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.
With hardly anyone noticing, the “HMRC wins 80% of avoidance cases” already dubious line we have been hammered with for the past couple years has now discreetly been changed into “HMRC wins almost 90% of tax avoidance cases”. This can be seen in this press release from earlier this month
Why HMRC would do this, and why now? No, it’s not merely for PR purposes.
A commenter on this AccountingWeb thread proposes an explanation
“There is a reason why HMRC have recently changed their objectives to “maximise revenues”, the Government needs your cash. What might a poorly led company try to do in such circumstances, accelerate receipts perhaps? Book income that isn’t actually income perhaps? Did I mention that the whole of government accounts record APN receipts as income even though they are an accelerated payment on account towards something that is still to be tested in Court to decide whether there is actually any tax due? Equal and opposite debtor and creditor anyone? However the government accounts record all but a 10% provision as income.
Did you notice that HMRC had recently started claiming to win 90% and not just 80% of tax avoidance cases that go to Court. I wonder which came first, the decision to only provide for 10% in the accounts or the analysis of cases that justified a 90% success rate. HMRC have though finally got around to disclosing the cases that they used to get their 80% or 90% results and a number of very professional commentators have asked why the list includes cases that aren’t actually tax avoidance and doesn’t include some which HMRC lost and which any reasonable person would assume should be on the list.
Next thing you know they will be trying to change the past with proposed retrospective legislation….oh wait a minute.
If you haven’t previously read George Orwell’s book 1984 you might want to pick up a copy.”
So there you have it: it’s “creative accounting” (so creative, in fact, that it would make even the Enron guys blush) destined to allow HMRC to once more mislead Parliament by affirming that they have collected “X billions of tax”, when all they have collected is retrospective payments on account of amounts that may or may not be due, to be determined at a later time.
Rumor has it that the law of diminishing returns has hit HMRC hard in their operation of the APN regime, HMRC having great trouble “collecting” from individuals, who 1/ simply don’t have the money 2/ insist on exercising their legal rights and have initiated Judicial Reviews (how dare they!).
So what’s HMRC to do? why, requalify 10% of the amounts already collected from “payment on account” to “tax collected” to make it looks like the money is still flowing in…when in realitythe well’s hopelessly dry.
And hope that Parliament doesn’t question the figures.
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.
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!
From Tax Journal:
“(…) One of the grounds of challenge was that condition C (in FA 2014 s 219(4)) was not met. Condition C is that, amongst other things, the chosen arrangements are ‘DOTAS arrangements’. Section 219(5) defines DOTAS arrangements as meaning ‘notifiable arrangements’ which have been allocated a scheme reference number. In other words, the arrangements must be notifiable under the DOTAS regime, as a matter of law. The fact that the arrangements were notified to HMRC is irrelevant for the purposes of ascertaining whether condition C has been satisfied.
HMRC took some six months to consider this ground of challenge before finally accepting that the arrangements were not notifiable under the DOTAS regime and that the APNs would therefore be withdrawn (…)
HMRC may have to accept this ground of challenge in relation to other similar EBT arrangements as it is obliged to be consistent in its approach and to treat all taxpayers in a similar position in the same way. “
After Montpellier last December, more unlawful APNs are being withdrawn following challenge by the taxpayer. This time it is for the Premier Strategies structure
From the FT :
May 27, 2016 5:43 pm
HMRC backs down on upfront payment of disputed tax
“A legal challenge has forced HM Revenue & Customs to back down over hundreds of tax demands issued to users of offshore trusts.
HMRC’s decision to withdraw demands to produce cash up front — known as “accelerated payment notices” — followed the launch of judicial review proceedings by scheme users who argued they should be exempt. (…)
Adam Craggs, partner at RPC, a law firm that brought the challenge, accused HMRC of taking a “shoot first and ask questions later” approach to the notices. He said they had a potentially serious impact on taxpayers including the risk of “being made bankrupt or being forced to conduct a fire sale of their home or other assets in order to raise sufficient funds”.
The move is the second time HMRC has been forced to withdraw accelerated payment notices. In January, up to 2,000 individuals who used employment tax schemes promoted by Montpelier Tax Consultants, an Isle of Man-based firm, won a reprieve.”
