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onlyme

Death by retrospective taxation

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Nah.  This is what Scottish football teams like rangers were doing and getting fined / relegated for doing.

Instead of paying somebody, so tax deductible on the company and taxable in the hands of the recipient, they pay into an Employee Benefit Trust which is tax deductible for the company.

However instead of then paying the employee out of this EBT it makes a loan to it.  And you don't have to pay tax on a loan so it is effectively a tax and NI free salary.

As a proud tax avoider I say fair play if the legislation allows this but people have known for two years that those "loans" have to be paid back; they can then be paid out the EBT normally but tax will be deducted.  So they only need to find ?60% of the oustanding loan balance.

The change was announced in 2017 and only applies if you haven't reapid the loan by 5 April 2019 so only partly retrospective.

 

 

Quote

 

The 2019 Loan Charge Provisions – Introducing a New ‘Relevant Step’

The draft legislation essentially creates a new ‘relevant step’ for the purposes of the Disguised Remuneration rules.

This will bring those loans entered into before the enactment of Part 7A within the charge to tax of that loan which remains outstanding at 5th April 2019.

For these purposes, a person (in this context the Trustees of the disguised remuneration scheme) is treated as taking a ‘relevant step’ if:

  • The person has made a loan after 6 April 1999;
  • to a relevant person; and
  • an amount of the loan remains outstanding at 5th April 2019.

 

  •  

https://www.etctax.co.uk/2019-loan-charge/

 

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All tax is theft. Not sure why people are committing suicide though

They would be better taking out mps and HMRC workers. If they are that desperate 

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5 minutes ago, ad_ceng said:

All tax is theft. Not sure why people are committing suicide though

They would be better taking out mps and HMRC workers. If they are that desperate 

They have found themsleves in a beautiful house, with a beautiful wife, and they have asked themselves "Well, how do I repay this?".

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1 minute ago, man o' the year said:

Featured on Moneybox recently. https://www.bbc.co.uk/sounds/play/m0002ycr

300k for IT consutant featured. Nice deal in the past with no NI nor tax to pay for 20 years but pay back in one year is extreme. Clearly going to be big problems here. To be honest how inept of tax office to allow this even happen.

 

I agree about the inept.

driving to bankruptcy seems counterproductive -- better to look at income and then take however large a cut you can over as few years as you can get away with.  

[Tax is easy -- just pay what you owe.  Anything else leads to sleepless nights.]

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51 minutes ago, man o' the year said:

Featured on Moneybox recently. https://www.bbc.co.uk/sounds/play/m0002ycr

300k for IT consutant featured. Nice deal in the past with no NI nor tax to pay for 20 years but pay back in one year is extreme. Clearly going to be big problems here. To be honest how inept of tax office to allow this even happen.

 

Its not HMRC to advice idiots that their dodge is illegal and will have them in the ock a few years down.

What needs to happen is the prosecution/charge for the idiot tax advisors too.

 

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55 minutes ago, man o' the year said:

Featured on Moneybox recently. https://www.bbc.co.uk/sounds/play/m0002ycr

300k for IT consutant featured. Nice deal in the past with no NI nor tax to pay for 20 years but pay back in one year is extreme. Clearly going to be big problems here. To be honest how inept of tax office to allow this even happen.

 

300k sounds a lot of money,. And it is.

But its also the tax the idiot been avoiding for the last 10-20 years.

Which begs the question where did all the income go?

 

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8 minutes ago, spygirl 🏆 said:

300k sounds a lot of money,. And it is.

But its also the tax the idiot been avoiding for the last 10-20 years.

Which begs the question where did all the income go?

 

Shite new build "mansion".

3 X Range Rovers.

5 X Rolex.

Job done. 

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How can this possible be moral? Get a loan from your company and you never pay it back? I'm cool with avoiding tax as much as you can. But this is just taking the piss imho.

 

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4 minutes ago, Great Guy said:

How can this possible be moral? Get a loan from your company and you never pay it back? I'm cool with avoiding tax as much as you can. But this is just taking the piss imho.

 

How is tax moral it is theft. 

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Posted (edited)

I think there has to be a distinction between demanding historical tax that has been evaded, and levying tax under new rules that are then applied retrospectively.

The former may be justified, the latter is unjust.

Tax laws are made deliberately obscure to entrap people who push tax avoidance too far.

What is taxable should be made unambiguously clear by tax authorities. It isn't always. The uncertainty is intended to make people be overcautious and sometimes pay more tax than they need to.

 

Edited by Happy Renting

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1 minute ago, Great Guy said:

How can this possible be moral? Get a loan from your company and you never pay it back? I'm cool with avoiding tax as much as you can. But this is just taking the piss imho.

