To think it's fair these tax avoiders pay the tax that's due?

[SuzzieWithEthics]

This scheme was dodgy from the start but lots of NHS and it contractors used it for years. Now face having a bill for hundreds of thousands. But all that's due is the tax they avoided. So it's all fair right?

www.theguardian.com/money/2019/feb/16/thousands-of-workers-hit-with-massive-tax-avoidance-bills?CMP=Share_iOSApp_Other

www.theguardian.com/money/2019/feb/16/thousands-of-workers-hit-with-massive-tax-avoidance-bills?CMP=Share_iOSApp_Other

No, I don't think it's fair that the rules changed and people are having to pay tax retrospectively. They were following the rules as they were at the time as far as I can see.

It's a bit like abolishing the non taxable allowance for a paye worker and telling you you have to pay the last couple of years extra tax.

I think it's on the government to close these loopholes in the first place. Not punish ordinary people who use them.

I agree, it should be paid back

Why isn't the employee benefit trust billed for the taxes, they are the ones who paid the contractors? It doesn't make sense. What a mess.

They were using a dodgy scheme that had been known about for years and paying next to no tax on incomes that should have been higher rate tax payers.

When you use these scheme you are marked and you run the risk that tax maybe due in the future if they investigate the scheme.

If it was legal when they avoided the tax I don’t think it’s fair that they have changed the rules and are retrospectively trying to claim the tax. At the time they were doing nothing wrong. Avoidance of tax isn’t illegal, evasion is and there is quite a big difference. Whether you think everyone should pay all the tax they potentially owe is another matter..

Possibly but then I think the football clubs that didn't pay there tax bills but we're let off by HMRC should have to pay too, even if that means closing and selling the assets.

I wonder why tax warriors always want to start with the small people. I'm not suggesting they shouldn't pay what they owe but most are not financial experts intent on avoidance rather they are mislead be experts. Large corporations on the other hand act deliberately and knowingly at much grater detriment. It's always easier to target the small guy though as he has less room to contest.

It wasn't legal, it was a grey area while they investigated it.

They've investigated it and said it wasn't legal.

People with big incomes paying next to no tax, now they act as if they were law abiding citizens

The dodgy scheme was legal though. As I say, it's on the government, not badly advised individuals.

But it’s not a closed “loophole” it was never legit to be paid in this way.
They got away with it by pretending the salary payments to workers were a loan (that would never be repaid).
It’s just sad that workers were misinformed by agencies and companies they worked for/with. The agencies should be penalised not the workers in that case. Bit shit all round really, but I don’t think HMRC is being completely U because the tax is owed.

It was recommended by the employer, by the accountant and by the agency, so it is understandable that many people just went with the flow, assuming that an employer like the NHS wouldn't recommend dodgy schemes. Many large employers were not accepting candidates if not under this "employee benefit" umbrella. Also, there were charges, people did pay up to 30% in "tax and other charges" - what they did not realise is that it was mainly fees for the scheme administrator and very little in tax.

If it was legal when they avoided the tax I don’t think it’s fair that they have changed the rules and are retrospectively trying to claim the tax.

It was never legal. I got offered a job like this and it was obvious what it was, so I ran a mile.

That said, it is not black and white. People who were part of this as a condition of employment in 'normal' jobs should not have to pay back the full amount. Where possible the companies should pay at least half and regardless the accountants and managers who ran these schemes should be jailed.

In many cases contractors were told that they had to register with 'umbrella schemes' like this, as it would be the only way they were paid and that it was legal.

Don't forget that contractors include quite ordinary professions - it's not all executives and senior people. There were nurses and social workers in this as well. And whilst it may have been a grey area at the time, it's worth noting that HMRC itself used this type of scheme for the contractors it hired!!

The rule has now been changed and applied retrospectively, so people who thought they were compliant have now been told that they weren't and are being given no choice about the tax demands that will start landing from April. There are people who are going to have to sell their homes or declare themselves bankrupt because they have no way of meeting the payment terms. HMRC is not allowing any kind of leeway and even MPs are starting to lobby about the fairness of this, as they have constituents who are literally going to lose everything.

