wont get a lot of sympathy.

However there is one stand out fact.

The scheme he used has not been tested for its efficacy.

AtW
20th September 2015, 14:54
Perhaps he was foolish.

Perhaps?

BrilloPad
20th September 2015, 15:29
Bit sensationalist of you DP. This only affects contractors this invested in an offshore tax avoidance scheme. Those with PSCs, that shoot straight dice are not on the radar.

And I thought avoidance was legal?

Anyway, my concern is that APN powers will be extended to anyone HMRC believes is IR35 caught. And will take the money allegedly owed directly out of bank accounts.

I really hope that IPSE and writing to MPs and petitions will make a difference.

AtW
20th September 2015, 15:31
And I thought avoidance was legal?

Famous last words...

What did they do to "tax avoiders" in Victorian England?

BrilloPad
20th September 2015, 15:32
He was involved in some dodgy scheme.

The tax laws will change. Our tax rates will go up and down. But nobody is coming to come after me and say "You owe 30k".

If you keep it simple then there's nothing to fear.

If on the other hand you have joined a scheme that promises to cut your tax rate to 10% by lending you some money from a fictitious source that you don't have to pay back then you were a fool.

I hope you are right. Were you fully IR35 compliant? As I am concerned that might deem you owe everything under IR35 plus penalties plus interest and take it out of your bank account.

HMRC might say that you were dodgy. What is the definition of dodgy?

I would like to see a legal definition.

AtW
20th September 2015, 15:43
Why tax avoiders have all the money spent???

Why didn't they use CDTs?

Why didn't they insist on full reputable (ie Lloyd's of London) 3rd party insurance with the "scheme provider" which would pay tax/penalties in the event of scheme deemed "not working" by HMRC??? Such insurance should be legally compulsory with sale of any DOTAs products in UK - that should have killed the market for "tax avoidance" nicely, though not even sasguru would touch DOTAS scheme now.

EternalOptimist
20th September 2015, 16:07
Not getting involved in the rights or wrongs of this, but when I grew up, I was taught not to look like a victim. If you do, you are more likely to become one.

Same thing applies to looking like a 'low hanging fruit'

Just don't do it.


Be a hard to get fruit, like me

TestMangler
20th September 2015, 17:21
If only he hadn't signed up to that dodgy tax avoidance scheme and just played it nice and simple like most of the rest of us do.

Invoice his clients. Filled in his tax return. Paid his dues.

He wouldn't have all this stress.

He must be kicking himself now for being so greedy ..... oh no wait ... he's bleating on about it being HMRC's fault.

First, I need to point out that I have never used any scheme and have been LTD since I started contracting.

With that out of the way, I find comments like yours, aimed at people who were in schemes, utterly ridiculous and the product of someone who has no real clue about contracting or business.

Thousands upon thousands of people were taken into these schemes at the very early stage in their contracting lives, usually being advised by agents and, dare I say it, accountants.

Imagine you've been an employee for 10 years or so and get made redundant or some such thing and you fall into contracting kind of by accident, when applying for perm jobs. You know nothing of how contracting works and take advice from agents who in turn pass you on to advisors. These people don't turn up with Dick Turpin masks, whispering behind their hands that they have a 'scheme' that you can use to evade tax. They are marketed as a legitimate way of doing business and indeed, they were at the time.

Would you come back with glib comments if Osbourne decides everyone who works via an agency is IR35 caught and then passes retrospective legislation ?

tomtomagain
20th September 2015, 17:44
First, I need to point out that I have never used any scheme and have been LTD since I started contracting.

With that out of the way, I find comments like yours, aimed at people who were in schemes, utterly ridiculous and the product of someone who has no real clue about contracting or business.


Glad to hear it.

So this is my version of events. I worked as a contractor in "The City" for a decade. In a team of 60+ contractors within a department of over 100 contractors.

Back in the early to mid 2000's these schemes were a hot topic of conversation. The vast, vast majority of the people at the places I contracted knew to avoid these with a barge poll. They were too good to be true.

However there was a small minority of contractors who absolutely hated paying any tax and would gleefully tell everyone within our group about how they had signed up to some "Loans" scheme. The schemes went like this. All contract money went to some offshore entity. Offshore entity gave them a "Loan" but they were never expected to pay that loan back.

