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Tax Avoidance About to Get Harder

Marketed tax avoidance – pay tax now before enquiry conclusion

The consultation document, ‘Tackling marketed tax avoidance’ draws to a close in just under a week’s time and if its proposals are enshrined in legislation then contractors still attracted to tax avoidance schemes may wish to pause for thought.

Launched late last month, the consultation proposes to require individuals to pay tax in dispute during an enquiry or appeal relating to tax avoidance. This would affect not only individuals and companies who have entered into tax avoidance schemes but also promoters of schemes and those who provide tax advice.

HMRC estimate there are around 65,000 people and businesses that have used marketed tax avoidance schemes that need to be investigated and litigated. When an avoidance scheme is challenged in the courts however, the tax system permits a taxpayer to hold on to the disputed tax regardless of how robust the scheme is or whether the taxpayer will succeed. The Revenue argue that this provides an incentive for the taxpayer and scheme promoters to ‘sit back and delay as long as possible’.

Of the 65,000 cases mentioned above, 85% of these took place more than 4 years ago and a wide range of avoidance schemes have been used to reduce Income Tax, NIC, Corporation Tax, Capital Gains Tax and Stamp Duty Land Tax. Two of the four largest areas of avoidance are implemented within the freelance sector as follows:

Area of tax avoidance Users under investigation

Employee Benefit Trusts (EBT’s):
Diverting remuneration via a trust to avoid PAYE & NIC

6,300

Contractor avoidance:
Contractors using offshore intermediaries & EBT’s who make loans in place of remuneration to avoid Income Tax & NIC

16,000

Some users have apparently used the same scheme more than once whilst others have used more than one scheme, although it is uncertain if contractors are amongst their number.

Follower Notice

Avoidance schemes take a long time to investigate and bring to resolution and because of this HMRC want to accelerate the payment of tax by the taxpayer by firstly issuing a ‘Follower Notice’. This will be issued in cases where there has been a final judicial decision in another case on the same or similar arrangements. The notice will require a person to amend their tax return or agree to settle on the basis that the likelihood of the taxpayer’s scheme succeeding is remote.

This will cover all taxes but NIC will require separate legislation.

Payment Notice

This will be issued alongside the ‘follower notice’. The ‘follower notice’ has a 90 day response time, after which the accelerated payment of tax would become due.

If a person agrees to settle the dispute then the Payment Notice will be discharged once the settlement has been concluded and the tax paid. Otherwise, the Payment Notice will become due for payment and pursued by HMRC.

It will be possible to challenge a Payment Notice but only on limited grounds that HMRC has erred in the process, e.g. a notice has been sent to the wrong person.

These proposals will apply to Self Assessment enquiries that are still ongoing and remain unresolved.

Late Payment Penalty

Penalties will also be introduced for late payment of tax as follows:

  • 5% when the due date of payment has passed (penalty day)
  • A further 5% of any amount unpaid 5 months after the penalty day
  • A further 5% of any amount unpaid 11 months after the penalty day

Subject to any amendments following responses to the consultation, these proposals will be included in this year’s Finance Bill.

By Andy Vessey

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31 thoughts on “Tax Avoidance About to Get Harder”

  1. TrueContractor

    Excellent news.

    The parasites are finally being brought to justice.

  2. Sandman

    What the article fails to highlight, is that the proposals also cover sending out Payment notices, to users of schemes which have NOT been linked to “a final judicial decision in another case on the same or similar arrangements”.

    So basically if you used a scheme, and entered a DOTAS number, you will get a payment demand – even if your case or a similar case has not even been to court.

    A case of “guilty until proven innocent”…

  3. Darren

    “Some users have apparently used the same scheme more than once whilst others have used them more than once”

    More than once it is then.

