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Thousands of workers hit with massive tax avoidance bills

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12 hours ago, mrtickle said:

Was the programme neutral, supporting the taxpayer, or supporting the cheaters? I often find it is excessively sympathetic to gullible idiots and sensible people who definitely knew what they are doing. Paul Lewis is a massive leftie (see his twitter).

 

Just listened to it.

It leans more to the ‘plight’ of these individuals and that 20 years is fairly unprecedented by HMRC (ie reserved for fraud). One contractor used an agency where this was the scheme so little choice. One individual received a tax bill a week before Christmas....and hearing their partner saying it was then that they broke down (inferred they can’t be interviewed themselves) does genuinely tug on the heart strings  

Despite HMRC saying no one will lose the MAIN home and no one going bankrupt....that seems to be the main argument by those impacted. 

The balance is that it does suggest that these people were at best naive. And one chap says he used the scheme but it wasn’t to avoid tax (albeit that is challenged in terms of the effect was it did avoid tax) but no explanation of why that individual, who owes £300k, did use the scheme if it wasn’t to avoid tax. 

What I find really annoying is that due to the distressed nature of those impacted no one asked “where is the extra money you saved?”. The chap with £300k has no assets. So to be fair he has enjoyed the money and now he pays. With no assets he may find himself better off that those who set aside the money and now have to pay it back. 

One chap owes £700k and retires in 2 years. No mention of age or the vast earnings set aside (or otherwise). Perhaps he may wish to consider option b. 

Other threads on HPC talk about retire early (involves saving hard). The chap who ‘saved’ £300k tax must have been earning big money...but the nature of that individual is earn it and spend it?  We are all different and spending isn’t a crime...but a suggestion of the financial affairs of some of those who have used this scheme, spent all the monies and may well lose little they had left. 

Edited by Pop321

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9 hours ago, mrtickle said:

Was the programme neutral, supporting the taxpayer, or supporting the cheaters? I often find it is excessively sympathetic to gullible idiots and sensible people who definitely knew what they are doing. Paul Lewis is a massive leftie (see his twitter).

 

The Zero sympathy brigade are missing the point. 

The point was to cut employer costs by getting rid of employees rights; by converting them to contractors.  

It achieved that aim. 

It was SOLD to employees as tax saving, but now it's revealed as a lie. 

If they'd been told you can become a contractor, lose all your employee rights but pay the same tax no one would have agreed to it. 

They HAD to be conned into it. 

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36 minutes ago, onlooker said:

Even HMRC contractors were involved in what is now deemed to have been tax evasion:

https://www.telegraph.co.uk/news/2019/02/24/hmrc-ruthlessly-pursuing-staff-potential-six-figure-bills-unpaid/

 

It says in the article

Quote

The law was changed in 2016 and those who used the arrangements now face huge tax bills

However, new law can't be applied retrospectively.

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38 minutes ago, Captain Kirk said:

It says in the article

However, new law can't be applied retrospectively.

I think this shows how newspapers suffer from having abolished sub-editors. I doubt the law has changed. What has changed is that the HMRC have become more rigorous in going after these cases. Up until recently, it could be described as a dubious avoidance tactic, now it is outright tax evasion.

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11 hours ago, mrtickle said:

Was the programme neutral, supporting the taxpayer, or supporting the cheaters? I often find it is excessively sympathetic to gullible idiots and sensible people who definitely knew what they are doing. Paul Lewis is a massive leftie (see his twitter).

 

Not sympathetic, but not condemnatory either.

The irony of Lewis being a leftie but not making the case that these greedy bastards were probably earning 100k a year and choosing to pay almost no tax on it - ie being absolutely the antithesis of a caring, considerate member of society - is hard to miss.

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2 hours ago, 24gray24 said:

The Zero sympathy brigade are missing the point. 

The point was to cut employer costs by getting rid of employees rights; by converting them to contractors.  

It achieved that aim. 

It was SOLD to employees as tax saving, but now it's revealed as a lie. 

If they'd been told you can become a contractor, lose all your employee rights but pay the same tax no one would have agreed to it. 

