Tax avoiders to be deliberately bankrupted.....?..

[BigMon]

NDA said:

Yes this sums it up quite neatly.

I have a couple of friends caught up in this - they're not greedy scumbags so frequently portrayed in the media (and on here occasionally). They were successful in business, paid their taxes and were advised by professional advisors about legal ways to minimise further taxation. Something many people do with pensions and ISA's etc.

Family homes are now being sold to pay the HMRC.

Indefensible. Is it possible to sue the advisors?

[loafer123]

Genuine question;

Did they think they were investing in movies, or was their only motivation to reduce the tax they paid?

[RYH64E]

NDA said:

Eric Mc said:

The problem is when what was SOLD as a legal tax avoidance scheme -

a) is deemed not to a valid scheme

b) is also deemed to have actually been tax evasion

A court case where both a and b combine is quite rare.

Yes this sums it up quite neatly.

I have a couple of friends caught up in this - they're not greedy scumbags so frequently portrayed in the media (and on here occasionally). They were successful in business, paid their taxes and were advised by professional advisors about legal ways to minimise further taxation. Something many people do with pensions and ISA's etc.

Family homes are now being sold to pay the HMRC.

I know a few people who have money deposited safely and anonymously in Switzerland, or so they thought... That might result in a few unexpectedly large bills in the near future.

I've been advised that there are plenty of anonymous places to deposit money, and plenty of schemes to avoid paying tax, but the risk and potential costs of doing either could easily end up costing more than just paying the tax in the first place. And I like to sleep at nights.

[Jockman]

loafer123 said:

Genuine question;

Did they think they were investing in movies, or was their only motivation to reduce the tax they paid?

Genuine question.

What do you think?

[Derek Smith]

loafer123 said:

Genuine question;

Did they think they were investing in movies, or was their only motivation to reduce the tax they paid?

The Times said:

289 people put £50m into the scheme. The amount is increased by a loan from Barlcays for £790m. Disney is paid £503m for the rights to two films, Enchanted and Underdog. Barclays is paid £293m for 10 years, the interest on the £790m loan. The films are relicensed to Disney in the expectation of £1,022bn over 20 years. The 289 claim tax relief of £117m on the interest payments to Barclays.

(The weird tenses of the verbs is deliberate. I wouldn't want to put Haymarket at risk.)

All the above is via The Times and seems to be accepted by everyone. It has been republished by other media, but whether they have their own sources or not is unknown.

I think that answers you question. I think few of the 289 sat in wooden fold-up chairs.

There are 780 people involved overall. What the others did, as what else the 289 did, has not been published.

[Jockman]

RYH64E said:

I know a few people who have money deposited safely and anonymously in Switzerland, or so they thought... That might result in a few unexpectedly large bills in the near future.

I've been advised that there are plenty of anonymous places to deposit money, and plenty of schemes to avoid paying tax, but the risk and potential costs of doing either could easily end up costing more than just paying the tax in the first place. And I like to sleep at nights.

There are so many legitimate ways to mitigate your tax bill......is it greed or just a large appetite for risk?

[RYH64E]

Jockman said:

There are so many legitimate ways to mitigate your tax bill......is it greed or just a large appetite for risk?

The problem is that even after you've mitigated what you can you're still left with a big bill, it's tempting to go further but all of the advisors trying to sell me schemes have been about as credible as Del Boy, and the only one I actually trust said just pay up. I guess others are either more trusting or less risk adverse than me.

Those who can't see what the problem have probably never had the dubious pleasure of paying HMRC an amount that could be better spent on a new Aston Martin.

Edited by RYH64E on Sunday 20th November 18:36

[don4l]

Jockman said:

RYH64E said:

I know a few people who have money deposited safely and anonymously in Switzerland, or so they thought... That might result in a few unexpectedly large bills in the near future.

I've been advised that there are plenty of anonymous places to deposit money, and plenty of schemes to avoid paying tax, but the risk and potential costs of doing either could easily end up costing more than just paying the tax in the first place. And I like to sleep at nights.

