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[webberg]

Revenue & Customs v Hyrax Resourcing Ltd & Ors (INCOME TAX/CORPORATION TAX : Anti-avoidance) [2019] UKFTT 175 (TC) (05 March 2019)

I think K2 was registered for DOTAS but Hyrax was not.

The above case was heard on whether HMRC's view (that Hyrax should have been disclosed) was correct.

The Judge agreed with HMRC.

I've not heard (or looked to see) whether an appeal has been made or is listed.

[DavidD]

Thanks, makes sense, I obviously have it back to front..

[DealorNoDeal]

Revenue & Customs v Hyrax Resourcing Ltd & Ors (INCOME TAX/CORPORATION TAX : Anti-avoidance) [2019] UKFTT 175 (TC) (05 March 2019)

I think K2 was registered for DOTAS but Hyrax was not.

The above case was heard on whether HMRC's view (that Hyrax should have been disclosed) was correct.

The Judge agreed with HMRC.

I've not heard (or looked to see) whether an appeal has been made or is listed.

Assuming it wasn't appealed, would that mean HMRC can issue APNs to Hyrax users?

Because it was a failure to disclose a notifiable arrangement, would it also enable HMRC to go back 20 years to open enquiries/raise assessments?

[webberg]

Assuming it wasn't appealed, would that mean HMRC can issue APNs to Hyrax users?

Because it was a failure to disclose a notifiable arrangement, would it also enable HMRC to go back 20 years to open enquiries/raise assessments?

1. Yes I believe it does mean that because the scheme has been held to be "disclosable", it will have a DOTAS SRN and an APN can be issued. I have no idea if such action is going to happen.

2. I believe it would be difficult for HMRC to use a 20 year rule to do as you suggest simply because a piece of legislation was interpreted as it was contemporaneously but was later found to have a different interpretation in Tribunal. Also DOTAS disclosure is an obligation primarily on those who offer arrangements and not on those who use them. (I'm aware that users were later included in the priority waterfall for disclosure). It would therefore seem more than a little unfair if the failure of the parties in the case mentioned were to be visited upon users.

That said of course, who knows these days what logic somersaults HMRC will perform to achieve "maximising revenue".

[DealorNoDeal]

That said of course, who knows these days what logic somersaults HMRC will perform to achieve "maximising revenue".

Indeed. And, in particular, I bet they'll be looking for "creative" ways to target those with open (and closed) loan years who are no longer within the scope of the LC.

[DavidD]

I've just had the time to go through this - ha, what a read....

"The slide went on to explain that the trustee was bound by law to act solely in interests of the beneficiary and (implied) a request to repay would never be in interests of contractor (the beneficiary); moreover, as the funds in trust were held for benefit of beneficiary ‘you would in effect be repaying yourself’.

"And that representation must be accurate as it would be difficult to see that anyone would enter into the arrangements which involved them taking the larger part of what would otherwise be their monthly salary as a loan if there was any real possibility of being asked to repay it. And that expectation would appear justified because, as the creditor rights were assigned to an EFRBS, and the trustees would act in the interests of the beneficiary (being the scheme user and his/her family), there seemed no reason why the EFRBS would ever ask for the loan to be repaid

The demands to repay the loans are a 'shakedown' stay strong never pay a single penny.

[DavidD]

I bet it made interesting reading for the judge to see that Robert Veneables QC was all over the literature as the 'architect and QC approver' of the scheme he was now defending....

The £3 million defence fund that was needed in case the scheme he designed failed ended up in his pocket....... You couldn't make it up !!

[webberg]

I bet it made interesting reading for the judge to see that Robert Veneables QC was all over the literature as the 'architect and QC approver' of the scheme he was now defending....

The £3 million defence fund that was needed in case the scheme he designed failed ended up in his pocket....... You couldn't make it up !!

Please read the case. It was not about whether the scheme worked or not. It was about whether it should have been disclosed for the purposes of DOTAS.

To the best of my knowledge there is no Tribunal case to say that the scheme "failed". I don't know if such a case is in the machinery to be heard or not.

As to the defence fund, again I have no reliable information as to how it was used or even if it existed.

[DavidD]

I agree with you completely and may be it hasn't failed in the courts but it has certainly failed me and many more.....

Whether the defence fund ever even existed is a another 'grey' area... !

[DealorNoDeal]

HMRC seem to win most tribunals which involve schemes.

I'm certainly not aware of any contractor schemes which have been successful* at tribunal. Even the cases which tried a different approach (eg. the employer was liable for the PAYE) have all failed.

* by successful, I mean the contractor wasn't liable for any additional tax