  4. Concerned

    This is clearly a case of ‘guilty until proven innocent’. So HMRC can make someone bankrupt by demaniong payment immediately. What happens when they are found innocent ? Does HMRC come in to help them bulld their life and buy back their home again? Bankruptcy for someone in any industry related to finance will immediately kiil their career. This is as bad as being able to lock up people for 2 months under terrorist legislation for just a suspicion then lettung them go when they have lost their job and becoome s social outcast due to the ‘no smoke without fire’ mentality that will mark them as guilty forever in their neighbours eyes. Anybody supporting this is the equivalent of the ignorant lynch mobs responsible for ad-hoc executions of innocents in days gone past. I imagine you’re the kind of people who would happily go along to burn a witch….

  5. TrueContractor

    But the greedy idiots that use or provide schemes which require a DOTAS number (such as the Montpelier DTA scam) are guilty of leeching off a system in a manner infinitely more egregious than benefit fraud.

    These societal parasites deserve the book thrown at them. Along with penalities and interest.

  6. true contractor not

    [quote name=”TrueContractor”]But the greedy idiots that use or provide schemes which require a DOTAS number (such as the Montpelier DTA scam) are guilty of leeching off a system in a manner infinitely more egregious than benefit fraud.

    These societal parasites deserve the book thrown at them. Along with penalities and interest.[/quote]

    Yeah right.Emit!

  7. Contractor Weekly

    [quote name=”Darren”]”Some users have apparently used the same scheme more than once whilst others have used them more than once”

    More than once it is then.[/quote]

    Thanks for pointing the error out – now amended.

  8. Parasite?

    FOR: True Contractor
    True contractor – If you would like to talk about parasites then let’s talk about the career unemployed. Let’s talk about benefit fraud. Let’s talk about MPs expenses that conveniently got swept under the carpet. Let’s talk about tax evaders (criminals) who never seem to get a mention. At least contractors who use schemes CONTRIBUTE to the economy and openly disclose to HMRC that their interpretation of the law is different to HMRC’s. Evaders, benefit fraudsters, etc trouser the money but never seem to get a mention. But worse than all that – you are supporting a set of rules that will give tax EVADERS (criminals) more rights than avoiders? How can it be right that criminals have more rights? How can you possibly support that? I might not like it that some clever people can avoid paying less tax – but I’m dammed if I want to live in a country that treats criminals better than law abiding citizens. It is a complete disgrace and our government should be ashamed. And by the way True Contractor – history has shown us that these things have a habit of “creeping”. Before you know it HMRC will be asking for the tax up front when they open an IR35 enquiry into your limited company – will you believe then that these proposed rules are bringing parasites to justice? Wake up!

  9. Concerned

    [quote name=”Parasite?”]FOR: True Contractor
    True contractor – If you would like to talk about parasites then let’s talk about the career unemployed. Let’s talk about benefit fraud. Let’s talk about MPs expenses that conveniently got swept under the carpet. Let’s talk about tax evaders (criminals) who never seem to get a mention. At least contractors who use schemes CONTRIBUTE to the economy and openly disclose to HMRC that their interpretation of the law is different to HMRC’s. Evaders, benefit fraudsters, etc trouser the money but never seem to get a mention. But worse than all that – you are supporting a set of rules that will give tax EVADERS (criminals) more rights than avoiders? How can it be right that criminals have more rights? How can you possibly support that? I might not like it that some clever people can avoid paying less tax – but I’m dammed if I want to live in a country that treats criminals better than law abiding citizens. It is a complete disgrace and our government should be ashamed. And by the way True Contractor – history has shown us that these things have a habit of “creeping”. Before you know it HMRC will be asking for the tax up front when they open an IR35 enquiry into your limited company – will you believe then that these proposed rules are bringing parasites to justice? Wake up![/quote]

    Unfortunately TrueContractor is one of those that believes draconian legislation will always affect ‘them’ and won’t ever be turned on him/her. As you’ve already said, its only a matter of time before this change kicks in for IR35 investigations. TrueContractor won’t be so self-righteous when that happens. It is coming, HMRC are eroding the rule of law to meet enforcement targets so they can get their bonuses. Directors of Ltd companies will soon be facing the same power-abusing monster that this legislation is aiming at.

  10. TrueContractor

    Well, pretty much the entire world outside of your tiny self-affirming NTRT group would wholeheartedly disagree with your disgusting behaviour.

