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Retrospective tax imposed on contractors’ loans

29th Mar 2016
Tax Writer Taxwriter Ltd
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A proposal to impose a retrospective tax on contractors’ loans has been branded deeply unfair.

Buried within the Budget documents released on 16 March was a technical note on tackling disguised remuneration avoidance schemes. The retrospective tax charge is hidden in chapter 5 paragraph 10 which is titled: “A new charge on outstanding disguised remuneration loans”.

This outlines how income tax and NIC will be imposed on employee loans which are outstanding on 5 April 2019, irrespective of when the loan was advanced to the employee or individual. This means the new tax charge could be imposed on loans which were advanced decades ago.

Disguised remuneration loans come in two common forms:

  • Employee benefit trust (EBTs) loans – used by company owners to extract large balances from their own companies without paying high levels of income tax;
  • Contractor loans - where an individual receives a loan and a small salary from an “employer” which was usually based offshore.

In both cases the loans were repayable but were usually never actually repaid. The employee is taxed on the benefit in kind of receiving an interest free loan, which amounts to 3% to 4% of the loan (depending on the official rate of interest in the tax year), for the duration of the employment.

Schemes involving EBT-type loans have been circulating since the 1980s, and contractor loans have been in common use since 2000. HMRC maintain that these arrangements do not work. However, there must be a considerable chance that they do. Very few of those schemes have been taken to the tax tribunal, and when HMRC have won a case they have generally done so on technicalities concerned with the implementation. New tax rules to stop disguised remuneration were introduced from 9 December 2010 and 6 April 2011 (ITEPA 2003, Part 7A).

Contractor loans have been subject to challenges in the tax tribunals, for example P Boyle v HMRC TC03103, where the contractor lost, although HMRC tend to only take cases to tribunal when they expect to win.

HMRC has offered settlement opportunities for those who took up EBT or contractor loan schemes, which required the individuals to who agreed to pay PAYE and NIC on all the loans they received. HMRC has also issued a spotlight on contractor loan schemes, so no-one can be in any doubt that HMRC doesn’t approve of contractor loans and it’s doing everything in its power to neutralise the schemes that used such loans to avoid tax.

Those who used contractor loans but who haven’t taken up a settlement opportunity are now receiving accelerated payment notices (APN) where their tax return is under enquiry. The APN is often based on estimated figures as HMRC don’t know exactly how much loan was advanced, so are guessing at six times the contractor’s salary.

The issue of an APN forces the taxpayer to pay the tax demanded as the APN can’t be appealed. If the tax is not actually due, the taxpayer has to force HMRC to conclude their enquiry by going to tribunal – which is clogging up the tax tribunal system.

The proposed tax charge will be imposed on an outstanding loan if income tax has not been paid on that loan (even where income tax wasn’t due under the tax law in place when the loan was advanced). The new charge won’t be imposed if the taxpayer has reached a settlement with HMRC, or otherwise paid tax on the loan as if it was salary. 

David Kirk, an expert on employment taxes, said: “HMRC have for a number of years made it plain that they will not tolerate tax avoidance in this area. However, they have often been very slow to act in practice, and this has left people with the feeling that they had dropped their cases. Whilst the Government has every right to change the rules, I do have concerns about four particular things with this proposed tax charge:

  1. “The tax can be raised on historical loans of any age, so it could relate to actions taken over 20 years ago.   
  2. The records relating to historical loans will often be lost and are difficult to reconstruct.
  3. Individuals were often sold the loan schemes by IFAs and accountants, in some cases quite aggressively. There is consumer protection law to assist victims of this sort of miss-selling when it comes to investments; however in this case HMRC seem to be going for the victims instead of the real culprits.
  4. The tax charge should fall on the employer, but it will be transferred to the employee/contractor."

Kirk concludes that many former contractors will be made bankrupt by this new tax charge, or if not made bankrupt will lose their homes.

He also says the charge is deeply unfair as in many cases the tax was not payable under the law that existed when the loan was advanced (pre December 2010), so the taxpayer should win their case if they could get a hearing at the tax tribunal. Under the proposals such taxpayers will have to pay the tax on the outstanding loan even if they do win their case at the tax tribunal.   

