regprentice Posted December 4, 2023 Share Posted December 4, 2023 (edited) 3 hours ago, Locke said: It is debatable....was it tax avoidance or was it tax evasion? Anything advertised as "pay less tax" is tax avoidance. Putting money into SIPP is tax avoidance. I'm a Chartered Accountant. Using an ISA or a SIPP is "Tax Minimisation" or "Tax Planning" but not "Tax Avoidance" "Tax Avoidance" is defined as "using tax advantages and loopholes in a way that wasnt anticipated by the government". This might be legal today, or in a grey area, but the floor can fall out from underneath you even if you think youve done nothing wrong (IR35 being a good example). Every article Dan has written has talked about P118 failing to notify under DOTAS- this is the Disclosure Of Tax Avoidance Schemes legislation and iirc this was introduced by Gordon Brown. If you think you're exploiting a loophole in the law, you must tell HMRC, and if necessary they will close the loophole asap. link This article describes the differences between Tax Planning and Tax Avoidance link Edited December 4, 2023 by regprentice Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted December 4, 2023 Share Posted December 4, 2023 On 02/12/2023 at 22:27, regprentice said: Thanks for that. Interesting ...but very much a 45 minute sales pitch for lawyers. Night and day diffrence between the interviews with Dan and with the solicitors - Dan explains everything in plain english but the Lawyers are parroting broad generalisations "we'll have to work really hard, its really difficult, when i write a letter my letters are 25 pages long, get registered with us as soon as possible, times running out, you dont need to pay me anything now..." all with a gentle push to "no win no fee" where they'd expect to rake it in when the cases are won. I didn't get any sense from that podcast that the lawyers involved had any particular skill here, and theyre leaning heavily on the Tax Policy Associates articles... "Dan Needle, in one of his excellent articles, identified something called 'causation' ". i'd be genuinely worried if thats the first time my lawyer has come across causation. Its quite clear the Lawyers here want to paint the landlords as innocent "client victims" of P118. One of them says "tax avoidance here is debatable"... i dont think it is mate. its the sole purpose of the whole scheme. But he seems to argue that the "client victim" solemnly intended to sell the property and pay the correct CGT at some point in the future and the fact that theyve got a CGT bill unexpectedly overdue now is because a big boy did it and ran away. It's a real grey area "legal services". Always worth looking into the background of anyone offering legal advice. In the case of some podcasters I find a quick Google on company house and a check with the SRA tells me everything I need to know. Quote Link to comment Share on other sites More sharing options...
bearishonhouses Posted December 4, 2023 Share Posted December 4, 2023 10 hours ago, msi said: That's simply incorrect. You can always choose to put your money under the mattress and forgo interest. That isn't avoidance as you are earning no interest to start with. By your logic, every dole claimant is 'avoiding tax' by not working and paying income tax. Arranging your affairs to pay less (or even no) tax when you were due to pay tax, by taking advantage of allowed mechanisms, is tax avoidance. Using an ISA is a perfect example of this. Tax Evasion is an illegal attempt by misrepresent your situation to avoid Tax or to take advantage of mechanisms that were not intended for you. In between is a deliberate grey area of aggressive borderline tax avoidance. Where folk try to misrepresent their situation or take advantage of mechanisms that were not intended for them, but haven't yet been formally deemed illegal even though they have no leg to stand on as past precedents don't support them. This is why wheezes such as the P118 have to be declared and given a unique reference. Once identified and judged they neatly move from the grey into Tax Evasion. The definitions have changed. In the early 80's, the commonly accepted meaning of tax avoidance was, as you say, any action taken to legally (as opposed to illegally) reduce one's obligation to pay tax; including claiming capital allowances, stock relief, payment of charitable contributions by means of deed of covenant. At some time since then, the meaning to HMIT/HMRC has changed to the definition explained by @regprentice . You may or may not agree with the current interpretation of the words by HMRC, but I see no benefit in arguing with it. Quote Link to comment Share on other sites More sharing options...
msi Posted December 4, 2023 Share Posted December 4, 2023 15 minutes ago, bearishonhouses said: The definitions have changed. In the early 80's, the commonly accepted meaning of tax avoidance was, as you say, any action taken to legally (as opposed to illegally) reduce one's obligation to pay tax; including claiming capital allowances, stock relief, payment of charitable contributions by means of deed of covenant. At some time since then, the meaning to HMIT/HMRC has changed to the definition explained by @regprentice . You may or may not agree with the current interpretation of the words by HMRC, but I see no benefit in arguing with it. I stand educated. Thank you and @regprentice Quote Link to comment Share on other sites More sharing options...