We had guys paying around 2% tax. From my recollection of the time we had numerous pub conversations on the subject with people pointing out ( not just myself ) that even if the scheme's were technically legal that joining them was going to expose one's self to a huge risk.

It was patently obvious ( even to someone like me who knows nothing about business or contracting ) that a scheme that let you cut your tax rate from around 35% to 5% was not going to be allowed to exist for long.

A number of the guys ( and one of the gals ) I knew back then have been caught. Yes they are bleating that "It's not fair". But they really only have themselves to blame. Plenty of people were telling them to stay well clear of these arrangements at the time.

Of course there may be some people who went through a Brolly and were pushed into such a scheme, OK, I could feel some sort of pity for them if I really tried hard. But really they should have done more research.



the product of someone who has no real clue about contracting or business.


Well I might not know anything compared to you but I managed to turn my "Plan B" into a full time "Plan A". Am just coming up to the end of my second year full time on "Plan B". With a record turnover and profit.


Haven't had a contract in 24 months. Made more money than ever. Do I get a "Boomed" or a Banana?

MicrosoftBob
20th September 2015, 18:10
He was involved in some dodgy scheme.

The tax laws will change. Our tax rates will go up and down. But nobody is coming to come after me and say "You owe 30k".

If you keep it simple then there's nothing to fear.

If on the other hand you have joined a scheme that promises to cut your tax rate to 10% by lending you some money from a fictitious source that you don't have to pay back then you were a fool.

Like Hector changed the basis of S660 because they wanted to go on a cash grab

If you're alive or dead Hector will bleed you dry as much as they can, above and beyond the law

raphal
20th September 2015, 19:19
HMRC APN INFO (http://hmrc-apn.info/testimonies)

AtW
20th September 2015, 23:32
First, I need to point out that I have never used any scheme and have been LTD since I started contracting.

Good.

I'll get you last then.

HTH

Hector


http://www.youtube.com/watch?v=mgm8P3w_80k


http://www.youtube.com/watch?v=s8JFVSNxkEI

AtW
20th September 2015, 23:42
If you're alive or dead Hector will bleed you dry as much as they can, above and beyond the law

How often did it happen to people who earned enough to pay 40/45/50 taxation levels?

It happens, as predicted long time ago, to those who thought that paying 5-10% to "scheme provider" and 0% to HMRC would results in savings on 40/45% tax.

HMRC got 0% instead of 40/45%, what kind of stupid person did it take to think it would be ok AFTER it was required to provide DOTAS number?

cojak
21st September 2015, 07:04
And take a time machine back to 2005

http://forums.contractoruk.com/accounting-legal/2869-concern-about-payschemeplus.html#post22837

Dear Underscore2 and Rebecca Loos - where are they now?

Probably with a new user login in HMRC EBT Scheme Enquiries thread...

centurian
21st September 2015, 07:41
So this is my version of events. I worked as a contractor in "The City" for a decade. In a team of 60+ contractors within a department of over 100 contractors.

This is my recollection of the past as well.

Also to add that the contractors in the schemes were continually winding up the other contractors - "thanks for paying my tax for me" etc.

I have sympathy for the fact that HMRC sat on their backsides for years, adding some weight to the claims of the providers that it was all "legal".

However, they all knew there was something slightly dodgy about these schemes. No-one can be intelligent enough to work in these places, yet so stupid to believe that paying virtually no tax doesn't even have the slightest risk attached to it.

cojak
21st September 2015, 08:03
This is my recollection of the past as well.

Also to add that the contractors in the schemes were continually winding up the other contractors - "thanks for paying my tax for me" etc.

I have sympathy for the fact that HMRC sat on their backsides for years, adding some weight to the claims of the providers that it was all "legal".

However, they all knew there was something slightly dodgy about these schemes. No-one can be intelligent enough to work in these places, yet so stupid to believe that paying virtually no tax doesn't even have the slightest risk attached to it.

Some of them admitted to greed (and thought that they knew the risk...) http://forums.contractoruk.com/accounting-legal/21499-sanzar-partnership-new-iom-company-2.html#post444417

cojak
21st September 2015, 08:14
Oh Very Dear...

http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j8599/TC04621.pdf

The beginning of the end I fear...

Better brace myself and get the hot sweet tea and Citizan's Advice Bureau contacts at the ready...

