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Old 14.05.2018, 23:08
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HMRC back taxing UK Contractors over "avoidance"

An MP is taking aim at HM Revenue & Customs for “retrospectively taxing” thousands of UK contractors who used so-called "avoidance" schemes in the past 20 years.

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The arrangements, usually involving loans and offshore trusts, were widely accepted as legal in the early Noughties and even briefly promoted by respected accountancy firms. However, since the introduction of a series of tough anti-avoidance measures, HMRC has cracked down on the users.

Many now face six-figure tax bills and a charge on any loans outstanding in April 2019.
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Old 14.05.2018, 23:35
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Re: HMRC back taxing UK Contractors over "avoidance"

People who set up schemes to avoid taxes are victims of their own greed and I can see no reason why they should not be required to pay their share of the taxes.

Such schemes are all ways considered legal by those who set them up and use them, until they are not. The idea that it would be somehow immoral to go after such people, while at the the same time ignoring the morality of avoiding paying ones share of the taxes in the first place is amazing.

But I guess this is what politics has come to in the U.K. today. Politicians follow the crowd rather than show leadership and some basic morals.
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Old 16.05.2018, 21:19
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Re: HMRC back taxing UK Contractors over "avoidance"

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Such schemes are all ways considered legal by those who set them up and use them, until they are not. The idea that it would be somehow immoral to go after such people, while at the the same time ignoring the morality of avoiding paying ones share of the taxes in the first place is amazing.
Yes... and No.

Imagine the speed limit is 50kph. To enable you to get where you want to go without delay, stay easily at the speed limit, and keep within the law, a car manufacturer devises and promotes cruise control as a solution - "avoid unnecessary fines". You pay the price to buy a car with it fitted, using it to ensure you do exactly 50kph where it is legal to do so.

And then the government not only changes the speed limit to 30kpm from a certain date (which you can still comply with using your cruise control)... but they also review the speed camera footage for the last 10 years and send fines to all those who exceeded it in the past... and you get the most fines as you drove more...

Retrospective legislation is ALWAYS robbery by the state.

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Ian
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Old 16.05.2018, 21:30
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Re: HMRC back taxing UK Contractors over "avoidance"

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Yes... and No.

Imagine the speed limit is 50kph. To enable you to get where you want to go without delay, stay easily at the speed limit, and keep within the law, a car manufacturer devises and promotes cruise control as a solution - "avoid unnecessary fines". You pay the price to buy a car with it fitted, using it to ensure you do exactly 50kph where it is legal to do so.

And then the government not only changes the speed limit to 30kpm from a certain date (which you can still comply with using your cruise control)... but they also review the speed camera footage for the last 10 years and send fines to all those who exceeded it in the past... and you get the most fines as you drove more...

Retrospective legislation is ALWAYS robbery by the state.

Regards


Ian
Most contractors are employees, they should be taxed under PAYE.
They work at the employers premises, using employers equipment & work hours to suit the employer & the contractor can't send in a friend some days instead of himself. IR35 is not new, yet people taking the piss & may finally get caught in addition to disguised remuneration.
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Old 16.05.2018, 21:45
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Re: HMRC back taxing UK Contractors over "avoidance"

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Yes... and No.

Imagine the speed limit is 50kph. To enable you to get where you want to go without delay, stay easily at the speed limit, and keep within the law, a car manufacturer devises and promotes cruise control as a solution - "avoid unnecessary fines". You pay the price to buy a car with it fitted, using it to ensure you do exactly 50kph where it is legal to do so.

And then the government not only changes the speed limit to 30kpm from a certain date (which you can still comply with using your cruise control)... but they also review the speed camera footage for the last 10 years and send fines to all those who exceeded it in the past... and you get the most fines as you drove more...

Retrospective legislation is ALWAYS robbery by the state.

Regards


Ian
Not really comparable imho.

We are talking about people who set up a scheme where their wages would go into a trust, and the trust would loan the wage to them and thus no taxes had to be paid, but there never was the intention to pay of the loan, and thus it should not qualify as a loan but as a payment and thus it is taxable. And this has always been the case. People now have a year (a grace period) to pay of their loan, or pay taxes on them.

