Retrospective taxation campaign
Discussion
Milky Joe said:
10 Pence Short said:
Well, no I don't know what you're stating.
On one hand, people avoiding large sums are not ok, whereas those avoiding small sums are ok.
All I asked you was, where do you draw the line?
Are you able to answer a simple question?
It's not a simple question and you know it. On one hand, people avoiding large sums are not ok, whereas those avoiding small sums are ok.
All I asked you was, where do you draw the line?
Are you able to answer a simple question?
I'm no tax guru but it's plain to see when an avoidance measure is taking the mick.
Put a figure on it.
10 Pence Short said:
So you answer the question- in your opinion, at what level do tax avoidance schemes go from being legitimate ways to limit your tax liabilities to 'taking the mick'?
Put a figure on it.
Forget about figures is my point. Look at intent of the particular tax rule and then consider whether they are being abused. Put a figure on it.
This above...
I don't know if this group represent those who used the same system as the one I know of, but, from the person I know who used this it went like this:
Self-employed consultant. Usually would pay a low NI rate and income tax as normal. It should be noted to make it even worthwhile entertaining such a scheme and the fees involved, the very large majority were earning several times the national average salary.
Instead, they tell HMRC they are working for a company in the Isle of Man. An 'umbrella' company. However, they have never met the owners of the company, never been to the IoM, and pick and choose their own jobs, so clearly still self-employed.
They get the umbrella company to issue invoices in their name, and the umbrella company take a commission, and the rest is deducted at the IoM income tax rate, less than half of the UK rate. So, instead of paying income tax for being self employed, they pay the IoM company and pay taxes to the IoM govt.
The 'loophole' was that as long as you were paying tax 'somewhere' you shouldn't be income taxed again in the UK.
Of course, this means that the self-employed person paid zero UK tax, yet gained the benefits of living here, making an IoM company rich.
If this is what the OP is talking about - then I have no sympathy. These people were clearly self employed, and clearly Uk residents, and at all times ran the risk that if HMRC thought the same that they would end up owing it all back...
I don't know if this group represent those who used the same system as the one I know of, but, from the person I know who used this it went like this:
Self-employed consultant. Usually would pay a low NI rate and income tax as normal. It should be noted to make it even worthwhile entertaining such a scheme and the fees involved, the very large majority were earning several times the national average salary.
Instead, they tell HMRC they are working for a company in the Isle of Man. An 'umbrella' company. However, they have never met the owners of the company, never been to the IoM, and pick and choose their own jobs, so clearly still self-employed.
They get the umbrella company to issue invoices in their name, and the umbrella company take a commission, and the rest is deducted at the IoM income tax rate, less than half of the UK rate. So, instead of paying income tax for being self employed, they pay the IoM company and pay taxes to the IoM govt.
The 'loophole' was that as long as you were paying tax 'somewhere' you shouldn't be income taxed again in the UK.
Of course, this means that the self-employed person paid zero UK tax, yet gained the benefits of living here, making an IoM company rich.
If this is what the OP is talking about - then I have no sympathy. These people were clearly self employed, and clearly Uk residents, and at all times ran the risk that if HMRC thought the same that they would end up owing it all back...
not260 said:
But I had a diesel fiesta, I made choices by limiting the benefit of the company car scheme and paid the tax due.
There's a difference between legitimately altering your liability and taking a risk by exploiting loop holes.
Presumably a loophole being a legitimate tax avoiding measure (like choosing another car) except one you can't use?There's a difference between legitimately altering your liability and taking a risk by exploiting loop holes.
SM
JustinP1 said:
This above...
I don't know if this group represent those who used the same system as the one I know of, but, from the person I know who used this it went like this:
Self-employed consultant. Usually would pay a low NI rate and income tax as normal. It should be noted to make it even worthwhile entertaining such a scheme and the fees involved, the very large majority were earning several times the national average salary.
Instead, they tell HMRC they are working for a company in the Isle of Man. An 'umbrella' company. However, they have never met the owners of the company, never been to the IoM, and pick and choose their own jobs, so clearly still self-employed.
They get the umbrella company to issue invoices in their name, and the umbrella company take a commission, and the rest is deducted at the IoM income tax rate, less than half of the UK rate. So, instead of paying income tax for being self employed, they pay the IoM company and pay taxes to the IoM govt.
The 'loophole' was that as long as you were paying tax 'somewhere' you shouldn't be income taxed again in the UK.
Of course, this means that the self-employed person paid zero UK tax, yet gained the benefits of living here, making an IoM company rich.
If this is what the OP is talking about - then I have no sympathy. These people were clearly self employed, and clearly Uk residents, and at all times ran the risk that if HMRC thought the same that they would end up owing it all back...