DaveB
21st September 2015, 08:17
The problem here isn't that people used dodgy tax schemes, although HMRC would like you to think it is.

What is happening is that HMRC are able to effectively demand money with menaces for tax bills that may or may not actually be due and force you to pay them upfront before actually being allowed to challenge whether they have got it right or not. They don't have to prove anything, they just have to make the demand. The onus is then on the tax payer to show that they paid the correct amount of tax in order to get their money back. The people who decide whether they have done that are HMRC.

If they make it work with the historical avoidance cases, which may or may not have been legitimate at the time, then you can bet they will start looking for other ways to apply it. Stand by for Advance Payment Notices for tax from Ltd contractors on the basis that they think you should have been operating inside IR35 6 years ago.

And no, having insurance from QDOS et al will not mean you don't have to pay it. It just means you might get it back at some unspecified point in the future.

NotAllThere
21st September 2015, 08:21
And take a time machine back to 2005

http://forums.contractoruk.com/accounting-legal/2869-concern-about-payschemeplus.html#post22837

Dear Underscore2 and Rebecca Loos - where are they now?

Probably with a new user login in HMRC EBT Scheme Enquiries thread...

Fascinating. With this (http://forums.contractoruk.com/accounting-legal/2869-concern-about-payschemeplus-3.html#post34485)from Mal, 28th September 2005:


As of the last budget, Dim Prawn made it possible for future tax legislation to be made retrospective to December 2004.

DimPrawn
21st September 2015, 08:26
As of the last budget, Dim Prawn made it possible for future tax legislation to be made retrospective to December 2004.


Some of my finest work. :smokin

I mean (cough) her finest work. :eyes

cojak
21st September 2015, 08:27
The problem here isn't that people used dodgy tax schemes, although HMRC would like you to think it is.

What is happening is that HMRC are able to effectively demand money with menaces for tax bills that may or may not actually be due and force you to pay them upfront before actually being allowed to challenge whether they have got it right or not. They don't have to prove anything, they just have to make the demand. The onus is then on the tax payer to show that they paid the correct amount of tax in order to get their money back. The people who decide whether they have done that are HMRC.

If they make it work with the historical avoidance cases, which may or may not have been legitimate at the time, then you can bet they will start looking for other ways to apply it. Stand by for Advance Payment Notices for tax from Ltd contractors on the basis that they think you should have been operating inside IR35 6 years ago.

And no, having insurance from QDOS et al will not mean you don't have to pay it. It just means you might get it back at some unspecified point in the future.

And we all know the DOTAS type smoking gun question on the SA forms, don't we boys and girls?

d000hg
21st September 2015, 08:56
"Between 2008 and 2010, Mr Adams freelanced at various banks in London. "

Worked for 3 years in a bank and does not have 27 grand cash saved, especially given not having to pay taxes everybody else does? Property?

That said, for someone who is earning £80k ish it shouldn't be a big ask. He said 27k is 1/3 of his salary which he says like "poor me" but means the opposite.

MrMarkyMark
21st September 2015, 08:59
"Between 2008 and 2010, Mr Adams freelanced at various banks in London. "


Worked for 3 years in a bank and does not have 27 grand cash saved

Fast cars, exotic holidays, loose women, drug habit.

Spent :smokin.

NotAllThere
21st September 2015, 09:04
Fast cars, exotic holidays, loose women, drug habit.

Spent :smokin. the rest wastedFTFY

cojak
21st September 2015, 09:05
Fast cars, exotic holidays, loose women, drug habit.

Spent :smokin.

Big houses, divorces and kids will do it as well...

suityou01
21st September 2015, 09:07
I wonder if any of these people take this to the European court of human rights. After all I thought the right to a fair trial was a basic one.

LondonManc
21st September 2015, 09:20
Big houses, divorces and kids will do it as well...

Having an extension built to an average sized semi can have a similar impact too.

Gone below my ideal war chest size at the moment but hopefully will recover that next year with kids getting older and having part time jobs to self subsidise their pocket money.

VectraMan
21st September 2015, 09:29
Big houses, divorces and kids will do it as well...

Yes well if you only have those things because of your ill gotten gains you can't really complain about having to downsize and pay the money back. The usual sob story is "I might lose my house".