I have no problem with this, it was a scam from the beginning and everybody should have known that if there is no incentive to pay back to on a loan it should not be considered a loan.

There is so much wrong with this that it surprises me that it took so long to start cracking it down.
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Old 16.05.2018, 21:50
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Re: HMRC back taxing UK Contractors over "avoidance"

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Not really comparable imho.

We are talking about people who set up a scheme where their wages would go into a trust, and the trust would loan the wage to them and thus no taxes had to be paid, but there never was the intention to pay of the loan, and thus it should not qualify as a loan but as a payment and thus it is taxable. And this has always been the case. People now have a year (a grace period) to pay of their loan, or pay taxes on them.

I have no problem with this, it was a scam from the beginning and everybody should have known that if there is no incentive to pay back to on a loan it should not be considered a loan.

There is so much wrong with this that it surprises me that it took so long to start cracking it down.
I spent many years as a ltd company contractor in the uk and you could optimise your tax to a level perfectly within the law. Zero tax non repayable loans were and are a tax scam and people who took them knew it.
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Old 16.05.2018, 21:57
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Re: HMRC back taxing UK Contractors over "avoidance"

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Not really comparable imho.

We are talking about people who set up a scheme where their wages would go into a trust, and the trust would loan the wage to them and thus no taxes had to be paid, but there never was the intention to pay of the loan, and thus it should not qualify as a loan but as a payment and thus it is taxable. And this has always been the case. People now have a year (a grace period) to pay of their loan, or pay taxes on them.
That sound more like that if you tilt your car side ways so that it runs on two wheels and and the wheels are just running outside the side line it is neither a car nor does the speed limit apply to you, as you are not using the road.
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Old 17.05.2018, 07:34
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Re: HMRC back taxing UK Contractors over "avoidance"

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Most contractors are employees, they should be taxed under PAYE.
They work at the employers premises, using employers equipment & work hours to suit the employer & the contractor can't send in a friend some days instead of himself. IR35 is not new, yet people taking the piss & may finally get caught in addition to disguised remuneration.
You might think that, but given the number of cases HMRC has won vs those they've lost, it seems the UK courts don't agree.

Anyway, this is not about IR35, it's about EBTs and other schemes used to avoid tax. People using these schemes are absolutely not caught by IR35 at all.

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People who set up schemes to avoid taxes are victims of their own greed and I can see no reason why they should not be required to pay their share of the taxes.
Such schemes are all ways considered legal by those who set them up and use them, until they are not. The idea that it would be somehow immoral to go after such people, while at the the same time ignoring the morality of avoiding paying ones share of the taxes in the first place is amazing.
There are people who set up the schemes, the owners. There are people who use the schemes. The scheme owners are shrewd marketers and salesmen. They have slick brochures and websites, often with entirely truthful, yet highly misleading statements about being "fully compliant with HMRC" and "QC approved" and "fully legal" - even that thes scheme is registered with HMRC.

What they don't tell you is that the scheme exploits a loophole in tax law, is already in HMRC's gunsights, and if it turns out the scheme doesn't work, it's you who bears the risk.

The scheme owners - those who setup the scheme - are the ones who make huge profits without risk. It is against those accountants and lawyers that your ire should be mostly directed.

The scheme users, especially in the highly paid sector, are often victims of their own cupidity, despite being dupes. How can anyone, presumably reasonably intelligent to be working in that sector at all, think that paying only 5% tax can possibly be government intention? So you'll find, among the general IT contractor community in the UK that sympathy for these people is muted.

However, there are some areas for thought.

1) The government has changed the law to close the loophole. However, they're applying that change in the law retrospectively, to cover the years the loophole came into existence and when it was closed. This is a slightly worrying presedence, though I understand that in this case it seems justified.

2) This tax grab may well bankrupt many tens of thousands of people, with consequential societical and economic effects, which cannot be the governments intention. HMRC are allowing time to pay for a very few, but most people are facing intransigence.

3) It's not just rich IT and other specialist contractors who are affected. There are lower paid agency workers who've been "recommended" these "solutions" by their agency - nurses for example.

4) These schemes are still being promoted: https://forums.contractoruk.com/umbr...ease-help.html

No - I've never used such a scheme and never would (I hope - I did buy timeshare once, so I'm not immune to sales pressure!).
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