Category Archives: News

Contractors’ ordeal and HMRC retrospection get discussed on BBC’s Money Box

BBC Radio 4’s Money Box with Paul Lewis, 18/03/2017

A couple remarks to Paul Lewis:
* The contractor has paid the correct amount of tax in the first place, as defined by the law as it stood at the time.
* The contractor did not merely buy into a set-up “he thought was legal”, the set-up was legal under the law as it stood at the time.

This is precisely the reason why HMRC / Treasury don’t want anyone to look too closely at the specifics, and are introducing 20-year retrospective law, in what can only be desceribed as the biggest smash & grab of this century.

There was a number of other inexactitudes in the programme, but I guess there’s only so much you can convey in a programme like this.

Still, let’s remember that for one self-employed getting a few minutes of airtime, there are tens of thousands others silently slaughtered by HMRC, for only two reasons: satisfying Gauke’s personal lust for self-employed blood (did a contractor steal his girlfriend many moons ago? we’ll never know the real reasons, but a vendetta it sure is), and brushing under the rug over a decade of incompetence, inaction and inconvenient truths.

Private Eye nails it again

From Private Eye No. 1433, 9 December – 22 December 2016, page 6 News:

Infernal Revenue

“Last week’s report from parliament’s public accounts committee on HM Revenue & Customs read like a compendium of old Eye stories.

From the disastrous Concentrix tax credits affair (a “complete failure”, with “many claimants being wrongly accused of fraudulent claims” and causing “unnecessary hardship and suffering”) to misleading claims about success investigating tax dodging, the MPs’ message was unrelentingly critical.

But on one point they were wrong. “HMRC’s senior management cannot afford to be complacent about the catastrophic collapse in customer service in 2014/15 and the first half of 2015/16,” said committee chair Meg Hillier MP. The trouble is they can afford to be complacent. The price of failure is simply gratitude from government for mercilessly implementing cuts without care for the consequences.

The HMRC chief executive who presided over the Concentrix and other customer service “catastrophes”, Lin Homer, bagged a damehood earlier this year. Meanwhile, the non-executive chairman of the HMRC board since 2012, Ian Barlow, remains at the head of the boardroom table. Even the minister responsible for the tax system throughout the years that gave the country these disasters, David Gauke, was recently promoted to the cabinet as chief secretary to the Treasury. A similar performance elsewhere would have meant political oblivion. But HMRC’s cock-ups tend to hit lower-income families whose plight can be safely ignored, giving plenty of room for complancency.

HMRC tries another scam

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Another day, another HMRC “nudge” tactic.

This time, it is an “invitation” for the taxpayer to deliberately misclassify / misdeclare loans as income, for HMRC’s benefit, using a law that doesn’t actually exist as a threat.
There is no statute or case law in existence to back this “invitation”.
In other words: it is manipulation at its finest on HMRC’s part.

In essence, they are encouraging the recipient to file an innacurate return… then in the same paragraph, inform that there are penalties for innacurate returns. 
Even Kafka wouldn’t have made it up.
Note also the neat “I want to help you” faux-friendly tone (did Behavioural Insights Ltd. come up with this?)

It’s little wonder that people fall for “HMRC” scams every day, when actual HMRC correpondance is so blatantly manipulative and deceiving. How this can go out on official letterhead without anyone blushing is beyond us – but hey, we’re not from the Stalin-esque “the end justifies the means” school of thought…

Thanks to the reader who sent us this gem, and shame on you, Harra, Granger, Troup, & the other scammers who authorised this. Soon you will find yourselves so entangled in lies, breaches of procedure, and contradictions of your own making that neither the PAC nor the Judiciary will be fooled anymore. And when the pendulum swings, it will swing faster than you can say “maximizing the amout of tax collected“.

If you are a contractor or recipient of APN(s) and have been offered a dubious “offer you can’t refuse” from HMRC, please get in touch via our contact form.

the ICAEW savages HMRC over latest retrospective tax stunt


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Presented without commentary, here are a few extracts from the Institute of Chartered Accountants of England and Wales (ICAEW)’s response to HMRC’s “Tackling Disguised Remuneration” technical* consultation – a.k.a. “the Osborne Ultimatum”

“We are very concerned about the proposals in the consultation document as they contravene
generally accepted notions of fairness and break the constitutional convention against
retrospective legislation, imposing tax charges in cases where taxpayers already had legal
certainty that none were due.
(…)
It is not acceptable for HMRC to create a retrospective tax liability where none currently exists,
especially as HMRC has been aware of loans to employees (referred to in the consultation
document – and adopted here for convenience only – as disguised remuneration (DR)
schemes) since at least 1999.(…)

To introduce legislation which affects transactions which were entered into up to 17 years ago (measured from the current year) where HMRC
has taken no timeous action despite knowledge of the alleged avoidance is likely to lay the proposed legislation open to challenges under the Human Rights Act (…)

HMRC should apply existing legislation rather than giving the impression of
being unable to take action by proposing new legislation duplicating what is already there.

