IR35 loan charge victimisation by HMRC says MPs
Discussion
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It appears a Parliamentary APPG thinks HMRC deliberately chose not to pursue promoters of loan schemes, who have expertise and resource. So it was easier to leg over the consumers.
It appears a Parliamentary APPG thinks HMRC deliberately chose not to pursue promoters of loan schemes, who have expertise and resource. So it was easier to leg over the consumers.
One sure way to have an on line argument is mention these things.
I was based abroad and had a few novel but legal ways of reducing local taxes but the notion that you pay some guy in the isle of Man on behalf of a UK resident and this guy then lends a non repayable loan to a guy he has no relationship with other than via a scheme provider.
They gamed the system and weren't as smart as the Guy in the isle of Man or Gib who rarely if ever sets foot in the UK because he knows all to well that the scheme was contrived from day 1.
If anyone signed up to these schemes and actually thought they'd work, they must be insane
I was based abroad and had a few novel but legal ways of reducing local taxes but the notion that you pay some guy in the isle of Man on behalf of a UK resident and this guy then lends a non repayable loan to a guy he has no relationship with other than via a scheme provider.
They gamed the system and weren't as smart as the Guy in the isle of Man or Gib who rarely if ever sets foot in the UK because he knows all to well that the scheme was contrived from day 1.
If anyone signed up to these schemes and actually thought they'd work, they must be insane
Interesting stuff.
I came across this a couple of years ago (pre-Covid). The chap involved simply thought he'd give it a punt & was not particularly concerned when HMRC caught up with him. He reckoned it did seem too good to be true.
At that time there was the option of trying to get the organiser to pay up - but they all seemed to be based overseas (IoM) & accordingly outside the Revenue's grasp, so HMRC (in this case) were pursuing the individual. As far as I recall, he had the option of paying the tax + any late payment interest for each year or paying all the tax as if it was due for (I think April 2019) & possibly running into a higher rate tax charge. But no penalties were being sought, so it seemed to be to be a pragmatic way of clearing the books.
Clearly our lords & masters don't agree.
Maybe they are a bit miffed that HMRC have given them less than full replies?
Of course, as their tax files are kept under strict lock & key (not even computerised in the past) , we have no way of knowing if self-interest comes into this...
I came across this a couple of years ago (pre-Covid). The chap involved simply thought he'd give it a punt & was not particularly concerned when HMRC caught up with him. He reckoned it did seem too good to be true.
At that time there was the option of trying to get the organiser to pay up - but they all seemed to be based overseas (IoM) & accordingly outside the Revenue's grasp, so HMRC (in this case) were pursuing the individual. As far as I recall, he had the option of paying the tax + any late payment interest for each year or paying all the tax as if it was due for (I think April 2019) & possibly running into a higher rate tax charge. But no penalties were being sought, so it seemed to be to be a pragmatic way of clearing the books.
Clearly our lords & masters don't agree.
Maybe they are a bit miffed that HMRC have given them less than full replies?
Of course, as their tax files are kept under strict lock & key (not even computerised in the past) , we have no way of knowing if self-interest comes into this...
untakenname said:
It's not just high flying contractors which were affected, a friend was a teacher for Harris academy and had to use an umbrella group which used this loophole so some people on low wages had no choice in the matter.
A friend of mine is an IT Contractor and took an inside IR35 role and the agency gave them a list of umbrella companies to choose from. I had a look online for the one she was going to use and the first thing I found was pages of stuff on Contractor UK and was some kind of avoidance scheme. Seems some companies force you down this route!
When I first started as an IT contractor, I was quite naive to how umbrella companies worked and simply went for the same one everyone else was using .. they had a chunky referral fee and many had been using them for years...
Yes they used convoluted overly complex schemes but our taxation isn't exactly simple to the point the hmrc themselves couldn't figure out the correct amount of they wanted me to pay back and sent me a £42k bill ..
After years of compliance checks and threats of "we will send you a figure to repay soon but may also litigate " from their (cold war-esque tactics using) behavioural insights team I was ready to pay up without question just to get them off my back and for the stress to go away. But thankfully I took some time (*many days and sleepless nights) to figure out how much I really needed to pay back which was in fact £22k.
So, yes, I probably shouldn't have used an umbrella company (I switched to my own Ltd Co as soon as I understood the scheme), but the billionaires who ran the schemes should have been held to account to some degree.
But I guess when you are a billionaire married to a member of the house of Lords, you're gonna be OK.
Yes they used convoluted overly complex schemes but our taxation isn't exactly simple to the point the hmrc themselves couldn't figure out the correct amount of they wanted me to pay back and sent me a £42k bill ..
After years of compliance checks and threats of "we will send you a figure to repay soon but may also litigate " from their (cold war-esque tactics using) behavioural insights team I was ready to pay up without question just to get them off my back and for the stress to go away. But thankfully I took some time (*many days and sleepless nights) to figure out how much I really needed to pay back which was in fact £22k.
So, yes, I probably shouldn't have used an umbrella company (I switched to my own Ltd Co as soon as I understood the scheme), but the billionaires who ran the schemes should have been held to account to some degree.
