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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 The Black Knight
13th Apr 2016 12:57

No No No no no

Andy Davis wrote:

cfield wrote:

This IR35 argument makes me laugh. It's been around for 16 years now and most contractors are fairly well-informed about it. You didn't have to go for one of these dodgy schemes just to avoid IR35.

As I said earlier, IR35 is not too difficult to avoid, and even borderline cases can justify non-compliance. The risks of being challenged were (and still are) very low and the risk of losing an enquiry even lower. You can also take out insurance to cover you against the professional fees or even the tax itself.

If you had done that, you could have still have saved yourself a respectable amount of tax, and I use that word in all its senses as taking dividends rather than salary is indeed respectable and totally transparent, not like the scheme you got involved in.

Avoid IR35 - make an arrangement so a piece of legislation does not apply = that's tax avoidance - disgusting, and how dare a reputable man of the profession suggest such a thing!

Borderline cases can justify non-compliance = not sure so we will just take a bit of a fyler and hope you get away with it - fantastic advice from a reputable accountant.

taking dividends instead of salary = NIC avoidance; that'd just another tax to be avoided surely, but no; it's respectable and transparent (ie: it went on a tax return). Not like a contractor loan at all (ie:declared on a P11d and a self assessment return so HMRC have absoutely no idea what has happened!)

But dividends are OK tax planning? HMRC are completely happy with that....... but wait didn't we just get dividend tax to ensure less tax is avoided by those who choose to pay themselves by that route? But that's OK, it's on future divdends.

Get a grip

It's not really the same thing

Changing the way you do something is not the same as changing the way you describe it.

Comes back to substance over form? but I note that point is always ignored.

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By Andy Davis
13th Apr 2016 13:21

Yes yes yes

 

It is, you have just decided to draw a line in the sand somewhere that seperates acceptable from unacceptable. Avoidance is avoidance, though you appear to be unable to distinguish between thetwo.

As as for substance over form...................... the courts have considered the substance of such loans and found them to be loans. No one is ignioring it, it's just not a relevant argument

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By cfield
13th Apr 2016 13:37

Your toy is broken, so let's break everyone elses

Andy Davis wrote:

Avoid IR35 - make an arrangement so a piece of legislation does not apply = that's tax avoidance - disgusting, and how dare a reputable man of the profession suggest such a thing!

Borderline cases can justify non-compliance = not sure so we will just take a bit of a fyler and hope you get away with it - fantastic advice from a reputable accountant.

Better than recommending compliance with IR35 and then finding out it didn't apply. IR35 is an infamously grey area so borderline cases abound.

In no way is taking dividends instead of salary even in the same league as the type of schemes we're discussing here. It's a fake moral equivalence to even compare the two. You just want to smear ordinary tax planning because your precious loan schemes don't work any more. Your toy is broken, so rather than play with other other kids you just want to break their toys too.

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By Andy Davis
13th Apr 2016 13:38

But it is

Avoidance is avoidance.There should be no distinction

Avoidance is legal, and rightly so........... or should I re-label it as tax planning or tax mitigation to make it more socially acceptable?

Evasion is not, and rightly so.

And spouting that's it's like evasion just does not hold water I'm afraid. If it were evasion, the Courts would have said so in the many cases they have heard over the years. They have not. It's not. Period.

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By gordo
13th Apr 2016 10:14

Section 419 (or section 455) as it used to be known
ShirleyM

Section 455, (or S419 as it used to be known), is not a tax.
It is though a charge,however an important point is that it is payable by the provider of said loan.
So you are technically incorrect.

I have tried to enlighten you.

Am I being accused of ignoring things you say that are incorrect....because it suits my argument! 
How can I possibly get a fair hearing in your court room?

I also gave you a link earlier to a CIOT article that demonstrated Error amounted for as much of the alleged tax gap as  avoidance and indeed Error taken together with Evasion gave rise to six times as much uncollected. Should our focus perhaps be on this first and foremost? Is it not a MUST win for HMRC?

http://www.tax.org.uk/media-centre/latest-news/press-release-‘tax-gap’-figures-–-nearly-six-times-much-lost-fraud

I think I have made it abundantly clear that HMRC are...misbehaving...in your name. I am surprised that this does not seem to concern you.

