HMRC are going to tax agency workers back 20 years

[Pirie]

So it appears many of us working through agencies are going to get life changing bills from the revenue:

How can this be real. Anyone had a brown envelope about this yet?

Pinie, why are you accusing anyone who is more knowledgeable than you (wouldn’t be hard) of being HMRC? I don’t work for HMRC but I have an interest in this topic and it has been known for years that these schemes were dodgy. All HMRC is doing is collecting rightfully owed taxes, you know, to pay for things like schools, nurses, roads etc. Why don’t you get yourself better informed and then come back on this thread for a sensible debate?

Tax is theft

Yeah right.

Not my intention matey

And yet you continue to repeat their propaganda in the face of multiple people saying otherwise with sources.

You don't seem to be interested in actual facts.

That quote of the opinion of one broadcaster is not fact, its opinion. The manner in which the schemes were used was illegal at the time and is illegal now. All the agencies which contacted me had the small print to excuse themselves whilst verbally insisting HMRC would never collect. When pushed on this one said "well we advice people to put the saved tax in long term savings for the future just in case". Verbally of course.

If Iain Dale really believes it was legal to defraud HMRC by stating personal income was a loan (which was the legal use) and that IT contractors during this period are on "ordinary money" he is having a laugh or not done his research.

These schemes were marketed at people in the higher tax brackets, not people who were paying basic rate on average earnings.

“why are you accusing anyone who is more knowledgeable than you (wouldn’t be hard)”

First post chap! Not a stunner IMO. Bad English! Probably better of doing what your username suggests. Be back soon!

yes, it's clear to most people - dodgy loan scheme, utterly different from using a normal agency and paying more tax. Getting comeuppance and rest of us who pay full tax more than glad.

Are you OK mate! You sound like HAL in 2001 Space Odyssey when it went into meltdown!

“These schemes were marketed at people in the higher tax brackets, not people who were paying basic rate on average earnings.”

If this was true then why do you think that on 13 September Low Income Tax Reform Group published a newsletter on the “Loan Charge” and whose mission is to:

‘Target for help and information those least able in the community to afford to pay for advice and make a real difference to their understanding of the systems of taxation and related benefits whilst working to make them more equitable and accessible for their needs.’

BTW I count that as a fact rather than the HMRC propaganda that some have been preferring as fact in recent posts.

But if your agency always did a tax form for each new temp or contract job, as was the norm in the 20yrs I've contracted via various agencies, surely you're OK ? I thought it was just self employed (not agency contractors) who were less than open re their real income.

FFS. If you were advised about a tax avoidance scheme that seemed to be good to be true, it was too good to be true. YOU WERE HIDING INCOME.

Umm Starbucks amazon massive corporations that avoided billions but let's all focus on individuals over the past 20 years that probably owe pennies in comparison

Cracking bit of whataboutery there.

The little people are least able to fight the likes of HMRC who will spend pounds to collect pennies from them. Make no mistake that the little people will be pursued relentlessly for arrangements going back twenty years that HMRC never challenged at the time, because they had no legal basis to do so.

HMRC has always had a legal basis to challenge dodgy loan schemes.

Here is one - HMRC complained to the ASA that his scheme misled people

"The Williams Gordon website claimed that you could “take home up to 92% of your pay” and that they’re “fully compliant with the necessary HMRC legislation and with all current IR35 policies”."
www.gov.uk/guidance/contractor-loan-schemes-misleading-advertising-spotlight-42

ASA ruled the claims were misleading and must be withdrawn. This summary from HMRC is a good summary:

"HMRC’s understanding of the contractor loan scheme is that:

contractors in this scheme are employed by an umbrella company which supplies the contractor’s services to their end-client
the umbrella company invoices the end-client and retains 10% as a fee
the umbrella company pays the contractor a salary at, or just above, the National Living Wage but below the limits for tax and National Insurance
the balance of the invoice is paid to the contractor in the form of a loan with terms that mean it’s unlikely to ever be repaid

Loans like this are no different to normal income and should be taxed in the same way as any other employment income.

Not all umbrella companies use avoidance arrangements like this. Most deduct the correct amount of tax and National Insurance from the full salary paid to the contractor."

I recall many years ago there were a few cases where self employed people or contractors had contacted HMRC and got written confirmation that their tax plans were legal. Later they were chased for back taxes due to HMRC "re-clarifying" their own rules. How on earth were those individuals supposed to do more, they had been told by HMRC themselves that what they were doing was completely legal, then HMRC changed their mind and applied it retroactively.

There was also a case where one umbrella company was taken to court by HMRC for avoidance and won the case as it was deemed in court that they had acted legally. A few years later HMRC went after a load of contractors due to "clarifying" the rules.

*“why are you accusing anyone who is more knowledgeable than you (wouldn’t be hard)”

First post chap! Not a stunner IMO. Bad English! Probably better of doing what your username suggests. Be back soon!*

What are you on about? My English is perfectly fine. Unlike yours - it’s “off” not “of” you ignoramus. What makes you think I’m a chap?

I have zero sympathy for anyone who is now having to repay tax after using these fraudulent loan schemes. Absolutely zero.

Well done HMRC 👍 👏

Allergic, I remember a case called Arctic Systems and some others. However these loans type agencies are in a different category - always been very dubious. That is not to say in some other areas there aren't grey areas of tax law but that is nothing to do with this case.

“What makes you think I’m a chap?”

Username “dog” not “bitch”. Regards poor English, you should have said “why are you accusing someone” rather than “why are you accusing anyone“. My typo of rather than off; mea culpa!

“HMRC has always had a legal basis to challenge dodgy loan schemes.”

Really, so if that is the case, why did they not challenge them in court. HMRCs preferred tool is litigation because only the very wealthy or organised groups can counter their “ see you in court approach”.

By the way, FAOD, FACT, the ASA is not a court of law, it is a government quango!

Errr no... you are accusing anyone who is more knowledgeable than you of being from HMRC ie several people. Not just someone ie one person. That lack of comprehension skills is very telling.

I believe, I was responding to one contributor. You have incorrectly assumed that I was responding to several. However, these personal side shows are tiresome so let’s get on with the real debate and that is:

U.K. Gov are going to cause catastrophic consequences with the “Loan Charge”.

Is Xenia off shift now?

I believe, I was responding to one contributor

Pity you didn't make it clear which one.

Is Xenia off shift now?

More likely bored stiff with a poster with a sparse history whose interest seems to be promoting a particular lobby view. Xenia has no responsibility to provide you with free legal advice.

This scam was well known when I was repeatedly invited to join it. It was only of any real use to high earners and those stupid enough to take it up were doing so out of greed. So lets not pretend this is primarily about low earners - you are fudging multiple different schemes.

Ultimately you are lobbying to allow people to lie about personal income by pretending its a business loan. That is a fraud on the rest of us who pay taxes.

If you don't like the responses here I suggest you put your hand in your pocket and buy answers you like better.

I don't have shifts as I'm a self employed sole trader (no limited company and I don't work for an agency).

HMRC don't prefer to litigate.In fact they have (unfairly) been accused by MPs of not litigating enough and instead settling. Yet settling with people in areas where tax law is unclear (in my view it is not unclear here with the loans) is very wise of HMRC, just as most commercial litigation settles too.

I don't disagree that much of tax law is very unclear and we have to deal with that on a day to day basis eg even something simple like the Financial Times I buy every day HMRC has given me different answers on whether all or part is for my work - and who knows anyway - the last should ideally be a lot clearer but I don't think the loans schemes were particularly unclear at all - those who thought they could only pay 15% tax by borrowing should have realised that was very unlikely to work.