On the international scene these proposals when considered in the light of other recent and
proposed changes to employer taxes and payroll, benefits-in-kind and expenses reporting
processes are making the UK appear a more ‘difficult’ country in which to locate staff, which
may not be desirable in today’s fragile economic climate.

Is it us, or is a can of worms about to be opened?

* “we intend to make it happen whether you like it or not, just need to work out the details”

 

Some brutal truths about IR35.

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As 90% of contractors at the UKHO resign over IR35, a contractor shares his thoughts…

“There are many reasons IR35 was a shockingly bad piece of legislation. From a personal perspective here is my take on it:

Being inside IR35 basically says that you are really an employee of your end client and trying to disguise the fact. This would be much worse than being an employee for the following reasons:

VAT liability – I asked Her Majesty’s Customs and Excise if I could I deregister for VAT if I was inside IR35. Their reply was that I would still have to charge VAT and that were my company not to do so they would ultimately come after me as a director for criminal fraud. As most of my clients were Financial Institutions who could not claim back VAT, the full amount charged was paid 100% to the treasury. NO EMPLOYEE WOULD BE EXPECTED TO CHARGE OR COLLECT VAT. Nor would they be crimally liable if it were not charged.

During my work for clients my company had to carry Professional Indemnity Insurance. This was almost always written into the client contact. If I was working on financial trading systems, often the premiums for this would be excessive. My company had to also provide Public Liability Insurance. NO EMPLOYEE WOULD BE ASKED TO PROVIDE PROFESSIONAL INSURANCES TO INDEMNIFY THEIR EMPLOYER.

My responsibilities as a company director meant I was responsible for filing Company Accounts and Returns. The clients I worked with would not hire me unless I traded through a Limited Company. NOT ONE EMPLOYEE WOULD BE ASKED TO FILE COMPANY RETURNS, LET ALONE PAY FOR THEM OR BE RESPONSIBLE FOR THEM.

The ultimate injustice was that if I truly was an employee as the Inland Revenue were asserting. they would ask me to pay the Employer National Insurance. NO EMPLOYEE PAYS EMPLOYERS’ NATIONAL INSURANCE. I would also be responsible for the payment of PAYE income tax and Employees National Insurance. NO EMPLOYEE IS RESPONSIBLE FOR PAYING PAYE INCOME TAX AND EMPLOYEES NATIONAL INSURANCE, as this is normally deducted by the employer.

Along with this I would have no employment rights, paid holiday or paid sick leave. AN EMPLOYEE HAS ALL THESE LEGAL RIGHTS.

I personally have no problem paying employee levels of tax. What I object to is paying both employee AND employer taxes. Especially when I have no employee rights and a stack of employer obligations.

Considering all of the above, it is unsurprising wonder that the introduction of IR35 directly caused the “contractor scheme” boom of the early 2000’s…

Have a tax credit and an APN in dispute? Beware this new tactic.

coercition

Have a tax credit and an APN in dispute? Be careful of this new tactic.

Dotas Scandal has received several reports of HMRC using now tax credits to cover outstanding APNs:

“Today i ran into a new situation. Every year i submit my tax return and go through the usual first payment on account, second payment on account. HMRC force you to pay your tax 100% over the amount you submit on your tax return and that normally sits as a tax credit.

I recently submitted my tax return, well actually way before i got letter, for 2015/16. I had a tax credit on my account, which offset against my current tax return would have meant I would not have had to pay any tax for 2015/16.

The letter today stated in simple terms that HMRC had swiped the tax credit and that under Finance Act 2008, they can do this. So basically: “tough luck, we’re not going to offset your tax credit against your latest tax return, we’re going to apply that tax credit to your APN and by the way you now still owe us £XXXXX”.

I am not even sure whether you can still pay current tax obligations. HMRC now seem to say whatever money they get they can apply in whichever way they want.”

It is no secret that HMRC are several £Bn short on their APN collection promises to Parliament, and getting desperate to extract monies by all means necessary.
As the APN well is drying up, expect more accounting tricks and unorthodox “collection” methods to be deployed. Plan accordingly.

Are mainstream media missing an important point of the Allardyce story?

Some interesting thoughts shared by one of our readers:

“It is interesting to see what happened to Big Sam.
What if as I reckon he was given an APN, didn’t have hundreds of thousands at his disposal, so went after quick bucks to pay for it? Even wealthy football managers don’t have that sort of cash lying around.
Of course we will never know the truth but I’m sure that’s what happened. If that is the case then I do feel sorry for him, I’m sure the media though will paint him as being greedy but there is more to the story than that.”

That would certainly be congruent with Allardyce’s comments on HMRC’s mode of operation.

Was “Big Sam” pushed into a corner by HMRC over the “retrospective advance payment” of an imaginary tax debt? If so, would that be indeed? Is there more than meets the eye?

We don’t know. But let’s all hope that some real investigative journalists will be found to get to the bottom of the story.

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Sam Allardyce summarizes HMRC and APNs

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Sam Allardyce says it like it is:

“It’s the most corrupt business in the country at the minute, HMRC”

“They fly out tax demands without any real knowledge whether they should or shouldn’t.”