David Kirk's book: Employment Status - the Tax Rules is now in its third edition. 

Replies (559)

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By Difficulttimes
06th Apr 2016 22:29

Let's ask this question - what is so special about the 4th April 2019? Why out of all dates in history that is the date when the loan needs to be re-paid or taxes paid - oh yeah thats right its a smash and grab. I love it how just because the word 'loan' is used when it comes to tax avoidance all of you so called experts suddenly understand taxation law better than the any other person out there. There are so many other products out there which minimise an individual's tax liability but I'm sure you won't have an opinion on that because they don't use the word 'loans' which is now apparently a toxic word to some of you . Get a grip I say and understand that this issue is more complex than how simplistic you are making it out to be. 

 

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By ShirleyM
07th Apr 2016 07:33

05 April 2019?

Difficulttimes wrote:

Let's ask this question - what is so special about the 4th April 2019? Why out of all dates in history that is the date when the loan needs to be re-paid or taxes paid - oh yeah thats right its a smash and grab. I love it how just because the word 'loan' is used when it comes to tax avoidance all of you so called experts suddenly understand taxation law better than the any other person out there. There are so many other products out there which minimise an individual's tax liability but I'm sure you won't have an opinion on that because they don't use the word 'loans' which is now apparently a toxic word to some of you . Get a grip I say and understand that this issue is more complex than how simplistic you are making it out to be. 

 

It's hardly a smash & grab. A smash & grab would have used 05/04/2016. They are giving you 3 yrs to get your affairs in order, which is more than fair and a damn sight more notice than some other new taxes have been given.

It isn't the word 'loan' that is toxic. It's the artificiality of the 'loan'.

You, and the promoters, insist you received a 'loan' and the government are giving you the benefit of the doubt by giving you 3 yrs to prove it really was a loan. Pay back the loan or pay the tax on the disguised remuneration. It's your choice.

It's you who needs to get a grip. You will have to pay tax on your income, if not now, then in the future. Get over it.

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By gordo
07th Apr 2016 09:10

What happens if the Contractor chooses to do nothing (and doesn't give in to HMRC's demand that it has the right to decide when the loan needs to be repaid). What happens then? HMRC raise a charge on something that wasn't chargeable yesterday! Bear in mind that the Courts have examined these loans in at least 3 previous cases and each time determined that they were properly constituted, repayable loans. Now I know some people here know better than the QC's and the tax specialists, but do you know better than the judges? So if the Contractor takes no action then HMRC wish to fabricate a charge based upon something that happened years ago. That's retrospective. What's your definition? 

I suppose I could just lump 'justsotax' second paragraph together because it is just rantings. None of it substantiated and none of it corresponds to my experiences. Of course the QC hasn't gone anywhere, that's just nonsense. Please tell me which QC's have "suddenly disappeared"? None that I know of and I suspect that 'justsotax' can provide no grounds for this statement. There are some providers that have disappeared for sure, but my own experience is that the providers I have experience of are doing everything they can to support people, meantime HMRC are knowingly trying to drown them in paperwork and drag things out hoping that they run out of cash and can't keep up the fight. HMRC are deliberately resiling from agreements to move things forward so that they can raise APNs and apply pressure. HMRC say that they are not ready to legislate and need more time to and more information....but they issue statements saying these schemes don't work. How do they know they don't work but aren't yet ready to legislate.....nonsense.

The idea that the three years is because  HMRC are considerate and wish to give people time to pay is misdirection. HMRC are proposing this three years ahead because they know there is a good chance  that they will never be able to get the legislation enacted as they wish, but by giving a 3 year gap they create doubt and worry and stress and they know that many will throw in the towel. Any behavioural psychologist knows that they way to create stress is to remove certainty.

So there is no law at present making any tax payable. There may not be in 3 years. However we are going to create 3 years of stress. 