    Not that it matters. Looks like your time is well and truly up. And I for one will be throwing a massive party.

    Low life tax avoiding parasites.

  11. Concerned

    [quote name=”TrueContractor”]Well, pretty much the entire world outside of your tiny self-affirming NTRT group would wholeheartedly disagree with your disgusting behaviour.

    Not that it matters. Looks like your time is well and truly up. And I for one will be throwing a massive party.

    Low life tax avoiding parasites.[/quote]

    🙂 ‘Burn the witch! Burn the witch ! I know, dunk her in the river, if she floats she is a witch. if she drowns she is innocent!’

    I see the similarities in your arguments. I hope you do eventually.

  12. Concerned

    [quote name=”TrueContractor”]Well, pretty much the entire world outside of your tiny self-affirming NTRT group would wholeheartedly disagree with your disgusting behaviour.

    Not that it matters. Looks like your time is well and truly up. And I for one will be throwing a massive party.

    Low life tax avoiding parasites.[/quote]

    Who said anything about NTRT? I see you have a bee in your bonnet about them. You’ve clearly got your prejudices and you can’t seem to put forward anything that isnt filtered through them. This doesn’t just affect those in NTRT. This will come and bite ALL of us.
    But don’t let that worry you. You just carry on brandishing your torch and pitchfork…..

  13. Parasite?

    Sorry – I do not know what NTRT is. Perhaps someone could tell me. And I am not quite sure what disgusting behaviour True Contractor believes I have engaged in. I am an accountant in practice. I have not used an avoidance scheme. True Contractor – your rant appears to me to lack all logic in respect of this proposed legislation – legislation that could well affect YOU one day. You have portrayed yourself as a thorough bigot, you have been abusive, and readers of this thread will view your posts for what they are.

  14. HMRC Officer

    [quote name=”TrueContractor”]Well, pretty much the entire world outside of your tiny self-affirming NTRT group would wholeheartedly disagree with your disgusting behaviour.

    Not that it matters. Looks like your time is well and truly up. And I for one will be throwing a massive party.

    Low life tax avoiding parasites.[/quote]

    It’s impossible an uneducated and lower class person like you to be a contractor…

    For the rest of us… if this go trough and you work outside IR35…. then you shouldn’t sleep at nights… with a minor change in the law they can take everything from you!!!!

  15. TrueContractor

    “It’s impossible an[sic] uneducated and lower class person like you to be[sic] a contractor…

    For the rest of us… if this go[sic] trough[sic] and you work outside IR35…. then you shouldn’t sleep at nights[sic]… with a minor change in the law they can take everything from you!!!!”

    Thankyou for your educated response.

  16. HMRC Officer

    [quote name=”TrueContractor”]”It’s impossible an[sic] uneducated and lower class person like you to be[sic] a contractor…

    For the rest of us… if this go[sic] trough[sic] and you work outside IR35…. then you shouldn’t sleep at nights[sic]… with a minor change in the law they can take everything from you!!!!”

    Thankyou for your educated response.[/quote]

    This is the response that you deserved UNTRUE Uneducated Contractor…

  17. TrueContractor

    “This is the response that you deserved UNTRUE[sic] U[sic]neducated C[sic]ontractor…”

    Do you have a problem with your caps-lock?

    Also, have you ever considered an English for dummies course? Maybe you could use some of the tax you stole to pay to go on a course?

    Just sayin’ like.

  18. Concerned

    [quote name=”TrueContractor”]”This is the response that you deserved UNTRUE[sic] U[sic]neducated C[sic]ontractor…”

    Do you have a problem with your caps-lock?

    Also, have you ever considered an English for dummies course? Maybe you could use some of the tax you stole to pay to go on a course?

    Just sayin’ like.[/quote]

    Haha ! Now I know you’re just out to wind people up on here. better get back to class, playtime is over. I think I heard the school bell ring.