“They just put ‘em out willy-nilly and  people s*** themselves and pay them.”

“Then they go to your accountant, and if you’ve got a s*** accountant, the accountant s**** himself and says, well you must owe them, you had better pay it.”

Sounds spot on to us!

 

For HM Government, are well all like Pavlov’s dogs?

War is peace

Last month, a horridly biased propaganda piece published in the Economist  made many alarm bells go off for those familiar with mental manipulation techniques – to the point that some readers questioned whether the infamous “nudge unit” could have helped pen the piece.
Would we put it past HMRC to now plant articles in reputable publications? Certainly we wouldn’t.

One commenter well versed in Behavioural Psychology offered interesting insights into the methods used and the aims behind them.

 “Some of the presuppositions in the language lead me to wonder if it could actually have been written, in full or in part, by a former department of the Treasury known as the Behavioural Insight Team.

To let you understand, the Behavioural Insights Team used to be a department of the Treasury but have now been hived off as a private company part owned by individuals and part by the Government. They use Behavioural Psychology to influence your decisions. One of their stated objectives is enabling people to “make better choices for themselves”. Oh really! Rather Orwellian I feel, but then behavioural psychologists do believe that we are just animals that can be manipulated, remember Pavlov’s dogs? Interestingly it would seem that Behavioural Psychologists must presumably believe that everyone just operates on animal instinct…except them. You can check out their website or indeed find them on Twitter. Their aim is to influence your behaviour and it would appear to be highly lucrative for them. Indeed in their first year of trading they managed to amass a Turnover of £4.8million and made a profit of £1.8 million. Their customers primarily being you and me, the taxpayer, in the guise of other government departments. I don’t know who will benefit from that profit but I do know that they are part owned by an EBT (Employee Benefit Trust). You really couldn’t make this up!

I digress. Back to the article.

It starts with the heading which pre-sets the expectations by referring to ‘dodgy’ tax structures.
The opening sentence states a bare faced lie (that tax avoidance isn’t legal) and makes no apologies or no attempt to water it down, so if you accept the source as being knowledgeable or authoritative, then there is a chance that you accept the opening, shamefully false, statement and if you read on without questioning that….then the scene has been set.

The first paragraph explains who is going to be the target of the article/attack and even gives them a derogatory name in quotes so that we can be relieved that it is not us who is the target, we can sneer at the “pinstriped mafia” who are the target and we are effectively given permission to dislike them and see them as the enemy, and of course putting this in quotes actually gives it authority as in “experts say”…, but then because it is in quotes, you can’t pin it on me because I didn’t say it.

The third paragraph implies that those who design, market or facilitate the use of tax avoidance arrangements could be fined a sum equal to 100% of the tax, but as Dr Bartolo has already very eloquently pointed out in the comments section, tax avoidance is perfectly legal (and any attempt at quantifying it is purely a wish list of HMRC). Surely you can’t fine someone for acting within the law. Quite so, but the paragraph reads as if it will be the case that anyone in the vicinity of the tax structure will be fined, legal or not.

This is an attempt by the Government to influence behaviour rather than run the risk of challenging these tax avoidance promotions in court and face the possibility of losing.

In this case they are trying to frighten the Accountants and similar professionals away from this area of tax avoidance. It’s all about collecting more cash. What I object to is the fact that they are trying to do it covertly by using NLP type language structures designed to influence behaviour and it’s hidden within their publications. The Behavioural Insights team are proud to call themselves the ‘nudge’ unit. They are trying to nudge you in the direction of the behaviour they want to see you take, even if that means you pay more tax than is legally due. They think they are smarter than you. It is no coincidence that HMRC recently changed its stated aims from collecting the right amount of tax, to ‘maximising revenues’”.

Other comments all also worth a read (notably those of Dr. Bartolo)

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An interesting quote from the new Chancellor

hammond

In the wake of the sad, sad news of Mr Osborne’s forced exit (through the back door) from the Cabinet, we present you a couple of historical quotes from new Chancellor Philip Hammond.

Assurances that wide powers will be used only narrowly in practice are no substitute for tightly drafted legislation. There remains a real possibility of inflicting damage on some of the UK’s most dynamic business sectors in the medium term, and thus of damaging the UK economy’s international competitiveness in the long term.”

(…)

“A taxpayer is entitled to know with certainty – be it an individual or a multinational corporation – what he may or may not do in planning his tax affairs. He is entitled to expect that his treatment be laid down in statute, not determined by administrative fiat; he is entitled to expect that another taxpayer in similar circumstances will receive treatment similar to his; and he is entitled to be protected from retrospective or retroactive legislation.

Sounds familiar / contemporary? This is from 2005, and commentary on a Labour Finance Bill.

Of course, Conservatives are no stranger to spectacular U-turns, so time will tell if the new Chanceller will do a “Gauke”, or remember his words from yesteryear and act in accordance.

If anything, let’s hope that the change in personnel at the Treasury opens the APN / Osborne ultimatum can of worms in earnest, and puts the whole Osborne-devised scapegoating operation under the scrutiny it deserves.