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By ShirleyM
13th Apr 2016 10:22

I think it is also clear ...

I think I have made it abundantly clear that HMRC are...misbehaving...in your name. I am surprised that this does not seem to concern you.

That disguising remuneration as a 'loan' is also misbehaving, but in whose name? I cannot answer that one!   I am surprised that this does not seem to concern you.  

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By justsotax
13th Apr 2016 10:30

you appear to have all the answers...

I can only assume you are one of the QC's who gave the original assurances...

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By gordo
13th Apr 2016 10:30

Did I answer your question in a way that didn't suit your argument so you ignored it?

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By Vaughan Blake1
13th Apr 2016 10:41

Difficulttimes, there obviously are two versions of the OED

Because mine refers to 'loans' as being repayable. Yours obviously does not!

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By Old Greying Accountant
13th Apr 2016 10:53

No body cares ...

... about the squirming of these "borrowers" because they have had their pants pulled down, don't you get it yet?

These schemes used by slimy scheme promoters are, as Shirley accurately describes them, fairy tales to magically change lead in to gold.

These schemes have tried to side step section 455, whereby they would have had a charge levied, which would be returned after the loan is repaid!

I am quite amused by the squealing, as the actions of the greedy few has made the tax landscape a minefield for the proper accountants, and long term everyone will lose out as legitimate sensible tax planning is getting tarred with the same brush as those used by (what are to all intents and purposes) fraudsters and sensible honest planning techniques are being vilified, and the wet modern politicians are likely to create even more bureaucracy for us as they knee-jerk react to appease the (misguided) chagrin of the voters, who in their turn are being manipulated by an ignorant press.

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By DotasScandalDotOrg
13th Apr 2016 11:27

"vilified tax avoidance" today, "sensible honest planning" yest

Old Greying Accountant wrote:

I am quite amused by the squealing, as the actions of the greedy few has made the tax landscape a minefield for the proper accountants, and long term everyone will lose out as legitimate sensible tax planning is getting tarred with the same brush as those used by (what are to all intents and purposes) fraudsters and sensible honest planning techniques are being vilified

I am "amused" by accountants extolling the virtues of "legitimate tax planning" in the form of the low salary / dividend arrangements when it was those that gave rise to IR35 in the first place.

And why did we do the salary / dividends?

Oh yeah...it was the accountants!

​The "vilified tax avoidance" of today is the "sensible honest planning" of yesterday. It's very easy to serve judgement in retrospect. Those of you self-confessed veteran accountants who are all too happy to question other professional's "intelligence" should really know better, and I am surprised, if not amused, at your lack of humility. 

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By The Black Knight
13th Apr 2016 11:33

nope

DotasScandalDotOrg wrote:

Old Greying Accountant wrote:

I am quite amused by the squealing, as the actions of the greedy few has made the tax landscape a minefield for the proper accountants, and long term everyone will lose out as legitimate sensible tax planning is getting tarred with the same brush as those used by (what are to all intents and purposes) fraudsters and sensible honest planning techniques are being vilified

I am "amused" by accountants extolling the virtues of "legitimate tax planning" in the form of the low salary / dividend arrangements when it was those that gave rise to IR35 in the first place.

And why did we do the salary / dividends?

Oh yeah...it was the accountants!

​The "vilified tax avoidance" of today is the "sensible honest planning" of yesterday. It's very easy to serve judgement in retrospect. Those of you self-confessed veteran accountants who are all too happy to question other professional's "intelligence" should really know better, and I am surprised, if not amused, at your lack of humility. 