There are so many legitimate ways to mitigate your tax bill......is it greed or just a large appetite for risk?

I suspect that it is naievity.

There are some people who have made large sums of money and would like to legitimately reduce their tax burden.

Along comes a tax advisor who tells them that the government are trying to encourage the film industry. Some of the "investors" are economically unaware. Comedians, actors etc..

The thing that worries me about this case is that people are not being fined for money that they made. They are being fined for money that HMRC say they lost. Unusually, the two figures appear to be very different.

So, the result seems to be that people are being asked to pay tax on money that they didn't make.

[Eric Mc]

BigMon said:

Indefensible. Is it possible to sue the advisors?

Of course it's possible.

But you may as well whistle because -

they will have made you sign a disclaimer/waiver when you joined the scheme

they'll have liquidated their operation anyway

[Eric Mc]

don4l said:

The thing that worries me about this case is that people are not being fined for money that they made. They are being fined for money that HMRC say they lost.

As can any commercial operation that is not paid the right amount by a debtor at the right time.

[Derek Smith]

don4l said:

I suspect that it is naievity.

There are some people who have made large sums of money and would like to legitimately reduce their tax burden.

Along comes a tax advisor who tells them that the government are trying to encourage the film industry. Some of the "investors" are economically unaware. Comedians, actors etc..

The thing that worries me about this case is that people are not being fined for money that they made. They are being fined for money that HMRC say they lost. Unusually, the two figures appear to be very different.

So, the result seems to be that people are being asked to pay tax on money that they didn't make.

I suspect you are being a little naive yourself. These people bought what they were being sold, but I can't believe they thought they were investing in the film industry and that seems to be the crux of the matter.

The people are not being fined, at least not according to the report in The Times. It seems the full amount of interest avoided is being reclaimed. The fact that they've not seen any of it yet, or at least not much, is neither here nor there. If they had been charged with offences then the fine would be on top of having to repay the amount owed.

If, for instance, you tried to avoid paying VAT on your new car by nefarious means, the HMRC would seize your car, go through the procedures in their own time, then sell your car through an auction, then take off the VAT you owed, then a percentage on top to take into account costs, then a punitive percentage on top of that, then would charge you the storage fees for keeping your car. The balance would be returned to you but the norm is that they do not charge for the imbalance.

There is no deterrent to just charging the outstanding money they should have paid. Many people would avoid paying vehicle excise duty if those were the rules.

It's always seemed odd to me that people complain about police powers when the HMRC has many, many more costly ones.

[AW111]

4x4Tyke said:

They don't get punished because they are part of the establishment, you only have to look at the DM article making excuses for them with miss-information making out they face some punitive 20 fold punishment. When in reality they are parasites, powerful establishment parasites.

The DM was a clever piece of misdirection.
It didn't actually lie, but gave the impression that people were being punitively charged multiple times their tax liability.
Then piled on the sob story that they would all be bankrupted.

Clever, unscrupulous journalism.

[Alpinestars]

AW111 said:

The DM was a clever piece of misdirection.
It didn't actually lie, but gave the impression that people were being punitively charged multiple times their tax liability.
Then piled on the sob story that they would all be bankrupted.

Clever, unscrupulous journalism.

That's topical DM journalism. Nothing clever about it at all. If the readership fall for it, that says more about them than the intelligence of the DM.

However, had they reported and understood the facts, they should have pointed out that it looks like the investors are being taxed on income they were never going to, and never will, receive.

[sidicks]

Alpinestars said:

That's topical DM journalism. Nothing clever about it at all. If the readership fall for it, that says more about them than the intelligence of the DM.

However, had they reported and understood the facts, they should have pointed out that it looks like the investors are being taxed on income they were never going to, and never will, receive.

so much for the 'powerful establishment' that some were claiming...!!

[NDA]

Jockman said:

loafer123 said:

Genuine question;

Did they think they were investing in movies, or was their only motivation to reduce the tax they paid?

