Interesting Tax Article

[wearethemighty 186]

Found this article regarding HMRC's claims against companies using EBT schemes and thought my fellow bears would be interested as it shows that all is not lost:

A leading accountancy firm says that HMRC has launched its long anticipated clampdown against users of Employment Benefit Trust (EBT) schemes, but many of the claims for backdated taxes are 'wildly inaccurate'.

UHY Hacker Young says that many of the thousands of individuals who have used EBT schemes in recent years are likely to have received correspondence from HMRC in recent weeks demanding payment for unpaid taxes.

Typically, penalties are not being sought if past tax liabilities are settled immediately, although court action is threatened for individuals who don't comply.

EBT Legislation

The Government first published draft legislation which targeted intermediaries (mainly EBTs) which provided 'disguised remuneration' to clients. Thousands of contractors are thought to have used such schemes over the past decade.

The Finance Bill 2011, published on 31st March 2011, contained the legislation which effectively outlawed disguised remuneration schemes, and its provisions became law on 6th April 2011, even though the new rules had not received Royal Assent. All payments made to clients via these schemes are now subject to standard income tax and National Insurance rules.

In addition, anti-forestalling measures were put in place, which apply to loans and similar payments made between 9th December 2010 and 5th April 2010, as payments made between these dates would have been subject to the new regulations had they been made on or after 6th April 2011.

You can read more background to the EBT clampdown here.

HMRC's case 'far from watertight'

According to the accountancy firm, many of the HMRC demands for payment are just 'hot air', as Steve Theaker, partner at UHY Hacker Young's Abergavenny office commented:

"Several of the letters I have seen are wildly inaccurate estimates of the amounts of tax actually in dispute. HMRC could at least get the numbers right.

"HMRC has litigated twice on the taxability of loans from EBTs and lost on both occasions. The courts have essentially ruled that EBTs were a legitimate form of tax planning prior to HMRC's announcement last December. HMRC seems to be pinning its hopes on judges reversing the precedent which has already been set - but why would they do that?"

"HMRC's case is far from watertight. Taxpayers should think very carefully about how they respond to these letters. If they chose to settle they may end up paying tax which HMRC has no legal right to. The letter actually says that if taxpayers chose to settle, but subsequent litigation finds in taxpayers' favour, the settlement cannot be reopened."

Oops posted in wrong place can a mod move this to BD?

[bluepeter 5,627]

In addition, anti-forestalling measures were put in place, which apply to loans and similar payments made between 9th December 2010 and 5th April 2010, as payments made between these dates would have been subject to the new regulations had they been made on or after 6th April 2011.

I take it that's meant to be April 2011? Where is this article from? I wouldn't mind reading the linked articles.

[DarcheVinny 1,003]

That article there, only adds to questions I have had in the old noggin for the past few months. If RFC exposed a loophole, a loophole which wasn't legally closed until after we'd used it...how can we be expected to pay? What am I misunderstanding?

Working for a readymix concrete firm, it's like my business manager giving a customer a low price by mistake, the concrete is delivered, then 8 years later the mistake is found and the customer is asked/told/ordered to cough up the rest? Ok, not a great example, but that's how it seems in my wee brain.

[ForeverBlue_Since91 2,895]

Did Rangers just fuck ra tims?

[the sliver fox 1,670]

That article there, only adds to questions I have had in the old noggin for the past few months. If RFC exposed a loophole, a loophole which wasn't legally closed until after we'd used it...how can we be expected to pay? What am I misunderstanding?

Working for a readymix concrete firm, it's like my business manager giving a customer a low price by mistake, the concrete is delivered, then 8 years later the mistake is found and the customer is asked/told/ordered to cough up the rest? Ok, not a great example, but that's how it seems in my wee brain.

This is along the same lines of what I was thinking, although now I'm thinking that as a nation, the UK is flat broke and it wouldn't surprise me if the Government put pressure on the Judges to reverse earlier rulings in order to recoup some much needed money.

Not that I'm paranoid or anything!

[bluepeter 5,627]

Did Rangers just fuck ra tims?

You think people are posting stories which support Rangers' claims over the tax issue because we beat celtc?

[TheLawMan 6,240]

Just to be clear on this. EBT schemes of old, if done to the absolute letter of the law could have been and probably were legal, with no or very little comeback.

The problems arise when you veer off the letter of the law, and this is the basis of HMRC's claims against us.

So the article, doesnt really confirm anything from that point of view.

Company A could have put in £40m and end up paying £1m of back tax

Company B could have put in £30m and end up paying £15m of back tax.

[bluepeter 5,627]

Just to be clear on this. EBT schemes of old, if done to the absolute letter of the law could have been and probably were legal, with no or very little comeback.

The problems arise when you veer off the letter of the law, and this is the basis of HMRC's claims against us.

So the article, doesnt really confirm anything from that point of view.

Company A could have put in £40m and end up paying £1m of back tax

Company B could have put in £30m and end up paying £15m of back tax.

Just to be clear on that though, we don't know if HMRC's claims against us are valid

[TheLawMan 6,240]

Just to be clear on that though, we don't know if HMRC's claims against us are valid

Correct. Thats what the tribunal is for

[wearethemighty 186]

I take it that's meant to be April 2011? Where is this article from? I wouldn't mind reading the linked articles.

It got sent to me from a mate, whos just told me its from....

Wait for it....

Transferrumours.com

[wearethemighty 186]

Interesting last paragraph

"HMRC's case 'far from watertight'

According to the accountancy firm, many of the HMRC demands for payment are just 'hot air', as Steve Theaker, partner at UHY Hacker Young's Abergavenny office commented:

"Several of the letters I have seen are wildly inaccurate estimates of the amounts of tax actually in dispute. HMRC could at least get the numbers right.

"HMRC has litigated twice on the taxability of loans from EBTs and lost on both occasions. The courts have essentially ruled that EBTs were a legitimate form of tax planning prior to HMRC's announcement last December. HMRC seems to be pinning its hopes on judges reversing the precedent which has already been set - but why would they do that?"

"HMRC's case is far from watertight. Taxpayers should think very carefully about how they respond to these letters. If they chose to settle they may end up paying tax which HMRC has no legal right to. The letter actually says that if taxpayers chose to settle, but subsequent litigation finds in taxpayers' favour, the settlement cannot be reopened."

Basically if we pay the tax they are claiming and the case gets found against HMRC we wouldnt be able to claim back any of our monies

[bluepeter 5,627]

Correct. Thats what the tribunal is for

Correct

We could do this all day...

[marmalade1872 40]

Correct

We could do this all day...

lets forget about the evil taxman for a while and enjoy todays footie pages .

[boss 1,941]

I take it that's meant to be April 2011? Where is this article from? I wouldn't mind reading the linked articles.

http://www.contracteye.co.uk/ebt-backdated-claims.shtml