But I guess when you are a billionaire married to a member of the house of Lords, you're gonna be OK.
Ice_blue_tvr said:
After years of compliance checks and threats of "we will send you a figure to repay soon but may also litigate " from their (cold war-esque tactics using) behavioural insights team I was ready to pay up without question just to get them off my back and for the stress to go away. But thankfully I took some time (*many days and sleepless nights) to figure out how much I really needed to pay back which was in fact £22k.
So, yes, I probably shouldn't have used an umbrella company (I switched to my own Ltd Co as soon as I understood the scheme), but the billionaires who ran the schemes should have been held to account to some degree.
But I guess when you are a billionaire married to a member of the house of Lords, you're gonna be OK.
Now the MPs have uncovered internal HMRC emails conspiring to attack the users only, and even to limit terms of reference of an inquiry to exclude any examination of the culpability of promoters. HMRC at director level made a deliberate choice from the outset to pursue the easily bullied contractors only and leave the perpetrators alone.So, yes, I probably shouldn't have used an umbrella company (I switched to my own Ltd Co as soon as I understood the scheme), but the billionaires who ran the schemes should have been held to account to some degree.
But I guess when you are a billionaire married to a member of the house of Lords, you're gonna be OK.
BTW, not sure being married to a member of HL is still adequate aircover for billionaires now. Co-ordinated dawn raids by NCA in several office and home locations on suspected PPE fraud isn't a sign everything is gonna be OK.....but we will see.
Countdown said:
Apologies if I've misunderstood......were Umbrella companies forcing Contractors to use the Loan Charge scheme or offering it as a remuneration option?
Not sure your point is shared by MPs. There is an inequality of arms here. We have exceedingly we'll advised and financially astute promoters who knew much more about these schemes taking advantage of the much less sophisticated contractor, and HMRC with all its resources. HMRC lied about their intention to take down the tooled up promoters because senior management feared fighting them would make it harder to make ordinary folk to pay up. Ahh triples all round!
HocusPocus said:
Countdown said:
Apologies if I've misunderstood......were Umbrella companies forcing Contractors to use the Loan Charge scheme or offering it as a remuneration option?
Not sure your point is shared by MPs. There is an inequality of arms here. We have exceedingly we'll advised and financially astute promoters who knew much more about these schemes taking advantage of the much less sophisticated contractor, and HMRC with all its resources. HMRC lied about their intention to take down the tooled up promoters because senior management feared fighting them would make it harder to make ordinary folk to pay up. Ahh triples all round!
Countdown said:
Sorry I probably didn't make my question very clear. Were Contractors forced to use these Loan Charge schemes offered by the Providers or did they sign up voluntarily when the Providers said "you'll save loads of tax"?
The issue is caused by unclear IR35 regulations and supply chain employment law non compliance often in umbrella companies and agencies.The Loan Charge APPG notes that agencies are in some cases pushing contingent workers into using a specific umbrella company. With the report consequently observing that many contractors will have engaged in disguised remuneration schemes having been issued a ‘take it or leave it’ offer by their agency, the fact that the Loan Charge holds contractors liable for unpaid tax, penalties and interest seems particularly unfair.
Anything I was offered from umbrellas/agencies that sounded too good to be true was dismissed out of hand...and I've seen/been offered many different schemes since the late 80s.
HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
Edited by mmm-five on Monday 22 August 14:44
mmm-five said:
Anything I was offered from umbrellas/agencies that sounded too good to be true was dismissed out of hand...and I've seen/been offered many different schemes since the late 80s.
HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
Good post.HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
Edited by mmm-five on Monday 22 August 14:44
mmm-five said:
Anything I was offered from umbrellas/agencies that sounded too good to be true was dismissed out of hand...and I've seen/been offered many different schemes since the late 80s.
HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
Beautiful summation of the situation.HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
Edited by mmm-five on Monday 22 August 14:44
mmm-five said:
Anything I was offered from umbrellas/agencies that sounded too good to be true was dismissed out of hand...and I've seen/been offered many different schemes since the late 80s.
HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
This ^^^HMRC has always had a poor understanding of their own rules, and that's why so many of these schemes are promoted. Instead of saying clearly what is and isn't allowed, HMRC writes some woolly guidelines (or poorly-coded IR35 tool), and then you have to try and decipher them. Even then HRMC will try to catch you out by claiming what you're doing is 'technically' legal, but not in the 'spirit of the regulations'.
However anyone who was naive enough to sign up for one of these schemes without reading & understanding their liabilities only have themselves (or their advisors) to blame....and anyone who was 'forced' to use one of these schemes should sue their advisor/employer/agency/umbrella.
Edited by mmm-five on Monday 22 August 14:44
In addition, using an umbrella scheme afforded the person doing the work none of the benefits of employment, and none of the benefits of self-employment, so I suspect many will say that there was no other option etc.
Obviously it suited recruitment agencies and intermediaries to funnel business through lucrative umbrella companies, charging the person doing the work multiple fees.
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