HMRC do not have the authority to decide when the loans should be repaid. Imagine for a moment a Contractor in the Oil industry who was earning £70,000 but is now out of work being told that HMRC have created a new tax and a new tax point and are holding a gun to his head demanding he repay the loan on their terms otherwise....

HMRC have said this will not cause hardship or impact upon families or cause breakdown. I suspect your newspapers will tell you a different story very soon.

People must be getting bored of us discussing this when clearly we are not going to agree.

I understand that some have their own views about whether people should have done the planning in the first instance. You have your own judgement about where the line is between acceptable planing and not, I understand. However, we have the Judiciary in this Country for a very good reason. Should we not wish to retain the  Judiciary? 

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By justsotax
07th Apr 2016 09:22

why don't you

just take your chances in the courts....I am sure the QC who guaranteed this would work for ever ad a day will defend the case.  Why would you want support from us lowlife low intelligent accountants and tax advisers, after all we have little understanding of these  schemes.

 

 

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By ShirleyM
07th Apr 2016 09:37

@Gordo

Break the law, rip off the country and other taxpayers, defy HMRC. Do what the hell you like, but for Gods sake stop making yourself out to be a victim of illegal laws. You made the decision to avoid/evade tax and you were happy enough to bend the law for your personal gain. It's hilarious really that you accuse the government of doing the very thing you did yourself. Income has always incurred income tax, unless you define it as something other than income, ie. an artificial transaction.

I don't have the clout to make you compliant with the law. However, other people do. Take your 'argument' to them!  :)

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By Difficulttimes
07th Apr 2016 09:44

That's all that I want.. our chance in the courts. If they (courts) say this is disguised remuneration than I will have to accept that I was involved with a scheme that was wrong and I will have to live with those consquences but at least I had my day in COURT.

HMRC have no right to tell me to repay the loan?

If the entity that lend me the money doesn't ask for it then it's between me and the entity, is it not?

They don’t tell you to repay your loan to the Bank right, you just do because those where your terms. 

All I want and many others is our opportunity to be heard fairly in the tax tribunals - is that too much to ask? I don't understand why any of you think I and many others don't deserve that?

If you commit a crime, you are not just declared guilty by the CPS and locked up to serve 'your' time no your case regardless of how heinous it was is heard by the judiciary for them to decide if you were guilty and what your punishment is. They (CPS) have to prove to the judge/jury that you were guilty of the crime you are accused of and this is no different. HMRC are denying us our most basic of human right. 

 

 

 

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By The Black Knight
07th Apr 2016 10:45

You are right

Difficulttimes wrote:

That's all that I want.. our chance in the courts. If they (courts) say this is disguised remuneration than I will have to accept that I was involved with a scheme that was wrong and I will have to live with those consquences but at least I had my day in COURT.

HMRC have no right to tell me to repay the loan?

If the entity that lend me the money doesn't ask for it then it's between me and the entity, is it not?

They don’t tell you to repay your loan to the Bank right, you just do because those where your terms. 

All I want and many others is our opportunity to be heard fairly in the tax tribunals - is that too much to ask? I don't understand why any of you think I and many others don't deserve that?

If you commit a crime, you are not just declared guilty by the CPS and locked up to serve 'your' time no your case regardless of how heinous it was is heard by the judiciary for them to decide if you were guilty and what your punishment is. They (CPS) have to prove to the judge/jury that you were guilty of the crime you are accused of and this is no different. HMRC are denying us our most basic of human right. 

 

 

 

You are right in that this should go to court and the proper process of law should be followed.

There should always be a right of appeal but this removal happened with determinations many moons ago and no body made a fuss then.

I am sure the QC will know the way to get rid of your APN regardless for a fee. If they haven't figured this out either then oh dear. It's a basic principle of law

Back to the point so you are saying:

This loan is repayable but you don't have to repay it?

and in return for this loan you carried out work for which you didn't get paid.

I assume you have not done this through a close company and s.455 does not apply.

substance over form ? is my guess before they get to Ramsay

We need this to go to tribunal so we can see the secret recipe that we missed in our level 7 education on the subject and 30 years of not noticing that tax didn't have to be paid.