Nope it was people leaving work on a friday going back to work on a monday as a limited company but nothing else had changed.

apart from a lot less NIC

 

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By cfield
13th Apr 2016 11:52

The original big mistake with IR35

The Black Knight wrote:

Nope it was people leaving work on a friday going back to work on a monday as a limited company but nothing else had changed.

apart from a lot less NIC

And it's a shame they didn't restrict it to the Friday to Mondays as IR35 might then have worked and we wouldn't have had civil servants and TV presenters getting in on the act too and making "personal service company" a dirty phrase.

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By Old Greying Accountant
13th Apr 2016 11:55

IR35 came about, ...

DotasScandalDotOrg wrote:

Old Greying Accountant wrote:

I am quite amused by the squealing, as the actions of the greedy few has made the tax landscape a minefield for the proper accountants, and long term everyone will lose out as legitimate sensible tax planning is getting tarred with the same brush as those used by (what are to all intents and purposes) fraudsters and sensible honest planning techniques are being vilified

I am "amused" by accountants extolling the virtues of "legitimate tax planning" in the form of the low salary / dividend arrangements when it was those that gave rise to IR35 in the first place.

And why did we do the salary / dividends?

Oh yeah...it was the accountants!

​The "vilified tax avoidance" of today is the "sensible honest planning" of yesterday. It's very easy to serve judgement in retrospect. Those of you self-confessed veteran accountants who are all too happy to question other professional's "intelligence" should really know better, and I am surprised, if not amused, at your lack of humility. 

as Black Knight states, because tax scheme pedlars saw legitimate limited companies using a salary/dividend strategy and pesuaded punters to pretend they were a trading company and not an employee. 

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By cfield
13th Apr 2016 11:55

Tarring with same brush

Old Greying Accountant wrote:

I am quite amused by the squealing, as the actions of the greedy few has made the tax landscape a minefield for the proper accountants, and long term everyone will lose out as legitimate sensible tax planning is getting tarred with the same brush as those used by (what are to all intents and purposes) fraudsters and sensible honest planning techniques are being vilified,

Well said OGA. Exactly the point I made somewhere on page 2 I think. You can't even say you're a tax advisor now without people visibly flinching.

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By The Black Knight
13th Apr 2016 12:04

adviser

cfield wrote:

Old Greying Accountant wrote:

I am quite amused by the squealing, as the actions of the greedy few has made the tax landscape a minefield for the proper accountants, and long term everyone will lose out as legitimate sensible tax planning is getting tarred with the same brush as those used by (what are to all intents and purposes) fraudsters and sensible honest planning techniques are being vilified,

Well said OGA. Exactly the point I made somewhere on page 2 I think. You can't even say you're a tax advisor now without people visibly flinching.

 

Adviser!! lol sorry had to be fair

or is permitted but er is correct according to the Oxford english dictionary

 

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By Difficulttimes
13th Apr 2016 10:48

No according to my tax return.. 

The amount included on E1 of the employment pages for X represents the taxable benefit in relation to interest at the official rate on employer provided loans.  These loans are repayable on demand.

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By ShirleyM
13th Apr 2016 10:55

Eh?

Difficulttimes wrote:

 These loans are repayable on demand.

Another fairy story?

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By DotasScandalDotOrg
13th Apr 2016 11:10

Something doesn't match your prejudiced narrative, Shirley?

Yes, the loans are real loans and as such are repayable on demand.

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By Old Greying Accountant
13th Apr 2016 11:26

In that case ...

DotasScandalDotOrg wrote:

Yes, the loans are real loans and as such are repayable on demand.

... the directors are in breach of their fiduciary duties under the Companies Act in allowing the company to make an unsecured loan without ensuring the borrower would be able to repay it, surely? After all the director is there to safeguard the assets of the company is he/she not?

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By The Black Knight
13th Apr 2016 12:08

then

DotasScandalDotOrg wrote:

Yes, the loans are real loans and as such are repayable on demand.

Then you were fully aware of the risks that this loan could have to be repaid and there would be an eveb bigger tax charge on this?

Although you may still make a saving of 10% nic on a lot of it.

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By Old Greying Accountant
13th Apr 2016 10:57

Couldn't possibly comment ...