Montpellier then !I don't know if this group represent those who used the same system as the one I know of, but, from the person I know who used this it went like this:
Self-employed consultant. Usually would pay a low NI rate and income tax as normal. It should be noted to make it even worthwhile entertaining such a scheme and the fees involved, the very large majority were earning several times the national average salary.
Instead, they tell HMRC they are working for a company in the Isle of Man. An 'umbrella' company. However, they have never met the owners of the company, never been to the IoM, and pick and choose their own jobs, so clearly still self-employed.
They get the umbrella company to issue invoices in their name, and the umbrella company take a commission, and the rest is deducted at the IoM income tax rate, less than half of the UK rate. So, instead of paying income tax for being self employed, they pay the IoM company and pay taxes to the IoM govt.
The 'loophole' was that as long as you were paying tax 'somewhere' you shouldn't be income taxed again in the UK.
Of course, this means that the self-employed person paid zero UK tax, yet gained the benefits of living here, making an IoM company rich.
If this is what the OP is talking about - then I have no sympathy. These people were clearly self employed, and clearly Uk residents, and at all times ran the risk that if HMRC thought the same that they would end up owing it all back...
The only thing they did wrong was issue the invoices in the IoM. The norm these days is to front the tax faculty and trusts with a UK based factoring company
Loads of them about and probably good for another 2-3 years before HMRC stop them totally. Unlikely to be retrospective if they do. I would think that this time next year would be time to go back to Ltd Co instead and watch what unravels in the new Finance Bill.
Obviously I've never looked into these "tax solutions" at all ...
Arf
supermono said:
not260 said:
But I had a diesel fiesta, I made choices by limiting the benefit of the company car scheme and paid the tax due.
There's a difference between legitimately altering your liability and taking a risk by exploiting loop holes.
Presumably a loophole being a legitimate tax avoiding measure (like choosing another car) except one you can't use?There's a difference between legitimately altering your liability and taking a risk by exploiting loop holes.
SM
not260 said:
supermono said:
not260 said:
But I had a diesel fiesta, I made choices by limiting the benefit of the company car scheme and paid the tax due.
There's a difference between legitimately altering your liability and taking a risk by exploiting loop holes.
Presumably a loophole being a legitimate tax avoiding measure (like choosing another car) except one you can't use?There's a difference between legitimately altering your liability and taking a risk by exploiting loop holes.
SM
The law was ambiguous... it would be a closer analogy that the law said diesels were OK, then later [after you made all the claims for a 335d [with the obligatory re-map of course] and they excluded anything over 2ltrs.
The law was drafted under the myopic half-wits tenure in the exchequer and he couldn't frame Roger f
king Rabbit without screwing it up. 10 Pence Short said:
Except in this instance it isn't 'retrospective taxation law'.
Some people interpreted an existing law in one way, the HMRC in another. They both disagreed, so the case went to court to be decided. In the end, it was decided the HMRC were right in their interpretation all along, and the money was owed.
During all of this, some people decided to continue with the interpretation that favoured them and their pockets. When it was later decided they were wrong in doing so, the HMRC quite rightly asked for their (overdue) tax.
So sticking my head above the parapet here, but I have to put this thread straight. I am one of those affected by this retrospective law, which is absolutely and 100% what this is. I am not going to make this personal, but just so that we can put this in context I am looking at a total bill, including interest, of somewhere in the region of a quarter of a million pounds. Again not looking to make this personal but although I have a comfortable income as an IT professional, I am very far from wealthy and cannot pay this money without selling my house, uprooting my wife and 2 kids, and pretty much starting my financial life over again (and depending on how the housing slump has affected the value of my house - I could easily become bankrupt). I mention this not for sympathy, but to make the point that we are not talking about abstract tax bills that will not affect those who pay them, but that instead this retrospective change is having a very real and very significant effect on ordinary people.Some people interpreted an existing law in one way, the HMRC in another. They both disagreed, so the case went to court to be decided. In the end, it was decided the HMRC were right in their interpretation all along, and the money was owed.
During all of this, some people decided to continue with the interpretation that favoured them and their pockets. When it was later decided they were wrong in doing so, the HMRC quite rightly asked for their (overdue) tax.
The essence of the scheme is as JustinP1 has said. Yes, it is a contrived, aggressive tax avoidance scheme and yes, I fully acknowledge that there is a moral discussion to be had about paying ones way and, indeed, as this government is so fond of saying paying a 'fair' and 'right' amount of tax (whatever that means). However, again I will for now stick to the facts.