Dyson Fury Posted December 10, 2023 Share Posted December 10, 2023 Coverage in the Telegraph: https://www.telegraph.co.uk/money/property/buy-to-let/taxman-hmrc-cracks-down-on-buy-to-let-landlords/ Quote The taxman is clamping down on buy-to-let landlords who set up companies to avoid rising tax bills. HMRC is sending letters advising landlords who may have incorporated in recent years to check if their tax returns are correct. The letter, seen by The Telegraph, states: “Information we hold suggests that too much incorporation relief may have been applied. This may mean you have not paid enough capital gains tax. This can happen if you’ve incorrectly calculated the amount of relief available to you.” Incorporation relief means you may be able to delay paying capital gains tax on the shares received until you sell them. It's a curious article, because it focusses entirely on the CGT aspect of the schemes. And although there is a quote from Dan Neidle, there is no mention of P118 or LT4L by name - only an oblique reference: Quote There is also a concern that landlords looking to reduce their tax burden following the changes were taken in by “cowboy” tax advisers offering “too-good-to-be-true” schemes. Quote Link to comment Share on other sites More sharing options...
regprentice Posted December 10, 2023 Share Posted December 10, 2023 4 hours ago, Dyson Fury said: Coverage in the Telegraph: https://www.telegraph.co.uk/money/property/buy-to-let/taxman-hmrc-cracks-down-on-buy-to-let-landlords/ It's a curious article, because it focusses entirely on the CGT aspect of the schemes. And although there is a quote from Dan Neidle, there is no mention of P118 or LT4L by name - only an oblique reference: CGT is the one thing they can get all of them for right now. The second they joined the scheme they should have paid 18/28% CGT on any gain in the value of their property since they acquired it - for many of them that could be a 6 figure sum. HMRC havent mentioned P118 or LT4L by name either. It's probably just journalistic caution... Quote Link to comment Share on other sites More sharing options...
msi Posted December 10, 2023 Share Posted December 10, 2023 4 hours ago, regprentice said: CGT is the one thing they can get all of them for right now. The second they joined the scheme they should have paid 18/28% CGT on any gain in the value of their property since they acquired it - for many of them that could be a 6 figure sum. HMRC havent mentioned P118 or LT4L by name either. It's probably just journalistic caution... That's all they need. One item then they can follow through with a full investigation at their leisure. Quote Link to comment Share on other sites More sharing options...
bearishonhouses Posted December 12, 2023 Share Posted December 12, 2023 On 04/12/2023 at 15:40, msi said: I stand educated. Thank you and @regprentice You are very welcome. Just been reading something else on Dan Neidles's site from which I infer, the difference now between tax avoidance and tax evasion is that the latter is a criminal offense, whereas the former is failed-tax-planning. Use of schemes that HMRC subsequently determines were 'tax avoidance' rather than 'tax planning' can result in penalties and interest, but NOT criminal prosecution. Apparently, the reason why the vendors of many bogus claimed-to-be-tax-planning-but-actually-tax-avoidance schemes include tax counsel's opinions is so that taxpayers can fight assertions from HMRC that a particular scheme was downright fraudulent by saying that they tried to comply with the law, and oh dear, what a shame it did not work but please do not send me to jail. Quote Link to comment Share on other sites More sharing options...
bearishonhouses Posted February 14 Share Posted February 14 Another update from Dan Neidle https://taxpolicy.org.uk/2024/02/14/property118_caught/ Quote Link to comment Share on other sites More sharing options...
Man of Kent Posted February 14 Share Posted February 14 There was one on LT4L yesterday too: https://taxpolicy.org.uk/2024/02/12/lt4l_fraud/ That whining sound you can hear is the sound of whole orchestras of the tiniest violins. Quote Link to comment Share on other sites More sharing options...
Man of Kent Posted February 14 Share Posted February 14 3 hours ago, bearishonhouses said: Another update from Dan Neidle https://taxpolicy.org.uk/2024/02/14/property118_caught/ I guess you have to admire the chutzpah of people who can assure you that everything is absolutely fine even as the sky is falling on around them. They must be absolutely shitting themselves. Quote Link to comment Share on other sites More sharing options...
2buyornot2buy Posted April 11 Share Posted April 11 Another update. Its not looking good for at least one individual who used this scheme. Quote Link to comment Share on other sites More sharing options...
BearlyBegun Posted April 11 Share Posted April 11 https://taxpolicy.org.uk/2024/03/23/less_tax_for_landlords_unregulated/ "Bailey was previously severely reprimanded by the Association of Chartered Certified Accountants (ACCA), and subsequently ceased to be a member. He’s now been reprimanded and fined by the Institute of Chartered Accountants in England & Wales (ICAEW), and then expelled by the ICAEW for failing to pay the fine. We don’t believe any of this has been disclosed to his clients." Quote Link to comment Share on other sites More sharing options...
Confusion of VIs Posted April 11 Share Posted April 11 49 minutes ago, BearlyBegun said: https://taxpolicy.org.uk/2024/03/23/less_tax_for_landlords_unregulated/ "Bailey was previously severely reprimanded by the Association of Chartered Certified Accountants (ACCA), and subsequently ceased to be a member. He’s now been reprimanded and fined by the Institute of Chartered Accountants in England & Wales (ICAEW), and then expelled by the ICAEW for failing to pay the fine. We don’t believe any of this has been disclosed to his clients." Less Tax for Landlords was the trading name of the One Consultancy Group. It was badly named, because its incompetence means many landlords are now paying more tax. 😁🤣😂 Quote Link to comment Share on other sites More sharing options...
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