Difficulttimes wrote:

No according to my tax return.. 

The amount included on E1 of the employment pages for X represents the taxable benefit in relation to interest at the official rate on employer provided loans.  These loans are repayable on demand.

... as any details of the terms of these loans are like Brigadoon, disappearing in the mists of time only to be glimpsed on rare occassions.

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By Vaughan Blake1
13th Apr 2016 14:02

Defies logic

Difficulttimes wrote:

No according to my tax return.. 

The amount included on E1 of the employment pages for X represents the taxable benefit in relation to interest at the official rate on employer provided loans.  These loans are repayable on demand.

Why did you sign up for this if you thought that there was the remotest possibility that the loan would be called in?

Work hard for 16 years on NMW, borrow extra money to pay the bills, and end up owing close to £1m???  Nope, makes no sense to me as a business model.

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By Andy Davis
13th Apr 2016 14:12

Defies logic

An all those Directors paying themselves minimum wage and the balance by dividend.

I'll buy their shares and even throw them in a 10% salary increase if they commit to carry on working for me for the next few years.

Oh, that's right................................... won't work for them will it?

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By justsotax
13th Apr 2016 11:02

to be fair gordo

its not me you need to convince.  I merely suggested a more relevant analogy than the salary/dividend argument.  That said I do agree with your statement regarding the 'charge', nevertheless all tax is 'retrospective'...as you will find when you go to a good adviser - they will always state when carrying out any planning that it is subject to 'changes in legislation'. 

 

I realise that part is really upsetting, but it s the same for everyone...

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By ShirleyM
13th Apr 2016 11:08

I can't imagine what the intelligence of the punters must be

If they were told the loan was repayable, and still went for it. It's mind boggling.

My guess is that someone is fibbing. The law doesn't (or shouldn't) protect dishonest people who lie for personal gain.

I also guess that someone is venting their spleen because they have been painted into a corner ... ie. outmanoeuvred by the government and another tax loophole closed.

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By ShirleyM
13th Apr 2016 11:13

Pardon me, please

If I doubt the sincerity of your claim. I have many sound and logical reasons for my doubts, ie. I don't think high earners are that thick.

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By DotasScandalDotOrg
13th Apr 2016 11:32

Stereotypes

Shirley, maybe if you made a honest attempt at understanding the facts by observing them objectively, you would be less puzzled? 

So far, all you have done in this thread is project your own prejudices about people and their motives ("IT geeks", "high earners",  "greedy", "thick"...etc).

This is not how you are going to gain any understanding. 

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By ShirleyM
13th Apr 2016 11:42

haha - it gets funnier :)

DotasScandalDotOrg wrote:

Shirley, maybe if you made a honest attempt at understanding the facts by observing them objectively, you would be less puzzled? 

Who is dishonest?  I suspect it is the person who tells the punter that the loan is non-repayable, while telling HMRC that the loan is repayable.

I have observed the facts, and my conclusion is that someone is being dishonest.

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By The Black Knight
13th Apr 2016 11:29

Substance over form (an accounting and tax principle)

If it looks like an elephant, smells like an elephant and walks like one, then........no it's legally registered as a girraffe.

If these loans are repayable then just repay them what's the problem? This can work in the same way as repaying a repayable loan with no tax charge. Or you could write them off with a tax and NIC charge.

The proposed changes seem to address APN 's and potential to double taxation so this matter will be settled in 2019 to give finality.

APN's I think were challenged in the courts (judicial review) and upheld. I agree they are not fair but that is the law as it currently stands at the moment is it not?

 

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By DotasScandalDotOrg
13th Apr 2016 11:40

The problem?

The Black Knight wrote:

If these loans are repayable then just repay them what's the problem? 

The problem is that repaying the loans doesn't make APNs corresponding to those loans magically disappear.

As for the JR of the APN legislation, it has failed in the High Court, but appeal has been accepted. So that's not the end of it.

I am a bit shocked at the lack of awareness of such facts from supposed professionals.

