I also thought it very strange that this had not been covered by AW & in fact sought to double-check that before posting such was my surprise.
The MSC rules are more likely to apply to those who specialised in contractors and provided services to personal-service-companies to the exclusion of all else.
Looks like HMRC don't intend to go back prior to the introduction of the new off-payroll regulations in 2017.
UTT Tribunal comments were persuasive but not binding so the appeal at UTT failed.
The Tribunal ruled that the amount assessable under ToAA was Nil. The Tribunal also ruled that HMRC did have a discretion to apply PAYE as they saw fit, which would appear to mean that the Loan Charge was never needed, but that they could not apply that discretion retrospectively. However, since the issue in the case of Mr Hoey was one of collection it was, rather strangely, a matter for the County Courts to decide.
"Fundamentally, it is vital to ALL legal challenges of DR schemes (and the Loan Charge) that HMRC are not permitted to retrospectively exercise a discretion that would allow them to dispense with any need to assess employers, agencies or end users, indeed anyone at all; to dispense with all time limits and taxpayer safeguards and which would allow HMRC to pursue individuals “without temporal limitation”......We are able to confirm that the appeal will proceed"
Thank you for your considered and obviously carefully researched response.
If only you had spoken up earlier we could have saved the Judiciary all that time that was spent in Dextra, Sempra and Murray Group all of which concluded that loans were loans and therefore not taxable as income.
So your basis is that HMRC can rip up the Taxes Act and don't have to abide by it, so long as it doesn't impact your clients? What happens when HMRC start applying the same approach in regard to IR35? HMRC, according to their consultation document, believe that only 10% of those who should comply, have done so. Some of the 90% must be represented by Accountants. But the Accountant says I'm sure my client isn't within IR35. HMRC say doesn't matter what you think and no you cannot go to Tribunal to have an independent judge rule on the matter, we are HMRC and we think tax is due.
What happened in the Court cases between 2004 and 2016 when HMRC first proposed the Loan Charge? How many times did HMRC lose in Court? Who is the ultimate arbiter? Why is a new retrospective (in its effect) Loan Charge needed?
HMRC will undoubtedly make a hash of this and sadly it is likely to cost lives. I don't that's a basis for not worrying too much about the Loan Charge, particularly if you are on the receiving end.
The Courts have examined the Loans on several occasions and concluded that these were legally enforceable, repayable loans.
HMRC themselves have written to me arguing that IHT is due on the basis that these are legally enforceable loans with a properly constituted trust. HMRC also know that in some cases loans have been repaid because I've had involvement with HMRC and liquidators over such matters. HMRC have also admitted in writing that no Tribunal has ever ruled on post DR schemes?
These people have a right, like every UK citizen, to have their dispute heard in a court of law, but the Loan Charge renders this pointless because, as HMRC have described it themselves, we win or we win.
If the citizen spend money to take the case to Tribunal and won then they would still face the Loan Charge. If they lost then they would face the higher of the outcome of the litigation as compared with the loan charge, along with the costs of litigating and possible adverse costs.
This is not justice. If it were anything other than tax then it would be referred to as extortion. Demanding money with menaces that have not actually been shown to be due.
To achieve this HMRC have had to override the protections in the Taxes Management Act that we all rely on to protect our clients and provide certainty.
So when you say you were merely pointing out the facts...I think that's actually what Justin was trying to do.
Justin rightly points out the law and points out that HMRC are acting in a manner that is not supported by law, whilst they make sweeping statements as if they decide the law for themselves, rather than our independent judiciary, yet the response from others is to harass Justin.
Almost 200 MPs have voiced concerns over this either by signing the EDM1239 or signing the All Part Parliamentary Group letter, explaining that they did not know what they were led to vote for in the Finance Act in regards to the clearly retrospective nature.
There was a further vote in Parliament which was carried by all who voted yet because no one voted against it there was 'no division of the house', so the Minister (and Government) can just choose to ignore the vote.
The House of Lords spoke out strongly in their report stating that the Loan Charge was retrospective in it's effect. Lord Judge ex-counsel to the Inland Revenue spoke out strongly against HMRC behaviour and approach http://bit.ly/2LdjemM
But the responses on here from Accountants prefer instead to attack the writer of the post and make what appears to be ill considered and incorrect assumptions about his reasons for the post.
My answers
Thanks Richard
Potentially everyone in the chain could be liable, right?
I also thought it very strange that this had not been covered by AW & in fact sought to double-check that before posting such was my surprise.