I have no sympathy for the off shore loan crowd, but I agree this "guilty until proven innocent" thing is both wrong and counter-productive as it now allows them to play the martyr.

MrMarkyMark
21st September 2015, 09:43
Having been around a while like some of the posters on here, I have seen these schemes come, go and blow.

Pretty much my whole family are self employed in some way or another, therefore, I always knew you didn't get something for nothing.

Conversations were always had, with other contractors, about how much more you can get, approved scheme, no problem, why don't you etc. etc.
They always knew exactly what they were doing.

Couldn't see how it could possibly be worth it, given you were only talking about creaming an extra 10-12% (over LTD).

:eyes

centurian
21st September 2015, 09:53
I wonder if any of these people take this to the European court of human rights. After all I thought the right to a fair trial was a basic one.

I am sure it will go all the way to the ECHR.

HMRC's basic defence is that APNs are the same as PAYE - you pay the money up front and if you disagree with the amounts taken, you take HMRC to court to get the money back. The concept of pay now, argue later has been enshrined in the tax code for decades.

DaveB
21st September 2015, 10:02
I am sure it will go all the way to the ECHR.

HMRC's basic defence is that APNs are the same as PAYE - you pay the money up front and if you disagree with the amounts taken, you take HMRC to court to get the money back. The concept of pay now, argue later has been enshrined in the tax code for decades.

APN's are not the same.

Under PAYE you make an advance payment on next years tax, based on the current year. When you submit your SA for the next year the tax payed is set against the tax owed and if it turns out you paid too much in the advance payment you get it back pretty much immediately. They will also pay interest on any extra that you paid. No arguing involved.

With APN's HMRC can decide you owe them money, for whatever reason, and it doesn't have to be linked to your current PAYE status, and demand that you pay all of it within 90 days or suffer penalties. The onus is then on you to prove that you didn't owe it. HMRC will then decide whether your proof is acceptable before they give you the money back, or not. They pay no interest on the money held if they do decide to give it back and if you can't pay the APN for whatever reason, you end up having to pay a 15% penalty regardless of the final outcome.

If they decide to take a blanket approach and challenge every contractors IR35 payments by deciding we were all actually inside unless we can prove other wise you could end up with a tax bill for all the "unpaid" tax and NI for your contracting years, with 90 days to pay or suffer the consequences.

DimPrawn
21st September 2015, 10:03
Lots of people are missing the point here.

The point is HMR&C are using powers introduced by our Tory friends who love and cherish us, to demand money with menaces for tax they believe you owe, going back many years. They don't have to present why, or how they calculate it, they just say pay £50K or whetever by Wednesday or we send the boys round.

It's up to YOU then, to pay £500/hr laywers and tax advisors and PROVE you don't owe the money.

Whether it's some obviously dodgy "scheme" or our old friend, "disguised employment" matters not.

psychocandy
21st September 2015, 10:12
Signed up for dodgy scheme, thinking, hmm I can get away with this. Probably paid something like 2-3% tax and live the life of riley for years.

Now bleating that hes got caught with his cock in till. Amount of sympathy = ZERO from me.

Got a bit of thing about this having seen it first hand. Dear brother spent years acting like a millionaire, paid zero tax, chucked letters in the bin. Then bleats because its so unfair that hes got to pay it back now and how can he clothe and feed his kids. Boo hoo.

suityou01
21st September 2015, 10:26
Lots of people are missing the point here.

The point is HMR&C are using powers introduced by our Tory friends who love and cherish us, to demand money with menaces for tax they believe you owe, going back many years. They don't have to present why, or how they calculate it, they just say pay £50K or whetever by Wednesday or we send the boys round.

It's up to YOU then, to pay £500/hr laywers and tax advisors and PROVE you don't owe the money.

Whether it's some obviously dodgy "scheme" or our old friend, "disguised employment" matters not.

So the IR35 insurance racket just collapsed overnight?

VectraMan
21st September 2015, 10:58
If they decide to take a blanket approach and challenge every contractors IR35 payments by deciding we were all actually inside unless we can prove other wise you could end up with a tax bill for all the "unpaid" tax and NI for your contracting years, with 90 days to pay or suffer the consequences.

I hope everybody's been putting the "extra" money aside.