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By The Black Knight
13th Apr 2016 12:02

IF

DotasScandalDotOrg wrote:

The Black Knight wrote:

If these loans are repayable then just repay them what's the problem? 

The problem is that repaying the loans doesn't make APNs corresponding to those loans magically disappear.

As for the JR of the APN legislation, it has failed in the High Court, but appeal has been accepted. So that's not the end of it.

I am a bit shocked at the lack of awareness of such facts from supposed professionals.

If you click at the link on the base article of this thread then HMRC I think explains how this new legislation helps you with that.

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By The Black Knight
13th Apr 2016 11:39

they way round IR35

The way round IR 35 was change the way you worked so it wasn't deemed employment.

NOT have blind faith in an accountants pen retrospectively changing a matter of fact.

You could compare entertaining being dissallowable being redescribed as stationary so that it is.

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By DotasScandalDotOrg
13th Apr 2016 11:45

Thanks for the tip

The Black Knight wrote:

The way round IR 35 was change the way you worked so it wasn't deemed employment.

NOT have blind faith in an accountants pen retrospectively changing a matter of fact.

Thanks for the tip. 

Do you think HMRC will let me borrow their time machine so that I can deliver this memo to my young self back in 2005 (when accountants were en-masse advising contractors to close Ltd Co's and switch to "contractor structures")? 

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By The Black Knight
13th Apr 2016 12:16

we all make mistakes

DotasScandalDotOrg wrote:

The Black Knight wrote:

The way round IR 35 was change the way you worked so it wasn't deemed employment.

NOT have blind faith in an accountants pen retrospectively changing a matter of fact.

Thanks for the tip. 

Do you think HMRC will let me borrow their time machine so that I can deliver this memo to my young self back in 2005 (when accountants were en-masse advising contractors to close Ltd Co's and switch to "contractor structures")? 

We all make mistakes don't beat yourself up about it.

We certainly were not giving that advice at the time.

Are you still with the same accountancy firm and do you still believe they were the cheapest?

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By Difficulttimes
13th Apr 2016 11:50

I could be wrong but I'm sure that a court is yet to hear an APN JR for a EBT case yet. From what I know it's just been PPNs so far. Most JRs for APNs are stayed until the Supreme Court hears the Ingenious case so sometime in 2017 by which stage we will probably have this legislation with us which makes the whole situation even more uncertain and incredibly complex. 

 

 

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By The Black Knight
13th Apr 2016 11:55

ingenious case

Difficulttimes wrote:

I could be wrong but I'm sure that a court is yet to hear an APN JR for a EBT case yet. From what I know it's just been PPNs so far. Most JRs for APNs are stayed until the Supreme Court hears the Ingenious case so sometime in 2017 by which stage we will probably have this legislation with us which makes the whole situation even more uncertain and incredibly complex. 

 

 

That's a new one on me I assume that has already done first and second tier tribunal then? Do you have a link handy or the case reference.

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By Difficulttimes
13th Apr 2016 12:06

Ingenious

 

[/quote]

That's a new one on me I assume that has already done first and second tier tribunal then? Do you have a link handy or the case reference.

[/quote]

 

http://www.taxation.co.uk/taxation/Articles/2015/08/04/333469/not-so-ing...

 

I should also add that you know the difference between litigation and JRs? JRs don't go through a first and second tier tax tribunal, they go through the High Court and then the Supreme Court if the Court of Appeals allow them to appeal. In this case Ingenious (film scheme) was granted the appeal so will be heard in the Supreme Court where the Rangers case will also be held. I'm not a legal person at all but the way things are going I don't think I will need to be anyway as we can do without it soon :) 

 

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By gordo
13th Apr 2016 12:05

I have so far been challenged
Justsotax

I have so far been challenged as being a Contractor, a Promoter and now the horrid QC who gave the blasted advice.

Though I'm flattered that you should think me sufficiently knowledgeable to be a QC.

Interesting that people should try and pin me as a person they can direct their anger at because they are not getting their own way. That's classic School Yard bullying.