 

The stupid HMRC tax rules allowed it despite knowing for years that it was going on.

Tax doesn't have a moral compass - do you think that the NI tax upon low paid jobs is fair, or that council tax is fair (Top band in Westminster - £1,421.  This could be for a £20m house ffs https://www.westminster.gov.uk/council-tax-bands-and-rates )?

It is to steal as much money from the worker as can be managed without riots or mass bankruptices.

Rangers was using these as far back as 2001 - https://www.bbc.com/news/uk-scotland-40501361

HMRC should have tightened the rules way before 2017 and, whilst establishing a liability, provided more achieveable ways of paying the tax such as agreeing installment plans or charges against houses.

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2 minutes ago, Happy Renting said:

I think there has to be a distinction between demanding historical tax that has been evaded, and levying tax under new rules that are then applied retrospectively.

 

by their companies giving away money as loans where they not reducing corporation tax?

the whole idea of a loan is that it' repaid. if money is given away with no intention of it getting repaid it's not a loan....

 

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2 minutes ago, Great Guy said:

if you disapprove of tax how would you pay for public goods like defence and roads?

Defence is one of the only functions the state should provide. It can be funded easily by low trade traffis. Most defence spending especially r and d is wasted I spent years watching it.

As for roads looking at the state of them the government are not doing a good job there at all. Private sector can do much better

 Though if the government has to fund them again traffis in trade will suffice.

Of course this assumes a very small state and less than 10000 government employees total 

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13 minutes ago, Great Guy said:

if you disapprove of tax how would you pay for public goods like defence and roads?

That's a tiny amount of what the government pisses away each year; this is the 2017 spending.

CCS207_CCS1117395176-1_Chart_1.jpg

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Posted (edited)
18 minutes ago, Great Guy said:

if you disapprove of tax how would you pay for public goods like defence and roads?

Don't engage with ad_ceng Great Guy, it only encourages!

Edited by InLikeFlynn

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32 minutes ago, Frank Hovis said:

The stupid HMRC tax rules allowed it despite knowing for years that it was going on.

Tax doesn't have a moral compass - do you think that the NI tax upon low paid jobs is fair, or that council tax is fair (Top band in Westminster - £1,421.  This could be for a £20m house ffs https://www.westminster.gov.uk/council-tax-bands-and-rates )?

It is to steal as much money from the worker as can be managed without riots or mass bankruptices.

Rangers was using these as far back as 2001 - https://www.bbc.com/news/uk-scotland-40501361

HMRC should have tightened the rules way before 2017 and, whilst establishing a liability, provided more achieveable ways of paying the tax such as agreeing installment plans or charges against houses.

I would say it’s to aquite as much money as possible without a care for the consequences. If you’re a believer in the Laffer curve then governments set tax rates to maximise their revenue. 

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3 minutes ago, assetrichcashpoor said:

I would say it’s to aquite as much money as possible without a care for the consequences. If you’re a believer in the Laffer curve then governments set tax rates to maximise their revenue. 

Yep; that would be it.

They want the money to keep pouring in so they can boost their egos by chucking big cheques about on massive vanity projects like HS2 - £56bn (and it will inevitably be way more than that) on a slightly faster train track.

Referring to my chart above the annual trasnport spend is £35bn so that's everything we spend on transport in 18 months, more probably ending up at two years or more, one one rail line.

Bonkers but hey, you've got to keep spending it or you have no reason to increase taxes and push back state penison ages.

 

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This has been posted on the board already but this particular post does emphasise how bad tax dodging (not the right word in this case though) can get.  I've seen HRMC catch up with enough people and the personal disaster that causes to see it's just not worth it.  I've never had a suicide but could have if a few other life events were thrown in at the same time.  Sure not everyone gets caught but the potential pain if you do makes it a no deal for me.  Plenty of (very) legal stuff to do so best stop there and not go into the twilight zone or worse.  That said, if you rely on a tax "advisor" in good faith then not so sure.  But then I've met some of these said advisors and any sensisble person would run a mile, even if they are family!

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4 hours ago, Great Guy said:

How can this possible be moral? Get a loan from your company and you never pay it back? I'm cool with avoiding tax as much as you can. But this is just taking the piss imho.

 

We must have different morals. If I knew I could get away with it, I'd do that in a flash. The country is full of corporate chancers so I'd have no qualms replicating that on a personal level. I would, however, make sure I had all my bases covered i.e. house paid off first.

Problem is that HMRC and their retrospective taxation rules brought in by Gideon are too open ended. I am surprised these haven't been tested in a courtroom. How on earth can it be right or moral to demand people to pay back tax that HMRC 'believe' you owe - and then they'll investigate only afterwards. *This isn't this legislation but another.

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