The MSC rules are more likely to apply to those who specialised in contractors and provided services to personal-service-companies to the exclusion of all else.
Looks like HMRC don't intend to go back prior to the introduction of the new off-payroll regulations in 2017.
UTT Tribunal comments were persuasive but not binding so the appeal at UTT failed.
The Tribunal ruled that the amount assessable under ToAA was Nil. The Tribunal also ruled that HMRC did have a discretion to apply PAYE as they saw fit, which would appear to mean that the Loan Charge was never needed, but that they could not apply that discretion retrospectively. However, since the issue in the case of Mr Hoey was one of collection it was, rather strangely, a matter for the County Courts to decide.
It looks like the matter will be appealed further. https://gofund.me/b01f74f3
"Fundamentally, it is vital to ALL legal challenges of DR schemes (and the Loan Charge) that HMRC are not permitted to retrospectively exercise a discretion that would allow them to dispense with any need to assess employers, agencies or end users, indeed anyone at all; to dispense with all time limits and taxpayer safeguards and which would allow HMRC to pursue individuals “without temporal limitation”......We are able to confirm that the appeal will proceed"
Thank you for your considered and obviously carefully researched response.
If only you had spoken up earlier we could have saved the Judiciary all that time that was spent in Dextra, Sempra and Murray Group all of which concluded that loans were loans and therefore not taxable as income.
How does the law apply to you if you have gone above the speed limit but never been caught?
How does the law in Class A drugs apply to Mr Gove when he admits to it 20 years later?
Why are we throwing out the TMA 1970 rules already laid down by Parliament, but only for this particular group?
So your basis is that HMRC can rip up the Taxes Act and don't have to abide by it, so long as it doesn't impact your clients? What happens when HMRC start applying the same approach in regard to IR35? HMRC, according to their consultation document, believe that only 10% of those who should comply, have done so. Some of the 90% must be represented by Accountants. But the Accountant says I'm sure my client isn't within IR35. HMRC say doesn't matter what you think and no you cannot go to Tribunal to have an independent judge rule on the matter, we are HMRC and we think tax is due.
What happened in the Court cases between 2004 and 2016 when HMRC first proposed the Loan Charge? How many times did HMRC lose in Court? Who is the ultimate arbiter? Why is a new retrospective (in its effect) Loan Charge needed?
HMRC will undoubtedly make a hash of this and sadly it is likely to cost lives. I don't that's a basis for not worrying too much about the Loan Charge, particularly if you are on the receiving end.
The Courts have examined the Loans on several occasions and concluded that these were legally enforceable, repayable loans.
HMRC themselves have written to me arguing that IHT is due on the basis that these are legally enforceable loans with a properly constituted trust. HMRC also know that in some cases loans have been repaid because I've had involvement with HMRC and liquidators over such matters. HMRC have also admitted in writing that no Tribunal has ever ruled on post DR schemes?
These people have a right, like every UK citizen, to have their dispute heard in a court of law, but the Loan Charge renders this pointless because, as HMRC have described it themselves, we win or we win.
If the citizen spend money to take the case to Tribunal and won then they would still face the Loan Charge. If they lost then they would face the higher of the outcome of the litigation as compared with the loan charge, along with the costs of litigating and possible adverse costs.
This is not justice. If it were anything other than tax then it would be referred to as extortion. Demanding money with menaces that have not actually been shown to be due.
To achieve this HMRC have had to override the protections in the Taxes Management Act that we all rely on to protect our clients and provide certainty.
So when you say you were merely pointing out the facts...I think that's actually what Justin was trying to do.
Justin rightly points out the law and points out that HMRC are acting in a manner that is not supported by law, whilst they make sweeping statements as if they decide the law for themselves, rather than our independent judiciary, yet the response from others is to harass Justin.
Almost 200 MPs have voiced concerns over this either by signing the EDM1239 or signing the All Part Parliamentary Group letter, explaining that they did not know what they were led to vote for in the Finance Act in regards to the clearly retrospective nature.
There was a further vote in Parliament which was carried by all who voted yet because no one voted against it there was 'no division of the house', so the Minister (and Government) can just choose to ignore the vote.
The House of Lords spoke out strongly in their report stating that the Loan Charge was retrospective in it's effect. Lord Judge ex-counsel to the Inland Revenue spoke out strongly against HMRC behaviour and approach http://bit.ly/2LdjemM
But the responses on here from Accountants prefer instead to attack the writer of the post and make what appears to be ill considered and incorrect assumptions about his reasons for the post.