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Loan Charge on BBC Front Page

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    Loan Charge on BBC Front Page

    Pretty sympathetic article.

    'My dad thought he was a criminal - he wasn't'
    "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

    #2
    awful

    Can you imagine having your contractor company challenged as being tax avoidance for 20 or more years and told you need to repay all the difference between a PAYE basis and a corporate one.

    I know this story is about offshore structures but it does make me very uneasy how HMRC are approaching this and the future for contractors using companies.

    That said everyone using offshore and loan backs ought to have realised the risk in their approach.

    Comment


      #3
      Originally posted by highlandspring View Post
      Can you imagine having your contractor company challenged as being tax avoidance for 20 or more years and told you need to repay all the difference between a PAYE basis and a corporate one.

      I know this story is about offshore structures but it does make me very uneasy how HMRC are approaching this and the future for contractors using companies.

      That said everyone using offshore and loan backs ought to have realised the risk in their approach.
      HMRC have way too much power. I would not mind so much if they used that against scheme promoters and large foreign corporates. But they bully the little guy.

      It is easy for anyone to be wise after the event. However HMRC basically approved these schemes until 2011 and tacitally approved them until 2017.

      HMRC need a root and branch reform.

      Comment


        #4
        This was covered on Today on R4 this morning.

        I didn't have any involvement with loans, so I don't know too much about them.

        If loans started in 1999, why didn't HMRC put a stop to the practice in the early noughties? Twenty years seems like an awful long time to wait to clamp down on them.

        Comment


          #5
          Originally posted by More Lamb View Post
          This was covered on Today on R4 this morning.

          I didn't have any involvement with loans, so I don't know too much about them.

          If loans started in 1999, why didn't HMRC put a stop to the practice in the early noughties? Twenty years seems like an awful long time to wait to clamp down on them.
          Or publish this a hell of a lot sooner than July 2016 !!!

          Contractor tax: loan schemes can cost you more (Spotlight 33) - GOV.UK
          STRENGTH - "A river cuts through rock not because of its power, but its persistence"

          Comment


            #6
            Originally posted by More Lamb View Post
            If loans started in 1999, why didn't HMRC put a stop to the practice in the early noughties? Twenty years seems like an awful long time to wait to clamp down on them.
            They tried. But kept losing cases when they got to court.
            Down with racism. Long live miscegenation!

            Comment


              #7
              Originally posted by NotAllThere View Post
              They tried. But kept losing cases when they got to court.
              I don't know what these cases were but I haven't heard of a single contractor scheme going to court and winning.

              In any event, if HMRC knew they had a major problem on their hands, they should have got the Government to change the law at the first opportunity.

              If you need a 20-year retroactive law to fix something, then you were asleep on the job.

              Comment


                #8
                Originally posted by More Lamb View Post
                I don't know what these cases were but I haven't heard of a single contractor scheme going to court and winning.

                In any event, if HMRC knew they had a major problem on their hands, they should have got the Government to change the law at the first opportunity.

                If you need a 20-year retroactive law to fix something, then you were asleep on the job.
                I had Dextra and Sempra quoted to me by my provider to show me it was compliant. I don't think they were contractor schemes but they did involve loans from a trust. Webberg or Iliketax can probably explain in more detail.

                Comment


                  #9
                  Originally posted by highlandspring View Post
                  That said everyone using offshore and loan backs ought to have realised the risk in their approach.
                  That's an easy and understandable throwaway line Highland, but look here http://financeandtax.decisions.tribu...54/TC07292.pdf

                  And in particular

                  "18. His motivation in entering into these schemes was solely to avoid the complexities of running his own company or his own business. When considering whether or not to enter the schemes he simply compared the post-tax cash he would receive under his existing arrangements, via a UK umbrella company, and the post-tax cash he would receive under the Penfolds arrangement. The cash which he would receive under the Penfolds arrangement was slightly better than he was currently receiving but Mr Hoey did not really understand that this was because he would be paid in a way which was designed to avoid paying UK tax on a large part of his earnings.

                  19. Importantly I note that Mr Hoey did not receive the full benefit of the absence of UK tax on his earnings because the fees chargeable by the various intermediaries were between 10% and 18% of his income, compared to the 1% which might be charged by a simple UK based umbrella company. A substantial part of the hoped for benefit of avoiding UK tax was therefore absorbed by the fees being charged by the promoters and facilitators of the scheme."

                  perhaps he ought to have known the risks, but when the bulk of any advantage is being swallowed by scheme fees, its difficult for a layperson to understand exactly what's going on.

                  Comment


                    #10
                    Originally posted by More Lamb View Post
                    I don't know what these cases were but I haven't heard of a single contractor scheme going to court and winning.

                    In any event, if HMRC knew they had a major problem on their hands, they should have got the Government to change the law at the first opportunity.

                    If you need a 20-year retroactive law to fix something, then you were asleep on the job.
                    Mainly because HMRC haven't litigated many. They prefer not to and use fear thru overwhelming financial and political clout to force capitulation. If a scheme is proved valid that power would be significantly less.

                    It also took until from approx 2004 to 2017 for all the finest legal minds to come to a conclusion as to how such schemes should be treated. But apparently it should have been obvious to Joe Contractor.

                    PS The BBC article was achieved underpinned by great work from core LCAG members and the opinion-splitting Phil Manley. It takes hard work to get visibility.

                    Comment

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