If you did the right thing (which I never did) of having a review or whatever before deciding to be outside IR35 then proving otherwise should be a formality. In theory. At least IR35 comes down to a matter of opinion; the loan that's never repaid scam is so clearly a scam there's really no debate. Maybe instead of paying the tax they'd like to repay their loans. That'd shut them up.

suityou01
21st September 2015, 11:06
I hope everybody's been putting the "extra" money aside.

If you did the right thing (which I never did) of having a review or whatever before deciding to be outside IR35 then proving otherwise should be a formality. In theory. At least IR35 comes down to a matter of opinion; the loan that's never repaid scam is so clearly a scam there's really no debate. Maybe instead of paying the tax they'd like to repay their loans. That'd shut them up.

I think the point is, you have to pay the money first, then claim it back through the courts. So if in HMRC's opinion you owe them 50K, then you have 3 months to pay.

tomtomagain
21st September 2015, 11:06
Maybe instead of paying the tax they'd like to repay their loans. That'd shut them up.

I wonder if the people who run these offshore loan schemes ever think about calling in the loans?

VectraMan
21st September 2015, 11:21
I think the point is, you have to pay the money first, then claim it back through the courts. So if in HMRC's opinion you owe them 50K, then you have 3 months to pay.

Which will spawn a whole new sub-industry of IR35 related claims against HMRC. Once again it's only the lawyers that win.

d000hg
21st September 2015, 11:21
I wonder if the primary objective here is to get more money, OR to put the frighteners on anyone who is considering using tax avoidance going forward... at a stroke making a drastic step on "reducing tax avoidance"?

OwlHoot
21st September 2015, 11:32
I wonder if the primary objective here is to get more money, OR to put the frighteners on anyone who is considering using tax avoidance going forward... at a stroke making a drastic step on "reducing tax avoidance"?

They can't fool you, Sherlock! :laugh

centurian
21st September 2015, 12:02
APN's are not the same.

Of course they are not the same, nor was I suggesting that they were.

But this will be the crux of their defence - the basic underlying principle that a person paying PAYE has to pay the tax due up front - it is seized from them by their employer - and if they disagree with the calculations, to firstly ask HMRC nicely for the money back - and if all else fails, to take HMRC to court.

The details are very different, but HMRC will focus only the underlying principle of paying the tax in advance is the same - and argue it is therefore "fair"

Will this argument wash with the courts, no idea. But a good HMRC brief will definitely try and drive that point home.

MicrosoftBob
21st September 2015, 12:06
Perhaps that should be raised in parliament, after all if APNs are good enough for us, they should be good enough for MPs expenses

suityou01
21st September 2015, 12:11
This thread needs SASGuru :laugh

LondonManc
21st September 2015, 12:17
Needs someone to take this to the European courts. You're putting lives at risk without evidence.

DaveB
21st September 2015, 12:25
Of course they are not the same, nor was I suggesting that they were.

But this will be the crux of their defence - the basic underlying principle that a person paying PAYE has to pay the tax due up front - it is seized from them by their employer - and if they disagree with the calculations, to firstly ask HMRC nicely for the money back - and if all else fails, to take HMRC to court.

The details are very different, but HMRC will focus only the underlying principle of paying the tax in advance is the same - and argue it is therefore "fair"

Will this argument wash with the courts, no idea. But a good HMRC brief will definitely try and drive that point home.

No, it's not the same principle.

Under PAYE you only pay on account if you have to complete a self assessed tax return. If you are a normal employee it is deducted from your pay, at the point at which you are paid, for the period which that pay relates to. There is no advance payment happening. The only way it can go wrong is if your employer screws up or HMRC has you on the wrong tax code.

If you do complete an SA they you pay half the forecast tax due on account, based on your current years income, not some arbitrary amount that HMRC may decide you owe for tax years already completed. It is offset against tax falling due in the next year, at which point you pay the balance. If you feel your liabilities will be substantially different you can make a submission to HMRC to revise your payment due on account.

You cannot appeal an APN unless you can demonstrate HMRC have got it wrong, and even then you still have to pay up in 90 days or face penalties.

cojak
21st September 2015, 12:33
So in a naive DOTAS like way - who DID tick 'YES' to the P35 Question 6 'Are you a PSC'?

:nerd

MicrosoftBob
21st September 2015, 12:39
So in a naive DOTAS like way - who DID tick 'YES' to the P35 Question 6 'Are you a PSC'?