  19. Parasite?

    True Contractor – your comments are beyond belief. Your have accused HMRC Officer of stealing tax – but you know nothing about him. Then you offer for him/her to take an “English for Dummies” course. And you referred to my behaviour as disgusting with absolutely no grounds whatsoever. You have turned the discussion of a serious matter affecting all taxpayers into an abusive slanging match. If you cannot make any sensible comments or stop yourself from being abusive I think it would be better for all concerned if you did not post. For sure, I shall not dignify this thread by making any more posts on it.

  20. Nic

    Schemes are perfectly L E G A L !
    I ‘ve been working outside IR35, I have an ISA and a pension…..they are ALL tax avoidance strategies…..
    Do you pay any more tax than you are required by law?
    If you do….you are an idiot!!!!

  21. Concerned

    [quote name=”Parasite?”]Sorry – I do not know what NTRT is. Perhaps someone could tell me. And I am not quite sure what disgusting behaviour True Contractor believes I have engaged in. I am an accountant in practice. I have not used an avoidance scheme. True Contractor – your rant appears to me to lack all logic in respect of this proposed legislation – legislation that could well affect YOU one day. You have portrayed yourself as a thorough bigot, you have been abusive, and readers of this thread will view your posts for what they are.[/quote]

    NTRT – No To Retro Tax – Campaign group set up to fight the BN66 legislation which govt got misled into putting on the books. Restrospectively made tax liable for the last 10 YEARS using weasle words to misrepresent BN66 as a clarfication on a backdating clause in a previous judgement in which the backdating clause was to AVOID old setups from being clobbered at the time.
    Kangaroo judicial reviews with blinkered scope have let it ride.

    BN66 basically says ‘starting from today the national has been 10mph for the last 10 years so here’s the speeding tickets for those 10 years.’

    I have no problem if loopholes get shut…but don’t do it this way. Thats just low…and is clobbering 2-3000 families for amounts which in a significant number will bankrupt them and make hem homeless.

    You may argue that they knew what they were getting into, but when you drive at 30 mph today do you think about your car being crushed in the future when they retrospectively change the speed limit to 20 mph?

    I have no problem to them being blocked from using loopholes but I object to the way it has been done because its opened doors for future abuse of power from HMRC just like they’re proposing now

    No doubt I’ll get the usual ‘scum sympathiser’ comments but my concern is with the precedents set (and continuing to be set) which will eventually encroach on what is deemed today to be a ‘model citizen’

  22. Nic

    Interesting article to read:

    David Cameron’s family could have money tied up in offshore tax havens after it was revealed his father made a fortune through a network of offshore investment funds.

    Ian Cameron, whose wealth was once estimated at £10m, ran several, perfectly legal, offshore accounts in tax havens such as Panama City and Geneva.

    Read more: http://www.dailymail.co.uk/news/article-2133064/David-Camerons-family-fortune-tax-dodging-offshore-investment-funds.html#ixzz2tn1PHj00

  23. TarkaDall

    “Schemes are perfectly L E G A L !
    I ‘ve been working outside IR35, I have an ISA and a pension…..the y are ALL tax avoidance strategies…..
    Do you pay any more tax than you are required by law?
    If you do….you are an idiot!!!!”

    There’s avoidance within the spirit of the law, like the ridiculous examples you give above. The reason this type of avoidance is encouraged is because it benefits society through encouraging saving and / or promoting business. You’d be an idiot not to make the most of these vehicles.

    Then there’s evasion, which clearly breaks the law. you’d be an idiot to evade your taxes.

    Then there’s the type of tax avoidance which which involves bending the law to such an extreme degree, through loopholes, that it takes the piss out of the spirit of the law and everybody who abides by the same rules. It is this form of avoidance that people are sick to the back teeth with. You’d be an idiot to use one of these schemes. And the people that did are now reaping the results of their short sighted avarice. (I mean can you seriously argue that even though you live and work in the UK it is right that you shouldn’t pay UK income tax? Really? Are you really THAT stupid?)

    There isn’t really any difference between the last 2. The results are the same, ie. The greedy few benefit at the expense of the rest of society.

    People are sick to death of seeing the wealthy such as IT contractors, Doctors and property developers abusing the law in such a way in order to make themselves rich. Leaving the rest of us to foot the bill for public services that they use as much as we do.