They HAD to be conned into it. 

Load of rubbish.

You know when you're paying zero tax on a fatcat salary.

Zero tax on a high salary is an offence against morality. 

Now the piper needs paying.  Deal with it. 

I was told about these schemes when I started contracting. I was not interested. And I'm a greedy *******.  But I'm not so greedy and selfish that I would try to pay zero tax on earnings of over 100k a year. 

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17 minutes ago, Fletcher said:

Load of rubbish.

You know when you're paying zero tax on a fatcat salary.

Zero tax on a high salary is an offence against morality. 

Now the piper needs paying.  Deal with it. 

I was told about these schemes when I started contracting. I was not interested. And I'm a greedy *******.  But I'm not so greedy and selfish that I would try to pay zero tax on earnings of over 100k a year. 

I'm with you there. Also, what about national insurance and pension contributions (which are tax exempt anyway)?  I'd be interested to know if they thought about their future at all or just put everything into these schemes and squandered it all.

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1 hour ago, Captain Kirk said:

It says in the article

However, new law can't be applied retrospectively.

They claimed the money they received was a loan. At some point, the complete lack of any debt collectors chasing repayment would suggest that it wasn't really a loan, and the tax return was therefore incorrect. A lot of these "loans" would now in any case be statute barred.

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55 minutes ago, Fletcher said:

Load of rubbish.

You know when you're paying zero tax on a fatcat salary.

Zero tax on a high salary is an offence against morality. 

Now the piper needs paying.  Deal with it. 

I was told about these schemes when I started contracting. I was not interested. And I'm a greedy *******.  But I'm not so greedy and selfish that I would try to pay zero tax on earnings of over 100k a year. 

Again you're missing the point. 

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5 hours ago, Pop321 said:

Just listened to it.

It leans more to the ‘plight’ of these individuals and that 20 years is fairly unprecedented by HMRC (ie reserved for fraud). One contractor used an agency where this was the scheme so little choice. One individual received a tax bill a week before Christmas....and hearing their partner saying it was then that they broke down (inferred they can’t be interviewed themselves) does genuinely tug on the heart strings  

Despite HMRC saying no one will lose the MAIN home and no one going bankrupt....that seems to be the main argument by those impacted. 

The balance is that it does suggest that these people were at best naive. And one chap says he used the scheme but it wasn’t to avoid tax (albeit that is challenged in terms of the effect was it did avoid tax) but no explanation of why that individual, who owes £300k, did use the scheme if it wasn’t to avoid tax. 

What I find really annoying is that due to the distressed nature of those impacted no one asked “where is the extra money you saved?”. The chap with £300k has no assets. So to be fair he has enjoyed the money and now he pays. With no assets he may find himself better off that those who set aside the money and now have to pay it back. 

One chap owes £700k and retires in 2 years. No mention of age or the vast earnings set aside (or otherwise). Perhaps he may wish to consider option b. 

Other threads on HPC talk about retire early (involves saving hard). The chap who ‘saved’ £300k tax must have been earning big money...but the nature of that individual is earn it and spend it?  We are all different and spending isn’t a crime...but a suggestion of the financial affairs of some of those who have used this scheme, spent all the monies and may well lose little they had left. 

I don't understand how anyone smart enough to be worth £100k pa cannot have clocked onto the fact that these schemes were too good to be true and that there would be a problem at some point.  I've had people pitch schemes to me that "will reduce your tax bill by 90%" (I'm self employed for tax purposes) - that would mean that I would be paying less tax than our lowest paid employee.  For me that just doesn't pass this sniff test; both on moral grounds and also commercially (ie. there's no way HMRC are going to let all that tax take disappear without trying to recoup it).

In the circumstances surely it makes sense to either not take part in the scheme; or alternatively save the "tax saving" in case HMRC come knocking of your door in the future.  To spend it like the people on Moneybox have done is lunacy.