 

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By cfield
07th Apr 2016 11:23

Loan should be capable of repayment anyway

Difficulttimes wrote:

HMRC have no right to tell me to repay the loan?

They're not "telling" you to repay the loan. They're just saying that, if you don't repay it, the loan will fall foul of the new rules on disguised remuneration.

I'm not an expert on these schemes, but I understand one of the requirements is that the borrower must be able to repay the loan at any time. In that case, why all the fuss about repaying it? Why is it making people bankrupt and driving people to suicide if the financial resources for repayment exist, as they should?

The point about a loan is that it continues to exist until it is re-paid by the borrower or written off by the lender. It was a loan yesterday, it is a loan today, it will be a loan tomorrow, and if you don't pay it back it by 6/4/19 it will be a loan then too. You are not being taxed on the loan yesterday, today or tomorrow, but you will be taxed on it in 2019/20 if it still dares to show it's face, so nothing retrospective about it.

To call it retrospective is to suggest that no new law can ever apply to pre-existing arrangements, which is daft, as you'd end up with one law for some people and a different law for others. I know that does sometimes happen in aspects of tax law (for example, existing employer childcare schemes will remain tax free when the new Government scheme finally kicks in) but as a general principle it is wrong.

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By ShirleyM
07th Apr 2016 09:46

No problem at all

If you honestly and truly believe that the 'loan' is NOT disguised remuneration, then you are justified in putting the country to even more expense and further delay in paying the tax due.

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By justsotax
07th Apr 2016 09:54

I wouldn't worry about the CPS

if everybody follows this type of scheme there will not be sufficient money in the government coffers to have a CPS.

 

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By ShirleyM
07th Apr 2016 10:01

Nothing much of anything, if no tax paid

justsotax wrote:

if everybody follows this type of scheme there will not be sufficient money in the government coffers to have a CPS.

 

Still, maybe Gordo can go rip off (oops, I meant emigrate to) another country once the UK is ruined.

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By Difficulttimes
07th Apr 2016 10:00

No it's HMRC who are clogging up the courts as people are being forced to spend thousands on JR proceedings as there was no right of appeal when the APNs were issued and this is the only course of action to fight the legality of this. If there was a right of appeal then there would be no JRs needed and you could deal with HMRC directly but this right was taken away. JRs cost this country hundreds of millions every year by Governments imposing legislation that takes away the rights of the people they are supposedly serving.

 

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By Old Greying Accountant
07th Apr 2016 10:03

If a "loan" is made ...

... and the T&C's do not specify a repayment date then sitting here on my Clapham Omnibus I am thinking, surely it is not a loan but a gift!

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By ShirleyM
07th Apr 2016 10:05

Different view

It's precisely because people like yourself are clogging up the courts, and using every tactic possible to delay/avoid/evade paying INCOME TAX, that the APN's were introduced.

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By gordo
07th Apr 2016 10:30

On the basis of Murphys Law I'm going to stop arguing, otherwise people might not know the difference.

Indeed on the basis of the logic coming back (or lack of logic), stuff the law it's in order for HMRC to do what they like because the end justifies the means, then I'm beginning to smell a rat (or a plant). Or maybe I'm getting paranoid.

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By The Black Knight
07th Apr 2016 10:50

by strange twist of fate you perhaps managed to divert resources away from IR35 so that those that simply ignored it's provisions got a free home run.

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By justsotax
07th Apr 2016 10:53

'end justifies the means'

that was just what I was thinking about the scheme you entered....

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By Difficulttimes
07th Apr 2016 10:59

Well after 160 comments I think we have finally come to common understanding. I want and you want a day in court. That's what all of us who are caught up in this horrific mess want but this proposed legislation won't allow this or make it purely academic at best which will waste valuable court resources.

 

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By The Black Knight
07th Apr 2016 11:24

Trouble is it's HMRC's job to collect taxes

They have removed the resources to do this effectively, so new methods of getting to the rabbit faster and without mercy have been designed.