:nerd

I imagine prostitutes using a ltd could be in hot water over that question

AtW
21st September 2015, 12:46
Property? That said, for someone who is earning £80k ish it shouldn't be a big ask. He said 27k is 1/3 of his salary which he says like "poor me" but means the opposite.

Property schmoperty, good warchest in the bank should always be available, that guy was a contractor ffs!

BrilloPad
21st September 2015, 12:49
I wonder if the primary objective here is to get more money, OR to put the frighteners on anyone who is considering using tax avoidance going forward... at a stroke making a drastic step on "reducing tax avoidance"?

Primary step is for HMRC to have fun. Taxpayer misery always has that effect on them.

wantacontract
21st September 2015, 12:57
well I am hoping the government take their time extracting payment out of these avoidance schemes and forget about the IR35..

BrilloPad
21st September 2015, 12:58
well I am hoping the government take their time extracting payment out of these avoidance schemes and forget about the IR35..

Its the thin end of the wedge. If HMRC are not stopped then they will come after everybody.

VectraMan
21st September 2015, 13:08
Its the thin end of the wedge. If HMRC are not stopped then they will come after everybody.

Listen, and understand! HMRC is out there! It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead*.


*And possibly not even then.

d000hg
21st September 2015, 13:10
Property schmoperty, good warchest in the bank should always be available, that guy was a contractor ffs!Permies don't have warchests though... maybe back then he had it in cash and now spent/invested/lost it. Maybe he went back to being a permie after losing all his money :)

MicrosoftBob
21st September 2015, 13:34
Listen, and understand! HMRC is out there! It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead*.


*And possibly not even then.

I say we take off and nuke the entire hmrc sites from orbit. It's the only way to be sure.

DimPrawn
21st September 2015, 13:40
http://i323.photobucket.com/albums/nn464/Mouse1812/hmrc_zps3566c8ab.jpg

AtW
21st September 2015, 13:43
I wonder if the people who run these offshore loan schemes ever think about calling in the loans?

They could sell those loans to debt collectors for half the value...

AtW
21st September 2015, 13:45
I wonder if the primary objective here is to get more money, OR to put the frighteners on anyone who is considering using tax avoidance going forward... at a stroke making a drastic step on "reducing tax avoidance"?

The objective is to frighten to death and then collect 40% inheritance tax...

BrilloPad
21st September 2015, 13:46
I wonder if the people who run these offshore loan schemes ever think about calling in the loans?

There was one firm that did. Redding I think? I tried a quick CUK search but could not find anything.

I think they went to a private forum and I never saw any more.

shaunbhoy
21st September 2015, 13:53
IIRC, Tax Avoidance was/is not illegal, only Tax Evasion. I'd imagine some sharp-suited lawyer might be able to argue that convincingly despite HMRC's protests to the contrary.
Of course some of these schemes sailed very close to the wind and only had a fairly short shelf life before being snuffed out.
If some of those schemes operated legally before Gordon Brown "closed the loophole" then surely they can only realistically go back as far as that date in pursuance of back taxes?
The closure of said schemes' loophole would have been around 2002-3 wouldn't it?

AtW
21st September 2015, 14:08
Why tax avoidance schemes are allowed to be sold without warranties in a form of 3rd party insurance in case the product "did not work"???

centurian
21st September 2015, 14:41
No, it's not the same principle.

Under PAYE you only pay on account if you have to complete a self assessed tax return. If you are a normal employee it is deducted from your pay, at the point at which you are paid, for the period which that pay relates to. There is no advance payment happening. The only way it can go wrong is if your employer screws up or HMRC has you on the wrong tax code.

If you do complete an SA they you pay half the forecast tax due on account, based on your current years income, not some arbitrary amount that HMRC may decide you owe for tax years already completed. It is offset against tax falling due in the next year, at which point you pay the balance. If you feel your liabilities will be substantially different you can make a submission to HMRC to revise your payment due on account.

You cannot appeal an APN unless you can demonstrate HMRC have got it wrong, and even then you still have to pay up in 90 days or face penalties.

I think you're missing the point.

Obviously, there are huge differences in the detail - of which you have detailed above, but HMRC will argue that this is irrelevant - the underlying principle is the same - pay first, argue later.