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7 hours ago, Exiled Canadian said:

I don't understand how anyone smart enough to be worth £100k pa cannot have clocked onto the fact that these schemes were too good to be true and that there would be a problem at some point.  I've had people pitch schemes to me that "will reduce your tax bill by 90%" (I'm self employed for tax purposes) - that would mean that I would be paying less tax than our lowest paid employee.  For me that just doesn't pass this sniff test; both on moral grounds and also commercially (ie. there's no way HMRC are going to let all that tax take disappear without trying to recoup it).

In the circumstances surely it makes sense to either not take part in the scheme; or alternatively save the "tax saving" in case HMRC come knocking of your door in the future.  To spend it like the people on Moneybox have done is lunacy.

Exactly. 

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17 hours ago, Exiled Canadian said:

I don't understand how anyone smart enough to be worth £100k pa cannot have clocked onto the fact that these schemes were too good to be true and that there would be a problem at some point.  I've had people pitch schemes to me that "will reduce your tax bill by 90%" (I'm self employed for tax purposes) - that would mean that I would be paying less tax than our lowest paid employee.  For me that just doesn't pass this sniff test; both on moral grounds and also commercially (ie. there's no way HMRC are going to let all that tax take disappear without trying to recoup it).

In the circumstances surely it makes sense to either not take part in the scheme; or alternatively save the "tax saving" in case HMRC come knocking of your door in the future.  To spend it like the people on Moneybox have done is lunacy.

If people were unsure if the scheme was legit at the time they should have run it past the inland revenue.;)

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23 hours ago, Pop321 said:

Just listened to it.

It leans more to the ‘plight’ of these individuals and that 20 years is fairly unprecedented by HMRC (ie reserved for fraud). One contractor used an agency where this was the scheme so little choice. One individual received a tax bill a week before Christmas....and hearing their partner saying it was then that they broke down (inferred they can’t be interviewed themselves) does genuinely tug on the heart strings  

Despite HMRC saying no one will lose the MAIN home and no one going bankrupt....that seems to be the main argument by those impacted. 

The balance is that it does suggest that these people were at best naive. And one chap says he used the scheme but it wasn’t to avoid tax (albeit that is challenged in terms of the effect was it did avoid tax) but no explanation of why that individual, who owes £300k, did use the scheme if it wasn’t to avoid tax. 

What I find really annoying is that due to the distressed nature of those impacted no one asked “where is the extra money you saved?”. The chap with £300k has no assets. So to be fair he has enjoyed the money and now he pays. With no assets he may find himself better off that those who set aside the money and now have to pay it back. 

One chap owes £700k and retires in 2 years. No mention of age or the vast earnings set aside (or otherwise). Perhaps he may wish to consider option b. 

Other threads on HPC talk about retire early (involves saving hard). The chap who ‘saved’ £300k tax must have been earning big money...but the nature of that individual is earn it and spend it?  We are all different and spending isn’t a crime...but a suggestion of the financial affairs of some of those who have used this scheme, spent all the monies and may well lose little they had left. 

Lets put those 'owes' figure into perspective.

If someone 'owes' 400k, that means, over 10 years, theyve been dodging ~40k of tax a year, which means theyve been earning well over  100k/y.

These are not poor people.

If you have that level of incoem youd expect them to spend a bit on tax and legal services.

 

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10 hours ago, mrtickle said:

Could do with some support on twitter please folks

 

 

Reading that twitter post reminded me of the (I think) Warren Buffet saying - "if you don't know who the mark is in a deal; it's probably you."

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23 hours ago, 24gray24 said:

Again you're missing the point. 

No he isn't. The people complaining here are those who have "borrowed" £00,000s in some cases going back to 2004 onwards and really should have been paying tax on that income.

 

There is a smaller example of teachers / nurses  joining national insurance avoidance schemes due to dodgy agencies. I have a great deal of sympathy for those people but for your typical contractor earning £80k+ a year I have zero sympathy.

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On 24/02/2019 at 08:23, 24gray24 said:

The Zero sympathy brigade are missing the point. 

The point was to cut employer costs by getting rid of employees rights; by converting them to contractors.  

It achieved that aim. 

It was SOLD to employees as tax saving, but now it's revealed as a lie. 

If they'd been told you can become a contractor, lose all your employee rights but pay the same tax no one would have agreed to it. 