The tribunals are clogged up and the new method has not worked very well but because of Ego we cannot retrench and admit the choice was wrong but have to come up with another method to patch a badly designed product. Perhaps HMRC's Psychology department can help them with that.

I expect it's the same reason why young men die and kill others overtaking because they can't say "whoops I made a mistake i'll break and pull in"

They are still missing massive amounts of tax because of a lack of enforcement in all areas.

They don't even notice the obvious - self assesment for you

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By Difficulttimes
07th Apr 2016 11:56

See I don't buy this 'removed the resources' there is so much 'fat' in Government departments that this shouldn't change anything. I read recently that in a tribunal hearing the QC for HMRC used 'Austerity' as part of their argument - thankfully the presiding judge dismissed it as ridiculous. They keep on peddling austerity to suit them in every way they can. Regardless of the economic situation the law is the law.

I'm pretty sure if I had a PCN and challenged it in court I couldn't say I don't have any money so I shouldn't have to pay it..

Time to get off..

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By The Black Knight
07th Apr 2016 12:10

Belief

Difficulttimes wrote:

See I don't buy this 'removed the resources' there is so much 'fat' in Government departments that this shouldn't change anything. I read recently that in a tribunal hearing the QC for HMRC used 'Austerity' as part of their argument - thankfully the presiding judge dismissed it as ridiculous. They keep on peddling austerity to suit them in every way they can. Regardless of the economic situation the law is the law.

I'm pretty sure if I had a PCN and challenged it in court I couldn't say I don't have any money so I shouldn't have to pay it..

Time to get off..

I think you would believe in any thing if it was in your favour.

Would you just repeat the same behaviour again.

Perhaps you were just the lawful prey of the promoters

and if the QC had won that point?

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By DotasScandalDotOrg
07th Apr 2016 15:04

Maybe we should just do away with Tax Tribunals altogether?

You got to love the endless stream of "I'm not an expert on these schemes, but..." + (insert uninformed statement) +  (insert judgemental comment) messages on this thread. If you are have no idea of the facts, at least have the humility, as professionals, to refrain from serving judgement.

The historical "arrangements" discussed, though HMRC likes to bundle them all under the "disguised remuneration" umbrella as if it's an evidence (it is merely their *opinion*, not that of any Tax Tribunal so far), came in various variants - a number of them including repayment by some fixed date XXXX. By what authority can HMRC, who is not party to the agrrements, decrete that the loans now need to be paid back by date YYYY, or else? 

Strange that so many arguably educated professionals don't see any problems with HMRC acting as Judge, Jury and Executioner - the stuff of banana republics. Maybe we should just do away with Tax Tribunals altogether?

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By Vaughan Blake1
07th Apr 2016 16:19

And for the fifth time..

DotasScandalDotOrg wrote:

 - a number of them including repayment by some fixed date XXXX. By what authority can HMRC, who is not party to the agrrements, decrete that the loans now need to be paid back by date YYYY, or else? 

What was that repayment date and what were the repayment terms?

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By djn24
07th Apr 2016 15:08

...

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By justsotax
07th Apr 2016 15:28

maybe i will

have to reluctantly accept I am a pleb commenting on schemes i have little knowledge of.  I guess I will have to take comfort from the fact that in the absence of said knowledge I did not pay £000's and sign up to such schemes with out carrying out such due diligence....

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By DotasScandalDotOrg
07th Apr 2016 16:13

Very easy...
Very easy to pontificate on people's actions on 2005 from the point of view of 2016. Fact is, most individuals caught in this mess DID consult with accountants. Back in that day, the first thing you heard was: do NOT go Ltd, you'll get bitten by IR35. Contrary to the suggestion of some commenters, the contractors in question were not, in general, the sophisticated investors they are made to be. They DID take professional advice, and were largely failed by the accounting profession.

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By The Black Knight
07th Apr 2016 16:33

WTF

DotasScandalDotOrg wrote:
Very easy to pontificate on people's actions on 2005 from the point of view of 2016. Fact is, most individuals caught in this mess DID consult with accountants. Back in that day, the first thing you heard was: do NOT go Ltd, you'll get bitten by IR35. Contrary to the suggestion of some commenters, the contractors in question were not, in general, the sophisticated investors they are made to be. They DID take professional advice, and were largely failed by the accounting profession.