I'm not saying this argument will win in court - it's up to the judges to decide. But I am saying to expect arguments like this. Remember that there is no hard and fast law as to what constitutes a breach under the ECHR. Both sides have a very latitude to argue their definition of "fair".

Or to put it another way, what do you seriously think HMRC will do at the ECHR - say "oh, we agree it's unfair - how silly of us" - of course not, they'll fight it all the way using whatever arguments they feel will win - however nonsensical it may seem to us.

Chuck
21st September 2015, 14:51
Or to put it another way, what do you seriously think HMRC will do at the ECHR - say "oh, we agree it's unfair - how silly of us" - of course not, they'll fight it all the way using whatever arguments they feel will win - however nonsensical it may seem to us.

And HMRC has a bottomless pit of our money to pay for it all.

AtW
21st September 2015, 15:09
Isn't there an argument that those "schemes" were missold and therefore organizers could be pursued in courts?

VectraMan
21st September 2015, 15:14
Or to put it another way, what do you seriously think HMRC will do at the ECHR - say "oh, we agree it's unfair - how silly of us" - of course not, they'll fight it all the way using whatever arguments they feel will win - however nonsensical it may seem to us.

If the Kippers get their way Britain will no longer be subject to the ECHR. Problem solved.

tomtomagain
21st September 2015, 15:21
They could sell those loans to debt collectors for half the value...

That would be pure evil .... frankly I wouldn't put it past them.

DEBT COLLECTOR : 'Ere we've come to collect the £250k you've been loaned by OffshoreTaxEfficiency Inc.

CONTRACTOR : Ahhh you see there's been some sort of mistake. You see its only a pretend loan so I didn't have to pay tax.

DC : I don't care. I'm taking the money or breaking your legs.

centurian
21st September 2015, 15:52
That would be pure evil .... frankly I wouldn't put it past them.

DEBT COLLECTOR : 'Ere we've come to collect the £250k you've been loaned by OffshoreTaxEfficiency Inc.

CONTRACTOR : Ahhh you see there's been some sort of mistake. You see its only a pretend loan so I didn't have to pay tax.

DC : I don't care. I'm taking the money or breaking your legs.

That is what I always found to be the paradox of the loan schemes.

In order to be fully and absolutely 100% out of reach of HMRC, it had to be an absolutely genuine loan, which meant it could be called in at any point.

Quite why anyone would agree to forgo earnings and in return receive a "loan" is beyond me.

AtW
21st September 2015, 15:59
Quite why anyone would agree to forgo earnings and in return receive a "loan" is beyond me.

More greed cells in the head than brain cells.

"In the words of Kenneth Parker J, the Scheme would “appear to realise every taxpayer’s dream of lawfully avoiding, or at least greatly reducing, income tax in any
jurisdiction”. In the case of Mr Huitson the effective rate of tax he would suffer on his income would be approximately 3.5%"

Zero Liability
21st September 2015, 19:12
And I thought avoidance was legal?

Anyway, my concern is that APN powers will be extended to anyone HMRC believes is IR35 caught. And will take the money allegedly owed directly out of bank accounts.

I really hope that IPSE and writing to MPs and petitions will make a difference.

They could be, but I presume it would require substantial legislative change, because my understanding is that they can only do this where they believe the scheme in question is materially similar to one already defeated in court. I struggle to see how they could do that with IR35, where their win:loss ratio when challenged is abysmal, and where each case is fairly unique. Perhaps if they reformed it to boil it down to SDC, but even then that is a pretty complex area of law.

psychocandy
22nd September 2015, 07:32
Must admit I didn't know that about APNs. i.e. You had to pay up then sort it out later or face penalties....

But, in reality surely this isnt going to happen surely?

Like I said, going back to the story of my brother. Self-employed. Didn't bother paying tax for 5 years. Chucked letters in the bin, demands etc. Just bunged it all and ignored them. Eventually, and it took them years, they got serious though and threatened jail etc. because he was bang to rights.

So he decided to sort it out. Can't remember the exact figures but he owed something like 50K with a part of this being fines etc obviously.

In the end, after he got an accountant on board to do the bargaining etc, they waived ALL the fines, and even some of the outstanding tax. He paid I think a few K up front, then the rest over about 2-3 years every month. Ended up paying less than he would have originally. (but he still moaned).