None are correct I'm afraid. 
I'm just a concerned Accountant who happens to understand manipulation and how Behavioural Psychology can be used or abused and I don't like what I see.  I qualified with ACCA in 1994 and  with CIOT in 2004 and then the psychology qualifications all came afterwards as I tried to better understand my clients and maybe figure out why they did not want advice on growing their business, but simply wanted to know how to reduce the tax so that they could keep more of their hard earned dough. 

Actually my most recent was a Diploma in Mindfullness, so goodness only knows what I'm doing spending time on this thread. I think it is that I would be happy to wait for the Courts, who are much more knowledgable than me, but I fear HMRC are trying to manoeuvre the situation so that people are deprived of that basic entitlement.

Bugger[***], I've been outed as an Accountbat who is prepared to question HMRC. Damn, the games up. Better go and get me one of those proper accountants or good advisers (almost wrote advisors there).

Anyone want to go round again?

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By The Black Knight
13th Apr 2016 12:39

psychopaths

gordo wrote:
Justsotax I have so far been challenged as being a Contractor, a Promoter and now the horrid QC who gave the blasted advice. Though I'm flattered that you should think me sufficiently knowledgeable to be a QC. Interesting that people should try and pin me as a person they can direct their anger at because they are not getting their own way. That's classic School Yard bullying. None are correct I'm afraid.  I'm just a concerned Accountant who happens to understand manipulation and how Behavioural Psychology can be used or abused and I don't like what I see.  I qualified with ACCA in 1994 and  with CIOT in 2004 and then the psychology qualifications all came afterwards as I tried to better understand my clients and maybe figure out why they did not want advice on growing their business, but simply wanted to know how to reduce the tax so that they could keep more of their hard earned dough.  Actually my most recent was a Diploma in Mindfullness, so goodness only knows what I'm doing spending time on this thread. I think it is that I would be happy to wait for the Courts, who are much more knowledgable than me, but I fear HMRC are trying to manoeuvre the situation so that people are deprived of that basic entitlement. Bugger[***], I've been outed as an Accountbat who is prepared to question HMRC. Damn, the games up. Better go and get me one of those proper accountants or good advisers (almost wrote advisors there). Anyone want to go round again?

bless ya would support you in above

But do feel we are fighting a losing battle when it come to the Law and how the government treats it's subjects/citizens cash cows or what we are now to them.

We can only deal with the laws as they write them.

This is happening in all areas of law. Europe or not I have no idea

Our police force used to be unarmed and didn't accidentally shoot the innocent either, progress I suppose. has it reduced the number of criminals carrying guns?

They just got grenades

My objection to these schemes (not just loan schemes right from the start) was not a moral one but I had concerns re: substance over form, Ramsay principle, commerciality tests etc etc I had no idea they would fail on the basics before the tribunal even got to these grand principles.

APN's are a pain Yes Fair no not really are they here to stay? I expect so until HMRC lose interest or the psychopaths at the top do as is in their nature.

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By justsotax
13th Apr 2016 12:12

angry me...

nope...I just find this whole thing amusing...as for a bully....not that either...but you do give the impression you know what you are talking about (albeit in my opinion it is misguided hence my jump from sympathiser to introducer etc).

I doubt I know half as much as you about the subject, what I do know however is that if the loan is repayable (well repaid) then the scheme doesn't work...and as we found out during the late 2000s...when loans aren't repaid then [***] happens...but you already know that.

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By The Black Knight
13th Apr 2016 12:41

spellind

Can someone please tell me how I get my spell check back on accounting web?

Used to have it then got a new computer

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By ShirleyM
13th Apr 2016 13:11

Not comparable

Avoid IR35 - make an arrangement so a piece of legislation does not apply = that's tax avoidance - disgusting, and how dare a reputable man of the profession suggest such a thing!

Going by the many threads on here regarding IR35, most accountants inform their clients that the contract must reflect reality, ie. saying that you can supply a substitute won't be a defence against IR35 if you cannot, in reality, supply a substitute. As everyone keeps telling you, it's substance over form!

