Tax "avoider" commits suicide.

[413x]

You can't plead ignorance.
I don't for a second believe you don't know you aren't committing fraud if you know you're paying that low a rate.

 

[Joshct]

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?

In the article it stated:

Thousands got paid net of tax and fees via payment services companies that they were directed to by the agencies that employed them. Typically, about 18% of their pay would be deducted.

Again, as per my first post if i'm reading this wrong tell me. However it indicates they got paid what they would have after tax. AKA they should be paid £30 an hour and get £20 after tax? They got £20 and the tax wasn't paid.
In which case these people have been screwed over.

 

[MacRS4]

The law was changed, and it was made to apply retrospectively. Call it clarification or whatever you want, it was still a change that went back in time.

That's the bit I find very uncomfortable tbh.

 

[MacRS4]

Put it another way, if the change hadn't been made in the 2017 finance act, a lot of those loan structures still wouldn't attract any tax.

 

[Greebo]

In the article it stated:



Again, as per my first post if i'm reading this wrong tell me. However it indicates they got paid what they would have after tax. AKA they should be paid £30 an hour and get £20 after tax? They got £20 and the tax wasn't paid.
In which case these people have been screwed over.

No my reading of it is that they still gained but it would appear that the companies setting this things up did make a killing. It reads like they got deducted 18% as a fee compared with either 32% or 42% depending whether they would have been a higher rate tax payer or not.

So yes, these people have gained either 14% or 24% tax and now HMRC are after them for the full amount despite having already paid 18% in fees.

Otherwise there was no reason for people to use these schemes if there wasnt a tax saving to be had.

They may well have been steered that way, I had friends who were steered towards these type of companies but that was on the promise that they would be only having half the amount of money deducted from their pay compared to not going with the company.

 

[Greebo]

The law was changed, and it was made to apply retrospectively. Call it clarification or whatever you want, it was still a change that went back in time.

That's the bit I find very uncomfortable tbh.

I think the issue is that HMRC raised the first court case in 2010 so from then onwards it should have definitely been at the users risk.

 

[MacRS4]

I know a few contractors that were nailed by similar things. Setup was invoice through company A, company A pays a salary to you (subject to normal PAYE), and then loans you the rest.

What's forgotten - especially by the providers - is that the risk is all the end-user's, not the provider. Provider takes it's 15-20%, then runs off. End user left with the crippling bill.

 

[MacRS4]

I think the issue is that HMRC raised the first court case in 2010 so from then onwards it should have definitely been at the users risk.

Oh I'd agree with that, but doesn't this go all the way back to 1999...? That's the bit I find a bit...unusual. The fact that any finance legislation can be retrospectively applied.

 

[stockhausen]

. . .
Again, as per my first post if i'm reading this wrong tell me. However it indicates they got paid what they would have after tax. AKA they should be paid £30 an hour and get £20 after tax? They got £20 and the tax wasn't paid.
In which case these people have been screwed over.

I was encouraged by a "Contractors Agency" to join one of these schemes some years ago.
The idea was that the Contractor and the Agency would "split" the tax "savings".
I smelt a rat and declined their "thoughtful" proposal - I am damned glad that I did

Oh I'd agree with that, but doesn't this go all the way back to 1999...? That's the bit I find a bit...unusual. The fact that any finance legislation can be retrospectively applied.

I don't think in practice that anything was "retrospectively applied"; I believe that what has happened is that HMRC has reviewed some of the creative schemes that were dreamt up by tax advisers and decided that some of them were never actually legal - I think that there was a tax avoidance scheme used by many people in the entertainment business that involved financing films.

HM Revenue and Customs claimed victory in a tax avoidance battle over schemes run by Ingenious Film Partnership and Icebreaker, worth more than £820m. (LINK)

 

[Greebo]

Oh I'd agree with that, but doesn't this go all the way back to 1999...? That's the bit I find a bit...unusual. The fact that any finance legislation can be retrospectively applied.

I have come across this with other schemes as well where the tax is applied restrospectively. There was the good old "all employees become shareholders of a sister company and then paid dividends instead of wages and they bill the main company for the work". Ive also seen schemes where companies are set up and own the cars which are then able to be driven by employees in the other company, comapny car tax free. There was another one a few years ago we were offered where it was along the lines of the company bought so much per month of a credit card/club scheme and then the employee could use that card tax free. Sounded well dodgy and wasnt surprised to see the scheme had got closed down by HMRC the following year on the basis that it should all be taxable.

Which is why the safest schemes gets written approval up front from HMRC of the tax status. Of course those kind of schemes don't give the best savings so any that give good savings tend to be running the risk that it might be decided they are evasion.

SO i think its okay to do these type of schemes so long as you put the tax aside which one day you may have to pay and also then be prepared to be out of pocket as you will have paid the set up costs of these schemes.

 

[Malt_Vinegar]

Was offered something similar once with a Canadian company, seemed "dodgy", so I turned it down.
I guess I made the right choice...
I fully expect the people doing this knew it was risky, and just took the chance. I guess now they pay the price. Ignorance is no excuse, you played the system and got caught out. It even sounds like the HMRC gave people the chance to own up and possibly pay a reduced fee.. More fool them for not taking up this offer!!
Play with fire, and you can get burnt

 

[Kenai]

Oh I'd agree with that, but doesn't this go all the way back to 1999...? That's the bit I find a bit...unusual.

Only if you have a currently outstanding 'loan'.

Obviously most people do because they never intended to pay back said loan.

What HMRC have said now is 'settle your loan or pay us the tax you would have owed'.

 

[NVP]

I am sorry I have very little sympathy. If for 20 years your have only been paying 1-2% tax per annum and HMRC now want you to make an offer otherwise they are going to hit you with a £120k tax bill (on average) then clearly you are a criminal who has been fiddling the state out of their taxes for 20 years.

Nope.

They paid full tax on their stated income. They only paid 1-2% on these additional "loan schemes" which legally followed the rule of law to the letter at the time.

 

[dowie]

Surely HMRC would dispute that it was legal at the time regardless? Parliament has simply clarified the situation in their view no?

 

[NVP]

I think they do and it was clarified in 2010? I don't know for sure actually, I've only skimmed bits about it.

 

[Greebo]

Nope.

They paid full tax on their stated income. They only paid 1-2% on these additional "loan schemes" which legally followed the rule of law to the letter at the time.

No. HMRC said they werent legal and sought judicial review which they eventually won.

 

[CREATIVE!11]

Naughty, tax avoidance is only for rich people.

 

[Rroff]

Be nice to see more prosecutions of those behind some of these schemes - while I don't have much sympathy for those who use them for instance the daughter of one of my colleagues who is a bit naive got stung by one that used some kind of loophole to offset work related "costs" against salary or something to reduce tax which a year later the HMRC came down hard on the people who'd used the scheme but last I saw the company who ran it were still advertising similar things on Facebook.

 

[FoxEye]

Hard to have too much sympathy.

Yeah my thoughts too.

I pay somewhere between 20% and 30% on tax & NI. It's the price for living in a civilised (just) country that tries (mostly) to take care of people.

What do these people trying to pay 10% or less think about the effect their avoidance will have on the country as a whole? Probably don't think too much about it, tbh. "I earned it, why should the govt have it," generally sums up a lot of the responses you'll get.

Tax avoidance, in itself, isn't necessarily a bad thing.

No, but if often is. And in this case certainly is.

 

[Efour]

No time for Tax avoidance types, be they a huge company or an individual.
We all live in society, we should all pay our share. Whether you think its a fair amount or not is for you to take up with the government.
British tax system certainly needs an overall to cut this kind of BS out.