Point being - from what I've seen they aint gonna come steaming in demand £200K and declare you bankrupt. I could be wrong of course but this is just what I've seen.

MrMarkyMark
22nd September 2015, 07:42
Point being - from what I've seen they aint gonna come steaming in demand £200K and declare you bankrupt.

Point now actually being, different times, different government, different deficit.
I'm sure everyone feels really reassured reading your brothers story and associated comments.

:laugh

rl4engc
22nd September 2015, 09:19
I can't see HMRC coming after people possibly caught by IR35 in the same blanket manner; it's not just IT contractors and the like that work in this way but plenty of managers and company directors AKA traditional Tories.

It kicked off a few years ago as it was "revealed" in the press that lots of public sector managers were working in this way, e.g. in the BBC etc. which ruffled feathers as obviously they're taxpayer funded. Not so the private sector.

I think this is just a shot above the bows for people considering these agressive schemes.. "We'll come after you at any point in the future.."

vetran
22nd September 2015, 09:24
did your brother have any assets?

If he had none being nice was the only way they could get him to pay.

BrilloPad
22nd September 2015, 12:08
More greed cells in the head than brain cells.

"In the words of Kenneth Parker J, the Scheme would “appear to realise every taxpayer’s dream of lawfully avoiding, or at least greatly reducing, income tax in any
jurisdiction”. In the case of Mr Huitson the effective rate of tax he would suffer on his income would be approximately 3.5%"

And what is wrong with lawfully avoiding?

Its irrelevant anyway - the question is should HMRC be allowed to assume guilt?

d000hg
22nd September 2015, 13:45
I think this is just a shot above the bows for people considering these agressive schemes.. "We'll come after you at any point in the future.."BN66 et al should've probably hammered home the point "don't f*** with HMRC" by now but I agree.

AtW
22nd September 2015, 14:35
And what is wrong with lawfully avoiding?

Nothing if your plan is to have your life totally wrecked by the tax office.

psychocandy
23rd September 2015, 08:05
did your brother have any assets?

If he had none being nice was the only way they could get him to pay.

I agree this may have had something to do with it.

vetran
23rd September 2015, 09:26
I agree this may have had something to do with it.

HMRC's Razor


Never attribute to nicety that which is adequately explained by improved chance of payment.

raphal
23rd September 2015, 11:31
I can't see HMRC coming after people possibly caught by IR35 in the same blanket manner; it's not just IT contractors and the like that work in this way but plenty of managers and company directors AKA traditional Tories.

It kicked off a few years ago as it was "revealed" in the press that lots of public sector managers were working in this way, e.g. in the BBC etc. which ruffled feathers as obviously they're taxpayer funded. Not so the private sector.

I think this is just a shot above the bows for people considering these agressive schemes.. "We'll come after you at any point in the future.."

If someone is caught by IR35, will there be any action on the client and the agency the contractor was engaged with ?

vetran
23rd September 2015, 11:35
If someone is caught by IR35, will there be any action on the client and the agency the contractor was engaged with ?

No Next!

BrilloPad
23rd September 2015, 13:05
I can't see HMRC coming after people possibly caught by IR35 in the same blanket manner; it's not just IT contractors and the like that work in this way but plenty of managers and company directors AKA traditional Tories.

It kicked off a few years ago as it was "revealed" in the press that lots of public sector managers were working in this way, e.g. in the BBC etc. which ruffled feathers as obviously they're taxpayer funded. Not so the private sector.

I think this is just a shot above the bows for people considering these agressive schemes.. "We'll come after you at any point in the future.."

Total bollux.

Using scare tactics a lot of people just pay up. Now they have APN and can take money direct from your account. A lot of people will just fold under the pressure.

HMRC are getting more aggressive and they need to be stopped.

AtW
23rd September 2015, 17:03
Using scare tactics a lot of people just pay up. Now they have APN and can take money direct from your account. A lot of people will just fold under the pressure.

How would that happen if vast majority of people had their money spent already?

What will have to happen is bi-partisan bill quickly passed called The Involuntary Organ Donations Act 2015.

raphal
26th September 2015, 11:24
If someone is caught by IR35, will there be any action on the client and the agency the contractor was engaged with ?


No Next!

I thought client avoiding NI & PAYE by taking contractor, should get the attention of hmrc as much the contractor who was caught by IR35.