Exactly, all these people who apparently knew nothing about it were just ignoring it and hoping it would disappear or they could get around it somehow. My dad worked at the IR for a long time and they are always willing to discuss repayment and getting as much back as they can reasonably expect. They would rather get back 20% instead of 0% because the person has gone bankrupt.
Tax "avoider" commits suicide.
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Exactly, all these people who apparently knew nothing about it were just ignoring it and hoping it would disappear or they could get around it somehow. My dad worked at the IR for a long time and they are always willing to discuss repayment and getting as much back as they can reasonably expect. They would rather get back 20% instead of 0% because the person has gone bankrupt.
Not really a few months, they have had up to two years to contact HMRC and "make an offer" otherwise they will get a bill based on their full tax rate. I am pretty sure that HMRC would accept substantially less than the "fine" they are threatening people who havent got in touch and made an offer. Would be interesting to know how little the ones who got in touch got away with paying. Plus I guarantee you would have years to pay it back in affordable instalments. Ignoring it and getting whacked with the full amount payable immediately is what has gone on here.
Even prior to this HMRC have been saying these type of schemes are tax evasion since 2010.
The one time I have had to deal with the HMRC over tax being due it took 2 years of negotiating a settlement and then the company got 5 years to pay it back.
Fair enough, I read the article this morning and opened it now only to grab some quotes.
Regardless no one has commented on the fact that these people received reduced wages to the amount of their tax, again unless I read it wrong.
Some may have and this is probably why HMRC expects 75% of funds to be recovered from employers.
This is exactly the sort of thing that HMRC has been encouraging people to be up front about so the situation can be dealt with.
I'm self employed and do my own taxes, I wouldn't ever trust a scheme like that.
The HMRC are generally helpful and even flexible as long as you keep in touch, I phone them every end of tax year just to confirm figures. Filing taxes as well is easy and a great skill to have as so many people never do it themselves.
I even asked about their stance on using slightly higher end PC equipment than the bare minimum that you might need for your job and claiming it as a tax exemption, IE a £300 graphics card instead of a £100 one that would likely last longer regardless of being more powerful due to better build quality or warranty period. He said that as long as you have people claiming for top of the line Macbooks for basic office work then they have no objections with people going for some slightly higher quality PC parts for a work PC, though obviously not a 2080ti or similar unless you really need it, which I don't, not for work at least.
Also the whole thing is done on trust until they decide to do an audit, so people either pay honestly for peace of mind and keep receipts and records which 99% of people do, or wilfully or naively avoid paying your full amount with the knowledge it can come back and bite you badly at any time.
I feel sad for the guy but he was in a high end engineering job likely defrauding a lot of tax whether he knew it or not, if he'd reached out he'd likely be OK.
The HMRC are generally helpful and even flexible as long as you keep in touch, I phone them every end of tax year just to confirm figures. Filing taxes as well is easy and a great skill to have as so many people never do it themselves.
I even asked about their stance on using slightly higher end PC equipment than the bare minimum that you might need for your job and claiming it as a tax exemption, IE a £300 graphics card instead of a £100 one that would likely last longer regardless of being more powerful due to better build quality or warranty period. He said that as long as you have people claiming for top of the line Macbooks for basic office work then they have no objections with people going for some slightly higher quality PC parts for a work PC, though obviously not a 2080ti or similar unless you really need it, which I don't, not for work at least.
Also the whole thing is done on trust until they decide to do an audit, so people either pay honestly for peace of mind and keep receipts and records which 99% of people do, or wilfully or naively avoid paying your full amount with the knowledge it can come back and bite you badly at any time.
I feel sad for the guy but he was in a high end engineering job likely defrauding a lot of tax whether he knew it or not, if he'd reached out he'd likely be OK.
I "forgot" to pay some tax, I approached HMRC and gave them 11 years worth of self assessment forms, they only looked at 7 years worth - it was only a few 100 but the paperwork was done all they had to do was ask for the sum I said I owed them... but nope... might be different if they approach me I guess...
Not quite sure what you mean? These people have been paid more wages as they have only been paying 1-2% tax on them. Or do you mean because they were in these schemes that they were prepared to be £20 per hour as they got to keep most of the £20 per hour compared to the £30 per hour they should have been getting paid for that job? I don't remember seeing any suggestion of that being the case?