Those facts are that HMRC were well aware of the details of the avoidance mechanism 15 years ago. 10 years ago, just as the scheme became very popular amongst IT contractors, HMRC took a closer interest and indeed issued an internal memo specifying exactly how it worked, and concluding that it would be very difficult to challenge. Then, for 5 years, pretty much nothing. In 2007, they wrote to all the scheme users saying that they would challenge in the tax courts. In 2008, having failed to take any cases to the courts, they introduced retrospective legislation re-interpreting the meaning of a couple of key legal points (such as what the phrase 'member of a firm' meant, which by the way now apparently doesn't mean what you think it probably does), claiming that they were 'putting beyond doubt' the fact that the scheme does not and never did work. Note that the scheme has never been tested according to the law as it was during the tax years in question. Contrary to what 10PS has said (in all good faith I am sure), the efficacy or otherwise of the scheme has never been proven one way or the other. The fact the HMRC said they were doing to do so; failed to do so; and then retrospectively 'clarified' the law does however to me speak volumes for what they thought their chances were.
I'm not looking for sympathy (although that would be nice) or moral judgement (although I fully accept that people will do so anyway) - but let's start from a position of factual accuracy at least.
Now you've changed the argument to tax evasion. That's illegal and to be clamped down on.
You are a tax avoider just like every other tax avoider. You altered your affairs to avoid paying so much tax but cruicially you did so legally. Just like other tax avoiders do.
The law is written for any number of reasons to encourage some behaviours and discourage others.
Our job is to work out the best outcome for us within the law. You chose to have a crappy car to save tax. Others choose to go without today and enjoy tax relief on pensions contributions tomorrow.
Tax avoiders are everywhere, you can't criticise them without being a hypocrite.
SM
You are a tax avoider just like every other tax avoider. You altered your affairs to avoid paying so much tax but cruicially you did so legally. Just like other tax avoiders do.
The law is written for any number of reasons to encourage some behaviours and discourage others.
Our job is to work out the best outcome for us within the law. You chose to have a crappy car to save tax. Others choose to go without today and enjoy tax relief on pensions contributions tomorrow.
Tax avoiders are everywhere, you can't criticise them without being a hypocrite.
SM
Elroy Blue said:
How very predictable!
You should quit and go do what he does. Leave your pension, your holiday, your sick pay, your continuity of employment, your training, your short hours, your HR 'work/life balance' consultant...Leave these things for life on your own paying your own employer's and employee's NI, your own accountant's fees, your own time off either holiday or sick or on the bench looking for work, your own training. Succeed or fail on your own hard work.
Then you too can enjoy public sector wokers moaning about the amount of tax you pay (without actually knowing the figures)
SM
deckster said:
So sticking my head above the parapet here, but I have to put this thread straight. I am one of those affected by this retrospective law, which is absolutely and 100% what this is. I am not going to make this personal, but just so that we can put this in context I am looking at a total bill, including interest, of somewhere in the region of a quarter of a million pounds. Again not looking to make this personal but although I have a comfortable income as an IT professional, I am very far from wealthy and cannot pay this money without selling my house, uprooting my wife and 2 kids, and pretty much starting my financial life over again (and depending on how the housing slump has affected the value of my house - I could easily become bankrupt). I mention this not for sympathy, but to make the point that we are not talking about abstract tax bills that will not affect those who pay them, but that instead this retrospective change is having a very real and very significant effect on ordinary people.
The essence of the scheme is as JustinP1 has said. Yes, it is a contrived, aggressive tax avoidance scheme and yes, I fully acknowledge that there is a moral discussion to be had about paying ones way and, indeed, as this government is so fond of saying paying a 'fair' and 'right' amount of tax (whatever that means). However, again I will for now stick to the facts.
Those facts are that HMRC were well aware of the details of the avoidance mechanism 15 years ago. 10 years ago, just as the scheme became very popular amongst IT contractors, HMRC took a closer interest and indeed issued an internal memo specifying exactly how it worked, and concluding that it would be very difficult to challenge. Then, for 5 years, pretty much nothing. In 2007, they wrote to all the scheme users saying that they would challenge in the tax courts. In 2008, having failed to take any cases to the courts, they introduced retrospective legislation re-interpreting the meaning of a couple of key legal points (such as what the phrase 'member of a firm' meant, which by the way now apparently doesn't mean what you think it probably does), claiming that they were 'putting beyond doubt' the fact that the scheme does not and never did work. Note that the scheme has never been tested according to the law as it was during the tax years in question. Contrary to what 10PS has said (in all good faith I am sure), the efficacy or otherwise of the scheme has never been proven one way or the other. The fact the HMRC said they were doing to do so; failed to do so; and then retrospectively 'clarified' the law does however to me speak volumes for what they thought their chances were.
I'm not looking for sympathy (although that would be nice) or moral judgement (although I fully accept that people will do so anyway) - but let's start from a position of factual accuracy at least.
I wish you the very best of luck mate, I thought that was how it was, but couldn't say so without getting embroiled in a avalanche of reading.The essence of the scheme is as JustinP1 has said. Yes, it is a contrived, aggressive tax avoidance scheme and yes, I fully acknowledge that there is a moral discussion to be had about paying ones way and, indeed, as this government is so fond of saying paying a 'fair' and 'right' amount of tax (whatever that means). However, again I will for now stick to the facts.