We failed them by not getting them a massive tax bill and not charging excessive fees I suppose.

You are having a girraffe surely?

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By DotasScandalDotOrg
07th Apr 2016 16:45

Not sure I understand your comment, the Black Knight
I (like many others), consulted with more than one accountant when moving from permanent employment to contracting. Not one suggested that the widely promoted, at the time, "contractor schemes" were not a viable trading vehicle. Quite the opposite, they were sold as a protection against IR35 uncertainty. Had the words "tax avoidance" been uttered, 99% would have run a mile.
Please bear in mind that the individuals this **** was peddled to are not accountants or tax professionals. They relied on professional advice.
So yes, by and large your profession failed us.

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By The Black Knight
07th Apr 2016 17:09

?

DotasScandalDotOrg wrote:
I (like many others), consulted with more than one accountant when moving from permanent employment to contracting. Not one suggested that the widely promoted, at the time, "contractor schemes" were not a viable trading vehicle.

It's not our job to examine all weird and wonderful schemes from non tax advisers unless specifically requested to do so.

I specifically said it's doubtful whether these schemes worked or not and the potential risks associated with ongoing investigations and penalties.

I spent hours (for no fees) drawing diagrams to explain what IR35 meant.

Clients in general would not pay for a review of the contracts and often the contract we needed to see was a secret.

The sensible took the advice or took on the responsibilty of the decision.

More often there is no clear answer.

Jumping out of the frying pan into the fire because a man in the pub said so I suggest was not the best thing to do.

did you ever check out the credentials of these accountants, were they even acountants? or just the cheapest man you could find.

 

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By cfield
07th Apr 2016 16:50

IR35 advice

DotasScandalDotOrg wrote:
Fact is, most individuals caught in this mess DID consult with accountants. Back in that day, the first thing you heard was: do NOT go Ltd, you'll get bitten by IR35.

Well I certainly never gave that advice, and neither I suspect would most of the other posters on here. I reckon you're just saying that to bolster your case.

I always told them:

a) how IR35 worked;

b) how to avoid it (if they were in a position to influence the contract and/or their role in any way);

c) the fact that it was their own decision - not anybody else's;

d) the chances of being challenged by HMRC if they decided that they weren't affected by IR35;

e) the number of IR35 cases that went to Tribunal and the HMRC success rate there;

f) the extra tax and NI they would have to pay if the complied with IR35 or took all the cash as salary; and

g) the ramifications if they lost, including the position regarding cash already extracted as dividends

Even if they appeared to be caught by IR35, I would point out how they might still be better off with a personal service company rather than working through an umbrella. Advantages include a) the 5% expenses allowance, b) NI savings on pension contributions, c) expenses they could claim tax-free.

I would also have urged them to negotiate higher fees to cover employer NI, holiday pay, etc.

I must confess though, I never got my advice signed off by a QC.

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By Vaughan Blake1
07th Apr 2016 16:26

Income £7,000, debts £900,000, few other assets....

Pretty much by definition is bankrupt.

What did these 'tens of thousands' of folks put on their mortgage applications?

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By DotasScandalDotOrg
07th Apr 2016 16:33

What do mortgages have to do with it?
Not everyone owns property.

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By Vaughan Blake1
07th Apr 2016 16:59

Quite a lot actually!

DotasScandalDotOrg wrote:
Not everyone owns property.

I am guessing though that of the 'tens of thousands' affected a few have mortgages.

So what did they put on their application?

Income £7,000, debts £900,000, I am guessing not.

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By justsotax
07th Apr 2016 17:15

unfortunately you are

preaching to the converted...it appears most on here (I cannot speak for all) would have at the very least advised something along the lines of 'buyer beware'...indeed if the so called accountants were a member of a professional body had provided advice without such caveats you could take action - a already stated.

