Tag Archives: Retrospection

the ICAEW savages HMRC over latest retrospective tax stunt


ouch

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”

 

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.

The Osborne Ultimatum: are we all being played?

Osborne ultimatum

Some serious food for thought for all victims of APNs regarding the infamous “2019 charge” on Contractor Loans (from gordo at the AccountingWeb forum)

“Tax planning, tax avoidance, tax mitigation…however you want to describe it, it is perfectly in order to resist HMRC from putting the largest shovel in one’s stores. So long as it is within the law.

Interesting that many are happy to give their opinions (not fact) on how the law should have worked and then back HMRC in their wish to dispense with tradition and rules and propose a law sometime in the future, which impacts upon planning undertaken many years ago within the law that existed at that time. Interesting that many seem to know better than the QC’s. However, HMRC do not make the law. They may propose something, but it’s Parliament that creates the law and seeks Royal assent.

I find it intriguing that HMRC have positioned this 3 years hence and then work on getting Accountants to influence clients to throw in the towel, despite the fact that there is no such law as things stand, further, we don’t know what the law might be if it arrives and therefore what settlement would amount to. The idea that the 3 year period is to allow loans to be repaid is misleading and does not explain why the Government did not act to stop any new loans being created from the date of the budget.

I also find it intriguing that HMRC think it better to employ, no that’s wrong, not employ but contract the services of behavioural psychologists to influence peoples’ behaviour, rather than work within the law.

Any behavioural psychologist would know that one way to create stress is to remove any feeling of certainty and create an atmosphere of uncertainty.

Check Companies House for Behavioural Insights Ltd. A company apparently part owned by the Treasury and part by individuals…and part by an EBT! (DS: and whose motto is “enabling people to make ‘better choices for themselves’” – you couldn’t make it more Orwellian if you tried!).
This company achieved Turnover of £4.8 million and profit of £1,4 million in it’s first period of trading. Impressive for a start-up. Who are/is its main customer(s)?

(https://www.gov.uk/government/organisations/behavioural-insights-team)

Imagine for a moment, now I am not saying this is true, but just imagine that I could convince everyone to give in and settle between now and 2019 under threat of what the law might be one day….then I wouldn’t actually need the law to be passed.

Addendum 20/09/2016 : to further understand the inconvenient truth behind HMRC’s operation, read also this article

 

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

Gauke performs magic trick, transforms 847 responses into 20 (and lies to Parliament in the process?)

gke
From Finance Bill Committee transcript , 17th June 2014:

David Gauke: “The consultation on the draft legislation earlier this year generated over 20 responses”  

From “Tackling marketed tax avoidance , Summary of Responses”, March 2014:

HMRC: “HMRC received 847 responses to the consultation

A breakdown of the capacities in which respondents made their comments is below: 

• 12 from representative bodies
• 29 from consultants
• 245 from accountancy firms
• 5 from law firms
• 547 from individuals
• 9 from other businesses “

Yes…. 847 is technically “over 20″…
Okay……

Did the Minister deliberately mislead the Parliament to force his retrospective legislation through?

You be the judge…

(In fact, is this any different to when HRMC misled Parliament into passing S58 in 2008 ?Jane Kennedy later confirmed in writing that “she was told by HMRC that only a very small number of people would be affected, and certainly not the thousands that have been impacted“.

It’s this kind of “inaccuracy” that will cost average people everything, yet cost MPs and civil servants nothing. Demand accountability from your representatives! )

gauke

Retrospective taxation and the rule of law

magna cartaFrom Adam Smith Institute :

“It is quickly becoming obvious that the rule of law does not apply to UK taxation any more. Already, schemes under which people arrange their affairs in ‘tax efficient’ ways that are perfectly in line with the UK’s (absurdly long and complex) tax code, are being struck down by HMRC, simply because they are arrangements designed to reduce a person’s tax bill. And now, it seems, HMRC can now make up new rules and make them apply to actions that take place even before the rules are put in place.

This is a mediaeval attitude to justice, redolent of the age of Morton’s Fork. That was the ingenious design of John Morton, Archbishop of Canterbury in the 15th century, who argued that a man living modestly must have plenty of money saved and could therefore be taxed, while a man living extravagantly was so obviously rich that he could easily afford to be taxed. (…) “

“There is the real danger that MPs may be misled into passing an extremely draconian and unjust retrospective change to the law, which will have serious financial repercussions for tens of thousands of businesses and individuals”

from The Parliament’s website

“The Exchequer Secretary has claimed that these measures are not retrospective. However, this statement is false.

“The changes will apply to any legitimate and registered tax planning arrangement entered into as far back as 2004, and retrospectively change the way that tax disputes are dealt with. There is the real danger that if the Exchequer Secretary is allowed to defend this legislation by saying that the changes are not retrospective, MPs may be misled into passing an extremely draconian and unjust retrospective change to the law which will have serious financial repercussions for tens of thousands of businesses and individuals. Indeed, you will be aware that the Treasury Select Committee has strongly criticised this aspect of the legislation and said that the Government has not made a case as to why these measures should apply retrospectively.

It is surely perfectly reasonable that any new tax legislation should only apply going forward, and should not be applied retrospectively to those cases which are already in the system.”

The Law Society slams David Gauke over retrospective legislation and disregarding the Rule of Law

Tax policy confusion ‘hugely damaging’, say City lawyers

From The Law Society gazette:

A ‘disturbing pattern’ is emerging where legislation is introduced with ‘minimal or ineffective’ consultation.

Concerns are raised that tax policymakers are ‘insufficiently conscious’ of the importance of the rule of law and over-reliant on guidance. The current government, it adds, has legislated retrospectively against certain types of stamp duty land tax avoidance schemes even though they had been known to HMRC for some time.

‘We do not consider that this is acceptable. Businesses must know that the law in place when transactions take place will be the law that applies to them’.

‘This principle is either absolute or it is nothing – once it has been broken once, further breaches are only questions of degree, the committee says.

(…and as it happens, the principle has been broken once already)