    It’s not good pointing the finger at politicians and corporations who also avoid their taxes. Or even the so-called benefit cheats. You’re all in the same boat. This is the behaviour of the parasite.

    I used to work as an “inside-IR35” contractor in the financials sector. A sector where you could pull in between £700 and £1,500 a day, so i’ve seen my fair share of greed. There was one particular contractor I knew who used to brag about how much he earned and how little tax he paid. This person earned 6 figures and lived in a 7 figure house in Highbury. I think he also earned a few properties. I believe he is now day-trading and one of the founding members of NTRT which makes me wonder what the rest of this group are like.

    Now i know not all contractors who used these schemes were as wealthy as this guy. But that’s missing the point. They are all as guilty as him.

    I wont be throwing any parties like a previous poster suggested, although i am happy that justice appears to have been done.

  24. Tony

    Some things here to put matters into perspective.

    1. We need to consider the role of government and its nature. Not everything – in fact, not most things! – it does are ‘necessary’, ‘good value for money’, ‘required’ and so on. Far from preventing policies that benefit the very few at the expense of the many, democratic governments virtually guarantee this phenomenon.

    2. HMRC isn’t competent to assess the impact of its actions on the economy, or their fairness. It is about as useful to ask it what people ‘should’ pay as it is to ask Google what they think they should pay – perhaps Google will have a better idea, even, since it’s the end user of some of the government’s services.

    3. Courts – and HMRC – are part of the government. Both are unlikely to come out with conclusions vastly at odds with its agendas, although admittedly courts have to work within the law, which it seems HMRC thinks it does not. All HMRC exists to do is collect revenue for the government, and it does so on an auto-pilot mode. It has little of interest to say about what it ‘contributes’ to society on net, and isn’t competent to assess that, and as a very self-interest party, any accounts it gives should be relied upon with a measure of suspicion. HMRC is not competent to interpret or dictate the law, and has a very outmoded understanding of modern business and employment, much like the courts.

    4. The value of government goods and services is not established, usually, on a market. It therefore carries with it a good deal of arbitrariness. Government spending is infamous for the extent to which ‘administrative costs’ and other waste factor in. So, if the government is spending too much, it should not automatically be assumed we’re not putting in enough or should be taxed more. Although imperfect, I do think governments should limit themselves to taxing what they need to provide certain services and goods they consider vital, perhaps provide a basic minimum income, and stop there.

    5. Politicians – including loud fools like Hodge (whose family is proficient in tax dodging even though she knows f-all about tax law) – are all on the dole. All income they earn in consequence of their office is tax money. These are the ultimate leeches. The same goes for bureaucrats, albeit they may perform a useful function; hard to argue that in HMRC’s case, though.

    6. The government finances a lot of its activity through the twins of borrowing and inflation via money printing.

    So who, exactly, is ‘leeching’ what and from whom? Tax avoidance is legal, and it is difficult to argue any ‘leeching’ is taking place. Tax avoiders may well pay more for the goods/services they consume than they put in, even after they pay less tax. The problem is the implicit assumption that tax is a) reasonably set and b) directed to worthwhile goals.

    PAYE and NIC, in particular, are archaic nightmares, linked to worthless systems. They are an affront to any modern society, but here we are, in 2014, demonising people who get around paying these worthless taxes.

  25. Tony

    @TarkaDall

    Sorry, it isn’t intuitively obvious why one should pay income tax. Tax has one purpose – to finance government expenditures, which in turn must be justified on their own merits. A good deal of them now simply exist because of lobbyists.

    So it is perfectly reasonable to say one should not pay income tax. Perhaps another form of tax can be used to cover government expenditures. It doesn’t matter what it’s called. I think the income tax is a pretty horrible one. They’re all horrible in their own way, but it stands out as particularly egregious.

    “People are sick to death of seeing the wealthy such as IT contractors, Doctors and property developers abusing the law in such a way in order to make themselves rich. Leaving the rest of us to foot the bill for public services that they use as much as we do.”

    Yet these options are open to them. Same with contracting – it’s not the preserve of the ‘wealthy’, it’s just that few people are aware of it, or perhaps possess the skillset it may require. More and more companies are opening up to using contractors, however, so this is changing.