 

 

 

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By DotasScandalDotOrg
07th Apr 2016 17:19

Not just contractors affected...
MPs too... oh wait - they gave themselves immunity

http://www.accountancyage.com/aa/news/2041528/mps-exlcuded-tax-avoidance...

"Legislation to prevent the practice of disguised remuneration, which uses trusts to provide non-repayable tax free loans and offshore pension schemes to avoid tax, was included in the Finance Bill.

However, section 554E (8) says the legislation “does not apply by reason of a relevant step taken by the Independent Parliamentary Standards Authority (IPSA) in relation to a member of the House of Commons”.

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By The Black Knight
07th Apr 2016 17:30

no not just special people affected

DotasScandalDotOrg wrote:
MPs too... oh wait - they gave themselves immunity http://www.accountancyage.com/aa/news/2041528/mps-exlcuded-tax-avoidance... "Legislation to prevent the practice of disguised remuneration, which uses trusts to provide non-repayable tax free loans and offshore pension schemes to avoid tax, was included in the Finance Bill. However, section 554E (8) says the legislation “does not apply by reason of a relevant step taken by the Independent Parliamentary Standards Authority (IPSA) in relation to a member of the House of Commons”.

Perhaps you can advise what you think that means?

None of my clients are MP's so its not really relevant even though I expect it makes a interesting headline.

bit of  fuss about a non issue like the panorama programme on misunderstanding non residents uk tax affairs and tax in general by the tax payers alliance.

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By justsotax
08th Apr 2016 09:23

nothing like changing the subject...

to avoid addressing the difficult questions.

 

As for MP's well we all know what they are about...its just whether you want to be in the same 'club' as them and be compared accordingly..

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By Vaughan Blake1
08th Apr 2016 10:23

Avoiding difficult questions like...

 "What do these 'loan' agreements say about repayment (sixth time of asking!)

 

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By ShirleyM
08th Apr 2016 10:28

You won't get an answer ....

Vaughan Blake1 wrote:

 "What do these 'loan' agreements say about repayment (sixth time of asking!)

 

..... because there isn't one, although you may get an answer that is as fictitious as the original 'loan'. !

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By Vaughan Blake1
08th Apr 2016 12:22

Gordo, difficulttimes

ShirleyM wrote:

Vaughan Blake1 wrote:

 "What do these 'loan' agreements say about repayment (sixth time of asking!)

 

..... because there isn't one, although you may get an answer that is as fictitious as the original 'loan'. !

Care to comment, or maintain a deathly silence that speaks volumes?

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By gordo
08th Apr 2016 13:53

Vaughan

I explained why I did not wish to comment any further and get drawn into a debate with people who do not listen and who do not wish to hear the facts because it gets in the way of their opinions.

It is very clear that some people think they know the law better than the judges.

I do not have access to the loan agreements of contractors so apologies, but I cannot directly answer your questions. However, you could go and read up on the cases that have appeared before the Courts where HMRC have consistently lost, starting with Dextra all the way up to Rangers: http://www.taxjournal.com/tj/articles/ftt-decision-rangers-fc-case-loans...

If it came to Court the likelihood is that the Contractors would win and HMRC know it, hence HMRC tactics where are demanding money with menaces where no tax is due.

The Courts have reviewed the loan agreements, I haven't. The Courts have decided that they are 'genuine legal events with real legal effect'. I accept their expertise.

There is no tax due at the time of this legal event. It is not for HMRC to force a new legal event at a time of their choosing so that they can apply a newly created charge that changed the effect of something that was done years ago.

I know how you feel about having to repeat yourself, but don't assume silence to be something it's not.

No doubt more uninformed comments will be made that are based upon emotion, not fact, including attacks upon my character or people finding it funny that some will go bankrupt despite having taken advice that they were acting within the law.

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By Difficulttimes
08th Apr 2016 14:17

Idea

Here is an idea how about we get off this forum and meet up in a pub in London because I would like to raise a toast for the thousands of people out there who are in the process of declaring themselves bankrupt? I've got a great speech planned as well... After that we can all drink, be merry and be satisfied with the thought that people across the country are selling everything they own all for declaring a DOTAS scheme on their SATR. It will be a right old laugh.. can't wait!

