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Tax Avoidance Scheme, Any Sympathy?
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I certainly think if they are going after the individuals then they should also go after the advisors that said the scheme was legal.
I certainly think if they are going after the individuals then they should also go after the advisors that said the scheme was legal.
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does that mean a lot of sympathy or none, Ellipsis?
Nobody should pay more tax than they have to. If their accountants get it wrong, it doesn't mean their clients have acted immorally, they've just been badly advised. The clients may have a cause of action against them, but I'm not sure giving duff advice should be a criminal offence.
Nobody should pay more tax than they have to. If their accountants get it wrong, it doesn't mean their clients have acted immorally, they've just been badly advised. The clients may have a cause of action against them, but I'm not sure giving duff advice should be a criminal offence.
I think the trouble is that we have a huge amount of unwieldy Tax legislation.
If a *Tax Specialist* manages to find a hole in the laws and exploit it (not illegally), HMRC become aware of it and then argue and persuade the Courts that this hole *is* either a) illegal, or b) contrary to the spirit of the general Taxation and that had they been aware of it, they would had included it in legislation to close it.
The Courts seem to accept this.......unfairly in my opinion.
If a *Tax Specialist* manages to find a hole in the laws and exploit it (not illegally), HMRC become aware of it and then argue and persuade the Courts that this hole *is* either a) illegal, or b) contrary to the spirit of the general Taxation and that had they been aware of it, they would had included it in legislation to close it.
The Courts seem to accept this.......unfairly in my opinion.
It means some, but not a lot. From the link ...
> HMRC estimates around 50,000 people were in the schemes, which it has described since 2010 as "disguised remuneration".
> This is where the agency employing them diverts most of their pay to an offshore trust, then the trust gives them a loan which they typically don't have to pay back - and on which tax is only payable at around 1-2%.
If that didn't seem fishy I don't know what would.
> HMRC estimates around 50,000 people were in the schemes, which it has described since 2010 as "disguised remuneration".
> This is where the agency employing them diverts most of their pay to an offshore trust, then the trust gives them a loan which they typically don't have to pay back - and on which tax is only payable at around 1-2%.
If that didn't seem fishy I don't know what would.
Yes, I do have sympathy with people who find themselves in such desperate situations that they want to take their own life.
However, we're talking about contractors that weren't happy with just being very highly paid, they also wanted to find a way of paying zero tax on the income.
When I was contracting during this time ('99 onwards) I avoided dodgy schemes whether 'legal' or not, paid myself a good salary, and paid tax on it. I was called stupid for doing it (by an accountant), but it seemed the right and ultimately safest thing to do.
However, we're talking about contractors that weren't happy with just being very highly paid, they also wanted to find a way of paying zero tax on the income.
When I was contracting during this time ('99 onwards) I avoided dodgy schemes whether 'legal' or not, paid myself a good salary, and paid tax on it. I was called stupid for doing it (by an accountant), but it seemed the right and ultimately safest thing to do.
I feel some leeway should be applied to those paying for expert advice because there was no justifiable claim they could know professional information themselves. If they have made due diligence choosing a professional maybe it is the professional that should carry the responsibility. In any case, even borrowers are let off loans when they prove impossible to pay off, why not the same for tax bills one could have no idea was illegal ?
// I feel some leeway should be applied to those paying for expert advice because there was no justifiable claim they could know professional information themselves //
That's not how tax works OG, it's the taxpayer that's always responsible, irrespective of what advice they get from a professional. It always seemed a bit harsh to me too, but that's the way it is.
That's not how tax works OG, it's the taxpayer that's always responsible, irrespective of what advice they get from a professional. It always seemed a bit harsh to me too, but that's the way it is.
// If that didn't seem fishy I don't know what would.//
the scheme involved converting your income ( which everyone agreed was income) into a loan ( not everyone agreed was one) - on which you didnt pay tax
obvious scam even if Prof. MagicoTaxo says it isnt
if it smells like a dog and barks like a dog then it is a dog.
the scheme involved converting your income ( which everyone agreed was income) into a loan ( not everyone agreed was one) - on which you didnt pay tax
obvious scam even if Prof. MagicoTaxo says it isnt
if it smells like a dog and barks like a dog then it is a dog.
the leddy who comments that no one should pay more tax than they should is correct
and I think is enshrined in a case called Summerskill - it is so obvious that no lawyer actually gives the ref.
BUT if you go froo a series of actions wiv your moolah and the ONLY reason for the transactions is to lessen tax - it is likely to be questioned by the tax man. The loan scheme OBVIOUSLY comes into this category
and it isnt new or oppressive
the UK tax system doesnt have GAAP - general anti-avoidance provisions. But they may be coming near you soon ! as it will increase the tax-take, and it was widely predicted that the Rossminster schemes ( of yore) and the loan scam would be caught.