Genuine question.

What do you think?

About as interested as you are by the pharmaceutical or oil and gas shares that your pension fund might be in.

[Efbe]

Eric Mc said:

BigMon said:

Indefensible. Is it possible to sue the advisors?

Of course it's possible.

But you may as well whistle because -

they will have made you sign a disclaimer/waiver when you joined the scheme

they'll have liquidated their operation anyway

PPI will be ending in a few years time. there's a huge industry in need of new employment!

[316Mining]

Alpinestars said:

I'm not that close to the detail but my understanding is as follows;

Cash flows;
Barclays loans investor partnership (LLP) £790 million

Investors invest £50 million

Total into LLP is £840 million.

This is used as follows;

£503 million to Disney on account of licence fees.
£44 million to a fInancial intemediary as fees.
£293 of up front interest. This would have been offset against investors' income in the year it was paid (sideways relief). It effectively gave tax relief of more than the initial investment, and probably led to tax repayments to investors.

Disney paid Barclays £497m back, retaining £6m for presumably being party to the scheme.

Effectively all the Barlays' money did a merry go round back to them. And the investor money was effectively used to pay a financial intermediary (£44m) and Disney (£6m).

The LLP was due to make £475m of future income and pay £525m of future interest.

The case revolved around whether the LLP was trading or not. It was crucial for the scheme that it was, because interest relief is only given if it was trading. It was held that it was not trading, therefore no interest is tax deductible for the investors. Which I think ultimately means the future income is taxable without any relief, notwithstanding that it will all go to pay interest to Barclays.

No tax rules have been changed by HMRC. Whether something has been trading or not goes back 200 years.

Thanks for this, first time I've come close to understanding the issue.

I assume the films were duds and never going to make back the billion or something?

I feel less sorry for the investors. However, I'm not so sure that they would all have understood the breadth of the issue, and would have been advised by people they thought were trustworthy. I can't see the average footballer having a proper understanding, and may even have asked "are you sure this is ok?" Of people that should know better. Allerdyce got stung by a hamper saleman for funks sake....

It will be interesting to see what level of celeb will start turning up on reality TV shows in the next few years, desperate to win and restore lifestyles.

[Alpinestars]

316Mining said:

Thanks for this, first time I've come close to understanding the issue.

I assume the films were duds and never going to make back the billion or something?

I feel less sorry for the investors. However, I'm not so sure that they would all have understood the breadth of the issue, and would have been advised by people they thought were trustworthy. I can't see the average footballer having a proper understanding, and may even have asked "are you sure this is ok?" Of people that should know better. Allerdyce got stung by a hamper saleman for funks sake....

It will be interesting to see what level of celeb will start turning up on reality TV shows in the next few years, desperate to win and restore lifestyles.

Enchanted and Underdog were the films.

[Jockman]

NDA said:

Jockman said:

loafer123 said:

Genuine question;

Did they think they were investing in movies, or was their only motivation to reduce the tax they paid?

Genuine question.

What do you think?

About as interested as you are by the pharmaceutical or oil and gas shares that your pension fund might be in.

Tobacco? Armaments?

I take your point but I appreciate also the flaw. When a pension invests in a fund it could have up to 100 different stocks in it. We are not talking about a pension fund here. Eclipse 35 is way above that level and invests in a specific sector exploiting explicit loopholes as it sees fit.

[Jockman]

RYH64E said:

Jockman said:

There are so many legitimate ways to mitigate your tax bill......is it greed or just a large appetite for risk?

The problem is that even after you've mitigated what you can you're still left with a big bill, it's tempting to go further but all of the advisors trying to sell me schemes have been about as credible as Del Boy, and the only one I actually trust said just pay up. I guess others are either more trusting or less risk adverse than me.

Those who can't see what the problem have probably never had the dubious pleasure of paying HMRC an amount that could be better spent on a new Aston Martin.

Edited by RYH64E on Sunday 20th November 18:36

Difficult post to respond to on a public forum.