    I think envy is a horrible reason to try and clamp down on someone. People who are “sick to their teeth” of tax avoidance can instead focus on politicians or MNCs, the latter of which may do it to the tune of billions (and I am not saying they are wrong to do so.) Trying to achieve ‘fairness’ (which the tax system definitely does not) is also a foolish way to utilise the tax system.

    The difference between these schemes, IR35, ISAs etc are a matter of degree and little more. The problem is this bloody mentality that the government should try to condition and encourage particular behaviours through the tax system, when all it should be doing is collecting revenue to finance what should be limited expenditures.

  26. Tony

    “FOR: True Contractor
    True contractor – If you would like to talk about parasites then let’s talk about the career unemployed. Let’s talk about benefit fraud. Let’s talk about MPs expenses that conveniently got swept under the carpet. Let’s talk about tax evaders (criminals) who never seem to get a mention. At least contractors who use schemes CONTRIBUTE to the economy and openly disclose to HMRC that their interpretation of the law is different to HMRC’s. Evaders, benefit fraudsters, etc trouser the money but never seem to get a mention. But worse than all that – you are supporting a set of rules that will give tax EVADERS (criminals) more rights than avoiders? How can it be right that criminals have more rights? How can you possibly support that? I might not like it that some clever people can avoid paying less tax – but I’m dammed if I want to live in a country that treats criminals better than law abiding citizens. It is a complete disgrace and our government should be ashamed. And by the way True Contractor – history has shown us that these things have a habit of “creeping”. Before you know it HMRC will be asking for the tax up front when they open an IR35 enquiry into your limited company – will you believe then that these proposed rules are bringing parasites to justice? Wake up!”

    Agreed – this is a clear abuse of power by HMRC. It should NOT be playing judge, jury and executioner.

    Personally, I think if the government wants to prevent these things it should change the law and not retrospectively penalise people for acting within the law. If the system was designed in such a way to be prone to abuse, that’s the legislators’ fault. Truth of the matter is they want there to be loopholes – but just for their cronies and buddies.

  27. TarkaDall

    @Tony :

    I think you’ll find the vast majority of people would disagree with you there. Including most Tories.

    Lobbyists? Are you aware that NTRT are trying to pay their way out of their wrongdoing by employing lobbyists? Fortunately, it looks like that was a waste of time of money which has restored my faith in the democratic process somewhat.

    So a progressive tax based on how much a person earns is “horrible” ? You’ll have to do better than that. What other form of tax would you suggest that doesn’t penalize the poor and reward the wealthy? Are we talking about a flat rate of tax here? Or perhaps a tax on consumption? Both are completely unfair as their marginal effects increase in inverse proportion to the wealth of the individual.

    Aggressive tax schemes are only available to higher earners (I believe in Montpelier’s case they take a fixed “fee” which wouldn’t make economic sense if you didn’t earn enough to make this viable from the users side and the provider wouldn’t be interested if you weren’t earning a decent amount).

    The very worst of the schemes are only available to the very highest earners (K2, Stamp Duty Avoidance etc..). Infact, as in most financial schemes, aggressive or not, the more you are worth, the more tax you can avoid paying.

    You make the incorrect assumption that the reason people are sick of the wealthy avoiding their taxes is down to envy. I think this says more about you than anything else you’ve written. Most of us, including me, can make moral choices. Infact myself and many other contractors in my position (We’re talking the top end of contractor earnings here) did and continue support any efforts to stop this odious abuse of the law.

    As i’ve pointed out earlier, ISAs and SIPPs etc .. are there to encourage actions that will benefit everybody and are open to everybody, not just the very wealthy. IR35 is a different matter (I was always inside IR35 as i always thought most contractors were taking the piss with the whole “I’m a business” rubbish).

    Blaming the introduction of IR35 as a reason to enter these schemes is an absolute joke. The contractor is basically admitting he’d more than likely be caught because he was acting like a temp rather than a business. Most contractors i know fall into this category.