How does this compare with a repayable loan (for HMRC purposes) actually being non-repayable (for the punters purposes)?

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By Andy Davis
13th Apr 2016 13:27

Not comparable

I know how IR35 works and how to ensure my client's affairs are arranged in such a way that IR35 does not apply. The original post said it is easy to avoid IR35. Dress it up all you like the word used was AVOID, and that means AVOID.

Not my phrase. Don't have a go at me

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By ShirleyM
13th Apr 2016 13:26

No no no

It is, you have just decided to draw a line in the sand somewhere that seperates acceptable from unacceptable. 

One solution reflects reality (no dishonesty), the other doesn't (based on dishonesty). 

Loans: you are ignoring the fact that they are repayable where HMRC are concerned, but not repayable where the punters are concerned.

No wonder you are having a problem distinguishing between what is acceptable and not acceptable.

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By Andy Davis
13th Apr 2016 13:30

Yes yes yes

 

My line in the sand is drawn where the legislation draws it, yours, presumably based on which side of the bed you get out of

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By Vaughan Blake1
13th Apr 2016 14:11

BTW

Whilst I had my OED open, I looked up 'opinion'.

"This is a belief or judgment that rests on grounds insufficient to produce complete certainty".

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By gordo
13th Apr 2016 14:33

No Title
Justsotax

I am happy to accept your first paragraph and shake hands on that matter.

As regards your second paragraph I'm afraid that we've been through this and the Courts have ruled. Vaughan found it for us earlier; that loans were deemed by the Courts to be repayable on demand.  The Courts tell me that's a fact. The Courts have ruled.

ShirleyM
I'm sorry I can't help you any more. I'm not sure if you re-read what you write, but I certainly can't get you to listen (to me).

I have been outed. Turns out I have some knowledge of the subject matters. You don't want to get me started on IR35, which was the most examinable and studied topic when I did my CTA exams. If we did then we would have to discuss the declaration being signed on both the P35 and the Tax Return, having fully considered the PSC tick-box each time. If HMRC could demonstrate that this was incorrect and knowingly incorrect then they could accuse fraud and the taxpayer would be personally liable. Who would the clients sue for the advice. Don't worry though I'm sure HMRC would never win in Court.....oh, wait a minute.

If you can't see that once HMRC get to make themselves judge and jury in regard to the tax strategies, their next target could well be IR35. Wouldn't be difficult to manipulate public opinion against those rogue people operating through Limited Companies.

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By The Black Knight
13th Apr 2016 15:03

If these schemes or any avoidance rely on a falsehoods such as:

A partner declaring working 10 hours a week but doesn't

A loan that is repayable that is not.

A substitution clause that in reality no substitution would occur

A dividend that is not lawful or backdated to cover up Wages or a loan

The Losses being dependent on some rather dubious accounting that was clearly not in accordance with accounting standards and then wait for it AUDITED lol

Then this is probably evasion not avoidance

Certainly that is the way HMRC viewed the Tenon incident and why they raided Blackstar as reported. Presumably there is media blackout on that one at the moment.

PA holdings looked at dividends that were not dividends - looks like an elephant? That took 13 years to get through the courts - solution APN's

How can a loan be repayable if there is no intention ever to repay it? The demand bit I get? But only a plonker would agree to work for a loan. Of course the exit route may well have been whoops I've spent it I'm going bankrupt so stuff your loan and your tax. In which case it was cheap living or was that fraud as well.

I do hope this goes to court so we get the answer.

I am interested to see if all avoidance firms were of the same ilk or whether there were some schemes that actually worked.

 

 

 

 

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By Andy Davis
13th Apr 2016 15:17

Loans......... sigh

The Black Knight wrote:

If these schemes or any avoidance rely on a falsehoods such as:

A loan that is repayable that is not.

How can a loan be repayable if there is no intention ever to repay it?

Because................... wait for it, because it has not been said before (at least not more than 50 times in this thread)

............................. the court has ruled they are loans. OMG

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