Tag Archives: APN

The Telegraph: “HMRC flexes new powers on contract and freelance workers in £5.5bn raid”

osborne_2853802bThe 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!

FT: “Taxpayers hit with ‘spectacularly wrong’ avoidance bills”

Funk2-s

“Imagine my shock when the APN was more than five times more than I thought it would be”.  “I thought I was going crazy.”  After weeks of going back and forth with the Revenue, the authority has acknowledged the mistake and promised to reissue the payment notice. “One has to wonder if this was a deliberate mistake on their part.”
(…)
This experience has been relatively common, said Michael Avient, personal tax partner at UHY Hacker Young. “Great care needs to be taken [by taxpayers] to make sure that the amounts are calculated correctly.” Mr Avient added, however, that it was inevitable that errors would occur given the volume of payment notices that HMRC is issuing.
(…)
The taxpayer described the process as a source of “acute stress”, adding that the tax bill arrived before his disputed arrangement has gone before the courts. “I really don’t have tens of thousands in spare cash to pay a bill I don’t even owe.”
“Law abiding citizens like myself who invested in schemes which were totally lawful, and in many cases actually promoted by the government, are being treated worse than common criminals,” he said. “It’s totally scandalous.”

Read the full article here (free registration required).

If you have received an APN with a completely wrong amount, or an APN for a year that HMRC is not entitled to, please contact us

Guest post: “End of term report – the view from form 4D”

by Graham Webber.

There is published in the Tax Journal of 30th April 2015, an excellent article by Graham Aaronson and Steve Bousher, which is a report on the late coalition’s efforts to tackle tax avoidance. It’s well worth a read.

In my personal opinion the article focuses on how the measures introduced by the late coalition Government impacted multinational companies and high net worth individuals. It fails to consider the thousands of less wealthy taxpayers who are caught as collateral damage.
I’d agree that the Government/HMRC addressing public opinion and getting it “on side” was a successful start although I remain confused over why Jimmy Carr (entertainer) was subject to adverse comment from the very highest level of Government, whilst Gary Barlow (entertainer) was not.
The article points to the key themes of the campaign to reduce avoidance, make it unattractive financially and to punish those who facilitate such schemes. All reasonable in the economic climate between 2010 and 2015 and all arguably looking to protect the economic recovery so often lauded if so little noticed by those who are not “high net worth”.
There is reference to the “introduction of measures” and “reducing the risk” of avoidance. The implication being that new rules would catch new schemes or perhaps even the effects of old schemes that continue beyond the effective date of new rules. This is the usual way of bringing new tax rules into force. If this is the case, then nobody can complain.

What is harder to stomach, especially for the members of form 4D who are unlikely to be “high net worth” is how these rules can generate life changing demands from HMRC for “schemes” that were finished and wound up long before the coalition was even imposed upon us.

Contractors are a very large group of people who are well paid, specialist in their areas and subject to a bewildering array of tax rules. In essence HMRC wants them all to be employees. Contractors and their clients don’t want this. Why would a large firm employ a specialist as an employee for a project that may require only a few weeks or months work? A contractor is often less expensive than a full time employee and does not arrive with the inevitable red tape burden.
Many contractors operated via “schemes” that promised low administration, no employee relationship and as a bonus, reduced tax. The tax reduction was achieved in the same way as an (employed) banker’s bonuses in many cases. HMRC launched enquiries in 2007 and 2008 and then …nothing.
With the APN regime now live, many contractors, having heard nothing in 5 years, 6 years, more, assumed that the demand now lying on their doormat was an error. (A lot of them are wrong). However, they’re not. They are live and need paying.
Having been lulled into thinking that no news was good news, this group of very much NOT high net worth people are looking at bankruptcy and loss of career and lifestyle partly at least because of the dilatory approach of HMRC.
This factor is likely to be far more harmful to “fairness” than the dressing down unfairly delivered by the PAC to HMRC.

It’s fine to focus on the wealthy and super wealthy and if I were selling newspapers I would do that. I would agree with the principles that the last coalition introduced in the main.
I fear however that the actions and experiences of the few thousands of high net worth individuals who indulged in tax avoidance is an excuse to visit huge UNFAIRNESS upon tens of thousands who have never made the top set.

Graham Webber is Director at WTT Consulting Ltd

Guest post: “APN – Apocalypse Perhaps Now?”

“(…) Now these people are being faced with a demand for tax, no appeal available, no postponement available, penalty for non payment, regardless of whether the amount is actually due and no shelter to be found in a legitimate legal process. I suggest that the “nurse test” will find this behavior UNACCEPTABLE, UNFAIR and OUTRAGEOUS.”

A comprehensive take on APNs and the unfairness they carry by a veteran tax professional

Read the full article here