I catch your drift, but I was a Black Cab driver, and my accountant had a whole slew of Black Cab drivers on his books, he specialised in Black Cab accounts.
When I signed up with him, he gave me a little speech, which he said that he gave all his Black Cab driver clients, to paraphrase, it went something like, “We both KNOW that you’re going to earn X amount per day, and declare X minus, it’s part and parcel of being a Black Cab driver, I’m telling you, don’t take the ****, the tax man isn’t silly, don’t say that you’re taking £1200 per month, and claim for £1000 worth of diesel, providing HMRC feel that they’re getting a fair chunk from you twice per year, they’ll probably leave you alone.”
On the advice of counsel, I invoke my Fifth Amendment privilege
against self incrimination, and respectfully decline to answer
On the advice of counsel, I invoke my Fifth Amendment privilege
against self incrimination, and respectfully decline to answer
Deliberately providing HMRC with misleading information gives them 20 years they can go back.
Other than that I'm avoiding this thread, it's too frustrating.
Tax avoidance, in itself, isn't necessarily a bad thing. But yeah this is pretty egregious, one notorious company my friend worked at had a big court case over something along these lines...albeit with the trader's WAGS receiving loans. Apparently amusingly involved various Essex birds having to explain how they expected to pay back [7 figure sum] from their mobile hairdresser business, work as a secretary etc.. etc...
The other one someone I know was caught up in involved claiming to be a second hand car dealer...
In either case they're not really sticking to the principle of the law at all and are going well out of their way to bend the rules to a ridiculous level, I think if you were morally inclined to partake in such a scheme then you've only got yourself to blame if you didn't keep some funds to one side for a fair few years just in case.
I don't think that is an excuse, it is hardly rocket science. I'm not claiming to be a tax expert but familiarising yourself with the basics of setting up a ltd company and how you could pay yourself salary/dividends... and/or speaking to an accountant isn't hard.
If someone is stupid enough to just accept that some umbrella company can somehow magically make tax disappear and not ask any questions then they deserve everything they get from HMRC.
The other one someone I know was caught up in involved claiming to be a second hand car dealer...
In either case they're not really sticking to the principle of the law at all and are going well out of their way to bend the rules to a ridiculous level, I think if you were morally inclined to partake in such a scheme then you've only got yourself to blame if you didn't keep some funds to one side for a fair few years just in case.
I don't think that is an excuse, it is hardly rocket science. I'm not claiming to be a tax expert but familiarising yourself with the basics of setting up a ltd company and how you could pay yourself salary/dividends... and/or speaking to an accountant isn't hard.
If someone is stupid enough to just accept that some umbrella company can somehow magically make tax disappear and not ask any questions then they deserve everything they get from HMRC.
Indeed, perhaps he couldn't handle the shame etc...
Probably has a life insurance policy that wil cover it.
Ah that blew up a few years ago with a news story about some old bloke who had turned to freeman of the land stuff after he was coming to the end of his interest only mortgage and hadn't been paying into an endowment policy for years. Sad thing is he probably had enough equity in his bungalow from rising house prices to buy a smaller property mortgage free if he'd just sold the thing.... instead he had some massive stand offs with bailiffs, a load of court cases and no doubt racked up way more costs for the bank, which I suspect then came out of the money gained once the house was repossessed and sold at auction. It was nuts... all the extra faff he caused and in the end was likely paying for too!
Ditto to people who took out Swiss frank mortgages because the interest rates were low.... just LOL for thinking there was a free lunch there!
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A friend did this, now owes the tax man tens of thousands. Told her at the time it seemed dodgy to me.
Agreed. If you are looking at doing this or similar.
Ask, "Does it pass a test of reasonableness that the law intends to allow me to not pay tax to the extent required by statute, for example, by taking non repayable loans instead of my salary?"
Most people would not think it reasonable, nor would most legal minds I suspect.
There's a terrifying element here - it's the fact that the law was changed and applied retrospectively. I'd agree the loan schemes.....appeared too good to be true, so were dodgy...but they were avoidance, not evasion. They changed the law to go backwards.
That's kinda terrifying.
That's kinda terrifying.
No they were recalibrated as evasion. On the basis that the intent of parliamentary tax legislation was not met by these schemes. They exploited loopholes by ingenious means but that does not make them legal or just.
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