    All i can see in you ramblings is a pseudo-intellectual justification of some very simple facts. Namely, if you work in the UK, live in the UK and utilize all manner of public services provided by the UK system, then it is only fair you pay into that system.

    You can apply this to politicians, corporations and benefit fraud. However, as i’ve said before, users of these schemes come lower down in the scale of parasites than the benefit cheat because you can afford to contribute to the pot.

    The simple fact it you were blinded by greed, chose to take a ridiculous gamble and lost. You didn’t even make provision for an outcome that didn’t go your way (greedy and stupid).

    Stop whining. Stop blaming others. Stop playing the sympathy card. Stop employing delaying tactics and pay up.

    There is nothing more to say.

  28. Tony

    “I think you’ll find the vast majority of people would disagree with you there. Including most Tories. “

    This is simply an ad populum fallacy writ large.

    “Are you aware that NTRT are trying to pay their way out of their wrongdoing by employing lobbyists?”

    What ‘wrongdoing’? The issue here is that HMRC should not be given the power to simply determine which cases are ‘follower’ cases. The wrongdoing has to be established before we can declare it to be “wrongdoing”. It isn’t “wrongdoing” just because HMRC changes the rules to suit it.

    “So a progressive tax based on how much a person earns is “horrible” ? You’ll have to do better than that. “

    Tu quoque.

    Are you charged for bread, or iphones, or clothes etc. based on how much you earn, for the -same- product? No, not really. I already qualified that the very poorest ought to be exempted from tax and perhaps benefit from a negative income tax. So this appeal to the “poor” or “unfairness” (sorry, don’t see it) doesn’t really do it for me. I am of the view that tax should equal those services deemed necessary by the government for it to provide, and nothing more, to the tune that the recipient benefits from them.

    ” I think this says more about you than anything else you’ve written.”

    Such as?

    “Most of us, including me, can make moral choices.”

    I don’t see what the “moral” choice here is. You pay what HMRC thinks you should pay. Probably a good deal less, since they’ll whine about you being an “employee” if you’re a contractor and have a barrage of shitty arguments that are basically special pleading to prove this. That’s it. Nothing “moral” about this.

    “are there to encourage actions that will benefit everybody “

    How was this “benefit” calculated? Where’s the proof of this statement? A bunch of calculations about what maximises tax income to the Revenue? Is this the moral compass of our society? lol

    “IR35 is a different matter (I was always inside IR35 as i always thought most contractors were taking the piss with the whole “I’m a business” rubbish). “

    True, I don’t think that only contractors should enjoy this avenue. Employment is just a highly specific business to business transaction. The attempts to distinguish it from “legitimate” business activity are just HMRC’s self-interested arguments to continue justifying the daft NIC tax. Besides, HMRC rarely pursues the end client for employer’s NICs, they’re too afraid to. Self-interested arguments that are selectively applied to HMRC’s benefit. I see the dividends as the benefit for completely forfeiting employment rights and the like. And yeah, anyone should be free to do it. Contracting is pretty much open to most people.

    “Blaming the introduction of IR35 as a reason to enter these schemes is an absolute joke.”

    Where did I do this?

    “All i can see in you ramblings is a pseudo-intellec tual justification of some very simple facts.”

    IOW, govt monopolises certain services, forces you to pay for a great deal of additional unnecessary ones in addition to the monopolised ones (at the price it demands and which it claims it alone can provide), then whines about parasitism when you refuse to pay tax for loads of things either inefficiently provided or which you would not consume at all, or if you did, would do so under alternative arrangements, if it did not monopolise their provision. Lay off the ad hominem when this is the best you can do.

    ” you can afford to contribute to the pot.”

    What “pot”? Why should one contribute to this “pot” to the full tune the government thinks – and I stress this word – should? It should justify its expenses to me, the taxpayer, before making that demand.

    “You didn’t even make provision for an outcome that didn’t go your way (greedy and stupid). “

    I didn’t take advantage of these schemes. I am not myopic enough, though, to bear a grudge against those who did, and I fully realise HMRC hates anything that doesn’t fit its narrow worldview of a PAYE employee and so will try apply principles like this to IR35, and beyond, if it can.

