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The next step

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    The next step

    At the end of this month the consultation period for HMR&C's 'High Risk Tax Avoidance Schemes' will end; the document seems to make their intention extremely clear:

    5. Payment of the tax in dispute
    5.1 The objective is to remove the cash flow advantage to users of high risk avoidance schemes of retaining the tax understated until the case is settled. This will be done by providing that users of such schemes will be subject to an additional charge on amounts that are underpaid. Users will be able to protect themselves from the additional charge by paying the tax in dispute upfront (i.e. when HMRC believes it should have been paid). The additional charge will be set at a rate that will remove the cash flow advantage of not paying the tax upfront.
    Payment upfront
    5.2 Taxpayers are required to complete returns on the basis of their best assessment of the amount of tax they think is due. A person who uses a listed scheme might decide to submit a tax return or claim showing tax payable or repayable on the basis that the scheme delivers the tax advantage it claims to provide; i.e. a return which assumes that the scheme works.
    5.3 If it is determined in due course that the scheme does not work, an additional charge would be payable, reflecting the amount underpaid and the time over which it is underpaid.
    5.4 Users would be able to protect themselves from the risk of having to pay an additional charge by making a payment which they think is sufficient to cover the risk.
    The additional charge
    5.5 The additional charge would apply where a listed scheme user opts not to pay the tax in dispute upfront and that tax is finally confirmed as due to HMRC.
    5.6 The general principle governing the additional charge is that it should offset the benefit the scheme user obtains by having the enjoyment of the tax in dispute until the dispute is resolved. In other words it should remove the cash flow advantage the user obtains from retaining possession of the tax in dispute. It should be separate from any liability to an inaccuracy penalty.


    Their definition of a High Risk Scheme is: "schemes that use contrived arrangements to seek tax advantages in circumstances where they are not intended to be available"
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    #2
    CIOT response:

    http://www.tax.org.uk/Resources/CIOT...HRTAS_CIOT.pdf

    I think I can safely sum up the proposal in 2 words - "half baked".

    Comment


      #3
      Originally posted by DonkeyRhubarb View Post
      CIOT response:

      http://www.tax.org.uk/Resources/CIOT...HRTAS_CIOT.pdf

      I think I can safely sum up the proposal in 2 words - "half baked".
      When has that ever stopped them

      Understandably damning response from CIOT but at then end of the day who wields the most power?
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        #4
        I could be misreading or misinterpreting or pointing out the flaming obvious but the following sentence from the proposal seems to give HMR&C carte blanche for retrospection??????

        If it is determined in due course that the scheme does not work, an additional charge would be payable, reflecting the amount underpaid and the time over which it is underpaid.
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          #5
          Originally posted by LisaContractorUmbrella View Post
          I could be misreading or misinterpreting or pointing out the flaming obvious but the following sentence from the proposal seems to give HMR&C carte blanche for retrospection??????

          If it is determined in due course that the scheme does not work, an additional charge would be payable, reflecting the amount underpaid and the time over which it is underpaid.
          My understanding is that schemes which have been designated as "high risk" would be publicised in some way, perhaps like the existing Spotlights.

          Users of said schemes would also be notified that additional charges will be levied if they understate tax and the scheme is later ruled by the courts not to work.

          It is not retrospection because people will be warned in advance that, if the scheme fails, they will get clobbered.

          Comment


            #6
            Originally posted by DonkeyRhubarb View Post
            My understanding is that schemes which have been designated as "high risk" would be publicised in some way, perhaps like the existing Spotlights.

            Users of said schemes would also be notified that additional charges will be levied if they understate tax and the scheme is later ruled by the courts not to work.

            It is not retrospection because people will be warned in advance that, if the scheme fails, they will get clobbered.
            But surely that would only apply if the scheme is 'listed'?
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              #7
              Originally posted by LisaContractorUmbrella View Post
              But surely that would only apply if the scheme is 'listed'?
              Only schemes which have been 'listed' would be subject to the additional charge.

              However, I don't know what's to stop HMRC listing schemes willy nilly.

              I'm sure it will lead to all manner of disputes and challenges.

              Comment


                #8
                Originally posted by LisaContractorUmbrella View Post
                But surely that would only apply if the scheme is 'listed'?
                So what is to stop HMRC just listing every scheme as its reported to them.
                merely at clientco for the entertainment

                Comment


                  #9
                  This is the plan apparently:

                  Selecting a high risk scheme and listing it

                  3.7 The proposal is for the Government to take a power to designate (“list”) in regulations a scheme of a particular description where it appears that:

                  the scheme might be entered into for the purpose of seeking a tax advantage;

                  that it is unlikely that persons would enter that scheme unless the main purpose, or one of the main purposes, of doing so was the seeking of a tax advantage; and

                  HMRC believes that the scheme does not deliver the claimed tax advantage.

                  3.8 The regulations would contain a description of the scheme and allocate a reference number to it. So, for example, the first scheme designated could be allocated the number 001.
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                  Comment


                    #10
                    Originally posted by LisaContractorUmbrella View Post
                    This is the plan apparently:

                    Selecting a high risk scheme and listing it

                    3.7 The proposal is for the Government to take a power to designate (“list”) in regulations a scheme of a particular description where it appears that:

                    the scheme might be entered into for the purpose of seeking a tax advantage;

                    that it is unlikely that persons would enter that scheme unless the main purpose, or one of the main purposes, of doing so was the seeking of a tax advantage; and

                    HMRC believes that the scheme does not deliver the claimed tax advantage.

                    3.8 The regulations would contain a description of the scheme and allocate a reference number to it. So, for example, the first scheme designated could be allocated the number 001.
                    Is that going to include IHT planning using trusts ect. if so say goodbye to the UK's stately homes and private art collections the words arse and elbow spring to mind

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