Dotas Scandal are fully expecting a “sorry for the inconvenience“ note to be sent by HMRC to those who were forced into fire sales of their family homes and to the families of those who just couldn’t cope with the bullying anymore.
We are on record maintaining for 2 years+ that the basis of operation of the APN regime would be “issue APNs to everyone and their dog, and count on taxpayers not having the know-how and funding (especially AFTER they have been forced to pay) to challenge the lawfulness of the demands”.
That’s terminal machiavellianism, directly in contravention of HMRC’s charter mandating fairness to all (NOT “unfairness to all”), and in striking contradiction with the reassurances given to the Treasury Select Committee: “HMRC will only seek accelerated payment in cases where there has already been a tribunal decision in their favour” (Lin Homer 09/07/2014)
How long will HMRC be allowed to continue?
HMRC forced to repay APNs issued unlawfully to 2000 contractors following challenge.
Never mind some of these contractors have sold their family homes to meet HMRC’s demands, or seen their marriages or relationships reduced to rubble.
Dotas Scandal understand that NTRT are suing HMRC for costs, and that Montpelier as well as a number of individuals are doing the same.
As you know, HMRC is currently conducting a campaign of delivery of Accelerated Payment Notices on an industrial scale. We are receiving very worrying feedback from readers informing us that they are in receipt of APNs for tax years where, as far as they are aware, no open enquiry exists (a prerequisite for the lawful issuance of an APN). We are hearing from accountants about figures as high as 40% of APNs where the existence of a valid enquiry is in doubt.
For this reason, we are supporting the petition started by our friends at BIG GROUP.
You will find this petition here.
Please take one minute of your time to contribute to it, and please pass the word around. Thank you.
The truth about HMRC’s abuse of powers against “low hanging fruit” freelance workers is starting to come out.
The Telegraph published a comprehensive article on the topic in its September 21st edition.
Read it here
The comments section is also worth a visit.
One reader summed up pretty accurately where exactly contractors caught in the APN farce are coming from:
“Interesting the volume of comments here by people who don’t have any clue as to why this all happens, i.e, non contractors. Those who are glad to see contractors being targeted here clearly don’t know the full facts.
As a contractor you are forced, yes forced by your client to open up a limited company to trade because they will NOT employ you directly, that’s to stop them from paying tax. You cannot negotiate this, if you don’t do it you don’t work. So then you contact HMRC and say “Hi, how much tax should I pay as a contractor” and they say “errm, it’s not as simple as that, err you have to fill in a self assessment.” So then you go to an accountant and say “Hi, how much tax should I pay” and they say “errn,it’s not quite as simple as that, there’s actually no tax construct for you being a contractor, most people just open up a limited company, but actually you shouldn’t because IR35 says you are actually just a disguised employee, err but just pay yourself dividends and some income.” So then someone comes along and says, you know what, HMRC can’t be bothered to stop the companies that employ you from forcing you in to this, and they cant be bothered to set up a contractor based tax position either, and the way you are trading is actually against HMRC direction anyway (IR35) and we have a simple way of getting paid which doesn’t involve loads of paperwork and is under law perfectly acceptable, AND you get to take more money home, then why the funk wouldn’t you do it? The annoyance is that HMRC could stop this overnight by either setting up a contractor related tax structure OR just stopping the companies who employ us from not paying us directly OR targeting those offshore companies offering the service are not being cracked down on or have any regulation put on to them.
What’s even more comical is that the money we collect and pay to HMRC in VAT and corporation tax is much more than HMRC would get as tax from us as an individual, AND if they make us go bankrupt they will lose a huge amount of future VAT and tax because we will never be employed again. Why make someone bankrupt for £30k when they will make you a million over there lifetime if you let them continue to work?? Added to which most contractors are doing this because they are some of the best people in their industries, and the country will lose the top people who are making this country successful and are in turn paying for all of the average low paid losers who took out a mortgage they can’t afford and are being bailed out by the country.”
HMRC has a very deep responsibility in contractors moving to DOTAS structures en-masse in the early 2000’s. Today, they are complaining about a situation they themselves created.
There is something in there for psychologists!
HMRC self-congratulatory press release (you’ll be forgiven for skipping this one…)
That was…very quick. Almost farcically so.
Thanks for nothing, Justice Simler