    “Stop whining. Stop blaming others. Stop playing the sympathy card. Stop employing delaying tactics and pay up.

    There is nothing more to say.”

    Good, you don’t have very much of interest to say that I’ve not yet heard. Just the same typical high-handed dismissals of any arguments that go contrary to HMRC’s and government’s agenda of taxing as much as it can mulct out of the taxpayers without going to the effort of justifying the programmes for which it taxes. How about you and HMRC stop whining for sympathy?

  29. TarkaDall

    @Tony

    It would be lovely, wouldn’t it, if no-one had to pay any taxes because we could all look after ourselves and live happily ever after. Unfortunately, this isn’t how the real world works.

    Your whole argument is driven by ideology (One that is completely at odds with my beliefs) rather than pragmatism. You’ve tried (and failed… see below) to employ some form of logic to your argument so how about this :

    Your argument is based on ideology (One that is completely at odds with my beliefs as it happens) rather than pragmatism. IOW you are committing the heinous logical fallacy of misplaced concreteness.

    Technicalities:

    1. “I think you’ll find the vast majority of people would disagree with you there. Including most Tories.”

    This isn’t an ad populum fallacy. If, on the other hand i proposed that “I think you’ll find the vast majority of people would disagree with you there therefore it must be right” then you might have been onto something.

    2. “Tu quoque.”.?

    I said : “So a progressive tax based on how much a person earns is “horrible” ? You’ll have to do better than that. What other form of tax would you suggest that doesn’t penalize the poor and reward the wealthy? Are we talking about a flat rate of tax here? Or perhaps a tax on consumption? Both are completely unfair as their marginal effects increase in inverse proportion to the wealth of the individual.”

    Lets break this down. I challenged your initial premise, and in the absence of further details provided 2 examples of alternative taxation and then went on to explain why I believe these are unfair.

    Now, if i’d have simply replied “So a progressive tax based on how much a person earns is “horrible” … well that’s just horrible” then i’d hold my hands up.

    3. “Blaming the introduction of IR35 as a reason to enter these schemes is an absolute joke.”

    You didn’t, sorry if i wasn’t clear. I was quoting an overused and poor justification for entering into any scheme which allows one to work in the UK, live in the UK, utilize all manner of public services in the UK system but pay nothing back into that system.

  30. Tony

    By all means, feel free to disagree, but don’t try to niggle out of offering arguments for the government’s policies – which themselves are ideology-driven – by pointing out that mine are based on an ideology, or rather, a principled approach.

    About the fallacy you cited, lets see…

    “Reification (also known as concretism, or the fallacy of misplaced concreteness) is a fallacy of ambiguity, when an abstraction (abstract belief or hypothetical construct) is treated as if it were a concrete, real event, or physical entity.[1][2] In other words, it is the error of treating as a concrete thing something which is not concrete, but merely an idea.”

    No, not quite.

    “Pragmatism” is just a euphemism for the horsetrading that goes on in politics, and is how the system got to where it is today – a horrid mismatch of conflicting agendas and ideologies that funnels cash to every busybody and lobbyist out there.

    So sorry, as someone who is forced to pay for all this profligacy, I am going to call out the government’s (shorthand for the agents that comprise it) cries for more money and its whinging that we’re not paying “enough” tax and put it down to its voracious nature

  31. vksingh

    all can continue to argue but this is against basic right to justice. Everyone one should pay tax as per the law but
    1) HMRC should not have judicial powers – Courts should. If Courts are taking time, set up an independent body
    2) Don’t apply laws retrospectively

    If HMRC can decide which are similar schemes why can’t courts? Take all similar schemes to courts and put an end to all this. Why is HMRC not using the existing powers to bring all disputes to closure?

    As for NTRT they did not do anything wrong. If they would have then why did Government had to change law retrospectively. In the end all this will cost more tax payer money as EU courts will not allow for retrospective legislation.

    Anyone agreeing to this legislation is in effect saying judicial system is not needed and just let dictators rules because judicial system costs money. Once this starts, where does this stops?

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