I mean honestly I have a dog ( = income. I realise I am on AB) and I am going to call it a guinea pig ( = a loan ) because there is no VAT payable ( = income tax) on guinea pigs
what were the designers thinking about? Jesus
and I think is enshrined in a case called Summerskill - it is so obvious that no lawyer actually gives the ref.
BUT if you go froo a series of actions wiv your moolah and the ONLY reason for the transactions is to lessen tax - it is likely to be questioned by the tax man. The loan scheme OBVIOUSLY comes into this category
and it isnt new or oppressive
the UK tax system doesnt have GAAP - general anti-avoidance provisions. But they may be coming near you soon ! as it will increase the tax-take, and it was widely predicted that the Rossminster schemes ( of yore) and the loan scam would be caught.
I mean honestly I have a dog ( = income. I realise I am on AB) and I am going to call it a guinea pig ( = a loan ) because there is no VAT payable ( = income tax) on guinea pigs
what were the designers thinking about? Jesus
// That's not how tax works OG,//
everyone is deemed to know the tax rules -
(foo everyone knew that innit?)
You cant get out of a tax by saying - I am very bad at reading and I read the rules and I thought they said 'tools' and I didnt need any of them. Because I am a tool but I dont use them often. So I er didnt pay tax and also stopped reading.
- but I wudduv if I had known
no one really believes that is going to get up and run do they
( I know this is AB so I expect some yesses)
everyone is deemed to know the tax rules -
(foo everyone knew that innit?)
You cant get out of a tax by saying - I am very bad at reading and I read the rules and I thought they said 'tools' and I didnt need any of them. Because I am a tool but I dont use them often. So I er didnt pay tax and also stopped reading.
- but I wudduv if I had known
no one really believes that is going to get up and run do they
( I know this is AB so I expect some yesses)
// I was called stupid for doing it (by an accountant),//
foo, all my accountants ( I have buried one, no two) have been *** and wusses. One thanked me for not shouting at him because it was the years end and it was all getting a bit fraughty-pooze
( one of his other clients had been done for false accounting which is v v bad if you are an accountant - years of future hassle from the tax man)
foo, all my accountants ( I have buried one, no two) have been *** and wusses. One thanked me for not shouting at him because it was the years end and it was all getting a bit fraughty-pooze
( one of his other clients had been done for false accounting which is v v bad if you are an accountant - years of future hassle from the tax man)
I have some sympathy here but not much. As PP and others have said it should have been pretty obvious that there was something dodgy about a scheme which says you will get remunerated via a non-repayable loan rather than a wage.. On the other hand if HMRC say it's okay, or seem to turn a blind eye, then I can see the temptation. But there is another issue- some employers required people to be 'paid' via such a scheme. Some pretty large employers said if you want this contract this is what you have to accept, knowing they could pay slightly less with the taxman effectively subsidising employer and contractor. In some cases payments were made by an intermediate umbrella company who have since disappeared with their profits-leaving only the contractor to pick up the tax bill years later.
A sort of parallel: one employer required me to be paid by an umbrella company- I could offset my expenses against my income so I paid less tax (say £20 a week less), but I was hardly better off (max £1 a week) because I had to pay an admin fee and pay the employer's share of NI (total £19). If HMRC decided to go back retrospectively and claim back my £20 a week I couldn't go back to my umbrella company and ask for my £19 admin /employers' NI back as they have run off with the money. After a year I realised all the tax risk was on me so I walked away and found another agency that didn't use umbrella companies.
A sort of parallel: one employer required me to be paid by an umbrella company- I could offset my expenses against my income so I paid less tax (say £20 a week less), but I was hardly better off (max £1 a week) because I had to pay an admin fee and pay the employer's share of NI (total £19). If HMRC decided to go back retrospectively and claim back my £20 a week I couldn't go back to my umbrella company and ask for my £19 admin /employers' NI back as they have run off with the money. After a year I realised all the tax risk was on me so I walked away and found another agency that didn't use umbrella companies.
The phrase "If it seems too good to be true …" definitely applies here.
But naivety is not the same as criminal intent, and I believe that any individual caught out in this situation should do as the IR have said and contact them.
From my experience, the IR are far more keen to accomodate someone who is looking to pay what is owed, and actually fairly assess what is actually owed, than someone who is clearly taking the proverbial, which gets an individual Tax Inspector looking into accounts and so on.
But naivety is not the same as criminal intent, and I believe that any individual caught out in this situation should do as the IR have said and contact them.
From my experience, the IR are far more keen to accomodate someone who is looking to pay what is owed, and actually fairly assess what is actually owed, than someone who is clearly taking the proverbial, which gets an individual Tax Inspector looking into accounts and so on.
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