Those facts are that HMRC were well aware of the details of the avoidance mechanism 15 years ago. 10 years ago, just as the scheme became very popular amongst IT contractors, HMRC took a closer interest and indeed issued an internal memo specifying exactly how it worked, and concluding that it would be very difficult to challenge. Then, for 5 years, pretty much nothing. In 2007, they wrote to all the scheme users saying that they would challenge in the tax courts. In 2008, having failed to take any cases to the courts, they introduced retrospective legislation re-interpreting the meaning of a couple of key legal points (such as what the phrase 'member of a firm' meant, which by the way now apparently doesn't mean what you think it probably does), claiming that they were 'putting beyond doubt' the fact that the scheme does not and never did work. Note that the scheme has never been tested according to the law as it was during the tax years in question. Contrary to what 10PS has said (in all good faith I am sure), the efficacy or otherwise of the scheme has never been proven one way or the other. The fact the HMRC said they were doing to do so; failed to do so; and then retrospectively 'clarified' the law does however to me speak volumes for what they thought their chances were.
I'm not looking for sympathy (although that would be nice) or moral judgement (although I fully accept that people will do so anyway) - but let's start from a position of factual accuracy at least.
It's wrong, it's morally wrong and even though it has raised my own taxation as a result of trying to catch you guys, you have my support in doing what you can.
Retrospective taxation is a term that is vile even on the tongue, let alone to be subjected to rigours of it.
10 Pence Short said:
A starter for 10...
A person paid £25,000 a year is required by their job to travel in order to visit clients. He is offered the choice of a fully expensed company car or £5000 additional salary to fund their own.
He works out that he will save £150 a month in income tax if he buys his own car, so takes that route.
Where does he stand morally with you? Is he a tax avoiding parasite, or just being tax efficient?
Or choosing to save for retirement by:A person paid £25,000 a year is required by their job to travel in order to visit clients. He is offered the choice of a fully expensed company car or £5000 additional salary to fund their own.
He works out that he will save £150 a month in income tax if he buys his own car, so takes that route.
Where does he stand morally with you? Is he a tax avoiding parasite, or just being tax efficient?
a. putting money into a pension
b. putting money into an ISA
c. putting money into a normal savings account.
Anyone doing a. or b. is tax avoiding scum and should be shot
Elroy Blue said:
I tink you know very well what I'm stating.
To deny that large scale tax avoidance takes place by constructive accounting is ridiculous. And my position remains that the people who carry this out are as morally repugnant as the bad back brigade who have never done a days work in their lives.
Nonsense. Turn it around - what is morally repugnant is the government helping itself to as much of your earnings as they like, without feeling any need to restrain what they spend it on, and more often than not for their own political gain. Why would any sane person not try to avoid that?To deny that large scale tax avoidance takes place by constructive accounting is ridiculous. And my position remains that the people who carry this out are as morally repugnant as the bad back brigade who have never done a days work in their lives.
I don't see why it is right to criticise people for using entirely legal mechanisms for reducing their tax bill. If the government write a stupidly complicated tax code, then they can't complain when people who understand it better than they do make use of that. Do you voluntarily give more to the government than you have to?
Edited by tank slapper on Tuesday 24th April 16:30
supermono said:
You should quit and go do what he does. Leave your pension, your holiday, your sick pay, your continuity of employment, your training, your short hours, your HR 'work/life balance' consultant...
Leave these things for life on your own paying your own employer's and employee's NI, your own accountant's fees, your own time off either holiday or sick or on the bench looking for work, your own training. Succeed or fail on your own hard work.
Then you too can enjoy public sector wokers moaning about the amount of tax you pay (without actually knowing the figures)
SM
You've never done the job of a Police Officer have you? I'll refer you to this thread posted today.Leave these things for life on your own paying your own employer's and employee's NI, your own accountant's fees, your own time off either holiday or sick or on the bench looking for work, your own training. Succeed or fail on your own hard work.
Then you too can enjoy public sector wokers moaning about the amount of tax you pay (without actually knowing the figures)
SM
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Still, I could have a job being constructive with my tax returns, have a nice car, get big bonuses, have some nice jollys abroad. I mean why pay tax on earnings of 60 grand+ when I can pretend I only earn 10.
Here's a reality check. When you went self employed...you made a CHOICE. When I left my other public sector parasite postition in the armed forces, I CHOSE a career that payed far less than I could've earned, with the promise of benefits at the end. I also knew that as a PAYE, I would pay ALL the tax I should.
Whinging that you might actually have to pay realistic tax on your earnings, then coming out with the usual 'it's all the fault of the public sector' is not only pathetic, it's breathtakingly arrogant.
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