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By ShirleyM
08th Apr 2016 14:29

The ones who will be having a right old laugh ....

... are the avoidance scheme promoters. You could wipe the smile off their face by putting in a negligence claim.  :)

I wonder why they didn't warn you of the risks? 

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By Difficulttimes
08th Apr 2016 14:31

I ask that same question a thousand times a day but what is it going to solve now.Absolutely nothing and it will be too easy to blame them as nothing can come from it now - just need a find a manageable solution going forward so I can draw a line in the sand and get back to topics I actually like talking about like football and cricket.

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By The Black Knight
08th Apr 2016 15:03

Solution

Difficulttimes wrote:

I ask that same question a thousand times a day but what is it going to solve now.Absolutely nothing and it will be too easy to blame them as nothing can come from it now - just need a find a manageable solution going forward so I can draw a line in the sand and get back to topics I actually like talking about like football and cricket.

 

s.213 IA 1986 read it

get your commission back - was it declared to you - was it paid to you?

the schemes I'm unravelling have been to tribunal and the promoters companies and accountancy companies have gone bust, this does not stop you persuing them. Unfortunately you can't believe this.

Some of these schemes the promoters knew they would not work and they were viewed as a cash flow planning excercise. You were perhaps supposed to invest the tax you did not pay make a kiiling then pay the tax later.

If these loan schemes have not been tested in the courts then why are you all declaring yourselves bankrupt?

I'm running out of breath

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By gordo
08th Apr 2016 14:58

For goodness sake ShirleyM
How do you know for a fact that they didn't?!

You won't be happy until you see someone sued, so long as it's not you.

HMRC are trying to change the rules. It wasn't taxable. It will be if HMRC get their way with retrospective impact. Blame the promoters!

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By Vaughan Blake1
08th Apr 2016 14:58

Dotas-scandal

I have read the testimonials on the website and very sad reading it is too.  The recurring theme is that the victims seem to still think that Dotas registered = HMRC approved.  If the promoters mislead them into this conclusion then that was very wrong.

Gordo, thanks for the response, I am trying to understand the facts and repayment terms are what differentiates a loan from a gift.  Perhaps someone else can enlighten me. Difficulttimes, you obviously had one of these, what did yours say about repayment? Dotas-scandal, you must have seen a good few too.

 

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By The Black Knight
08th Apr 2016 15:20

agree

Vaughan Blake1 wrote:

I have read the testimonials on the website and very sad reading it is too.  The recurring theme is that the victims seem to still think that Dotas registered = HMRC approved.  If the promoters mislead them into this conclusion then that was very wrong.

show me the marketing that led you to believe DOTAs = HMRC approved

It will I expect be a fraudulent misrepresentation to a contract (misrep act 1967)

HMRC never approved anything that's just what you were told. DOTAS was a guarantee HMRC would at some point crawl all over it. It just gave them a bigger window and a fish in a barrel.

We (accountants) were being told a QC had given his opinion ( the QC as it turns out on some schemes was not given the full facts) and we would be sued if we didn't sell this crap.

HMRC took so long to wake up that it seemed the world had turned on it's head. I even went to have a look and the commissions looked really tempting but when asking questions they didn't really understand what I was asking.

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By ShirleyM
08th Apr 2016 14:58

Is that wrong?

To want to see justice done, and wrongdoing wiped out? You seem to think so, but I don't.

HMRC didn't change the rules. Income is taxable. Deciding to call income something else (a non-taxable something else) IS changing the rules and is an artificial transaction purely for the purpose of tax avoidance/evasion. There is no legitimate business purpose for such a transaction.

Anyway, HMRC are not taxing the disguised income. They are taxing the outstanding loans. No change of rules, just a new tax, along with other new taxes.

Anyway, we have tried to inform and advise why the scheme is/was a bad idea.  You can lead a horse to water ......

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By gordo
08th Apr 2016 15:09

No ShirleyM
You are wrong. Plain wrong and the Courts have told you so. What will it take?

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