They HAD to be conned into it. 

There may be some low paid, low skill positions where people were forced into this type of arrangement in order to secure employment.  I have sympathy for anyone in that situation who now faces a tax bill. 

What we're talking about here though are degree educated IT professionals who had full knowledge that they were trading employment rights for higher compensation levels.  And then out of pure greed they decided to enter into tax avoidance schemes (which HMRC had already declared would be investigated as far back as the turn of the millennium). 

These people can't be in anyway surprised that they are now being chased for back taxes when they thought they could get away with paying close to zero.

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19 hours ago, PaulParanoia said:

There may be some low paid, low skill positions where people were forced into this type of arrangement in order to secure employment.  I have sympathy for anyone in that situation who now faces a tax bill. 

What we're talking about here though are degree educated IT professionals who had full knowledge that they were trading employment rights for higher compensation levels.  And then out of pure greed they decided to enter into tax avoidance schemes (which HMRC had already declared would be investigated as far back as the turn of the millennium). 

These people can't be in anyway surprised that they are now being chased for back taxes when they thought they could get away with paying close to zero.

I have friends who contract doing my role I did as an employee (well previous role I have just retired) in finance. 

They earn massive amounts...say, £150k pa. None, not one entertained these schemes. Not because of morals (unfortunately my business was not renowned for morals) but because they knew it was too good to be true. To be fair they used pensions and limited companies to mitigate some tax....but nothing unusual like loans from off shore companies. 

However, unfortunately the IT guys and project managers who work for the same finance company were a different matter. Whilst not defending those IT guys,  but I guess it could be argued IT and project managers are low skilled in everything but projects and IT. They don’t know finance. 

Anyhoo....I guess the revenue have had this same debate and decided anyone paying little or no tax on earnings of £100k a year are worth pursuing out of principal. They also know politically most of us will agree. 

I see a read across here to the 118’ers trying to avoid S24. Buster has some great scheme which sets things up purely to mitigate tax.....tick tock, tick tock. 

The simpliest Tax avoidance scheme I have seen is where I declare my rental income on jointly owned property as not 50/50 with my non earning wife ie I declare more for her.  That is definitely acceptable per HMRC rules but I have never done it even though I am a higher rate tax payer. Why? ( I hear a voice at the back ask)....because the only reason I would make such a declaration is to mitigate tax....and that doesn’t feel right. 

I have paid huge amounts (relative to income) into pension for 5 years. Why? (Same bloke at the back)...to mitigate tax AND to give me a pension, two reasons so it works better for me. 

If the only reason you do something is to mitigate tax....then I am very wary.

Edited by Pop321

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16 hours ago, winkie said:

If people were unsure if the scheme was legit at the time they should have run it past the inland revenue.;)

I'm sure they were aware.....but greed got the better of them. 

I used to listen to these IT contractors all the time, saying how stupid others were (employees and umbrella / paye staff) for not doing like them. 

The warnings that hmrc would come knocking one day were laughed at. Well, guess what....😂

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14 hours ago, Fishfinger said:

There were 3 of them with placards at the city end of London Bridge this morning.

Having already read this thread I ignored them with a smile...  

You should have gone up to them and bellowed with laughter. 

Actually a rendition of that laughing song would have done nicely. 

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1 hour ago, Agentimmo said:

I'm sure they were aware.....but greed got the better of them. 

I used to listen to these IT contractors all the time, saying how stupid others were (employees and umbrella / paye staff) for not doing like them. 

The warnings that hmrc would come knocking one day were laughed at. Well, guess what....😂

"It's legit mate. Signed off by a tax barista n everyfink!"

 

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I can remember in Aberdeen around 2008/9 these "road shows" would come up from companies Manchester to the various engineering houses for a "lunch and learn" on these EBTs.

snake oil salesmen. when they were asked what happens when the HMRC shuts it down, they smugly replied "we have ex HMRC guys working for us who are already working on the next scheme"

 

needless to say I did not sign up as it looked so dodgy! I know some who did who are now complaining on linkedin and various forums. they were on 650 a day FFS back in 2008. deserve all they get!

 

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