I can't get that worked up about people who were mislead and as a result didn't pay enough tax. It wasn't deliberate avoidance. In terms of bolstering the coffers, why aren't HMRC going after these complex corporation structures which mean that multi-nationals like Google and Starbucks and Facebook don't pay anywhere near the level of tax that they should? HMRC reached a sweetheart deal with Vodafone that meant that the firm avoided paying £6bn in tax that it should have done!! But that's too much like hard work, and firms have deep pockets and expensive lawyers and can afford to litigate. Much easier to go after an IT contractor and who gives a shit if it means she loses her home as a result?

I’m trying to work out what sort of salaries these people had, that the tax they owe comes to £400,000. I can’t imagine I’ve ever earned enough to pay £400,000 in tax in my whole life.

For goodness sake, these aren't poor little naive people who've been exploited. I know people who've been boasting about it for years. We've got to get away from the idea that tax avoidance is a morally neutral phenomenon. If some people pay less it means someone else has to pay more and it's invariably those on PAYE who can't avoid tax or be 'creative'.

For goodness sake, these aren't poor little naive people who've been exploited. I know people who've been boasting about it for years. We've got to get away from the idea that tax avoidance is a morally neutral phenomenon. If some people pay less it means someone else has to pay more and it's invariably those on PAYE who can't avoid tax or be 'creative'.

THIS! Anybody sensible would have ran away from this scheme. It was obvious and people were boasting about it, I know some of them.

Conjugation of tax avoidance:

I take the advice of accountants and cannot possibly be expected to understand the complexities of tax law.

You are a scummy tax avoider, depriving the NHS of much needed funds.

He is a rich millionaire cheating old people out of support in their old age.

We are little people, just doing the best we can to support our families and we were pushed into it anyway.

They are rich corporations who should pay every cent of tax they owe.

It is funny how this tax avoidance scheme seems to be perceived so differently from the film finance schemes, backed at the time by the government and even encouraged by the HMRC. This loan scheme was always just pretty plain dishonesty with no one benefiting other than the employees themselves.

I agree OP. People keep calling this a ‘rerospective law change’ but that’s far from the truth.

The reality is that these schemes were never sanctioned, and HMRC made it very clear that if you used one you could end up liable to pay the tax you rightly owed.

People will keep on coming up with new and inventive ways to avoid paying their taxes. Just because a new scheme hasn’t officially been banned by HMRC doesn’t mean it’s authorised.

If you make use of loopholes to avoid paying your tax, even if that specific loophole hasn’t yet been closed, you know you’re doing so at your own risk and that you may have to one day account for the money you rightly owe.

The people who used this scheme benefitted for years to the tune of thousands of pounds, at the expense of schools and roads and hospitals. The overall cost to HMRC is billions.

I know loads of contractors who used this scheme and it is 100% not their fault as it was a condition of their work to be on a scheme like this

They were security staff/builders at some of London's biggest firms but hired through recruitment agencies who also took a cut

I’m trying to work out what sort of salaries these people had, that the tax they owe comes to £400,000.
The HMRC calculates all income from often 10 - 20 years of employment to be "earned" in the current year, thus most of it will fall into the additional tax bracket.

Laurie,

The thing is they are not being fined, merely being asked to repay the tax. There was nothing to stop them putting the money aside for this purpose (yes, they do have to pay an ‘unfair’ interest rate, but generally that is a relatively small amount).

It is common sense to realise that a ‘non repayable loan’ is salary.

I have little sympathy. Any normal person would realise "hey I've not paid any tax or NI on this salary, surely that's a bit fucked up?"

Feigning ignorance when it's blatantly obvious you SHOULD have been paying tax and weren't is their own fault.

But the people pushing these loans out should also be fined too imo.

I used to work for an EBT but paid full tax and NI on my salary as it was run in compliance and didn’t use the loan loophole.

I think a lot of people knew exactly what was going on, but I do have some sympathy for those caught up that didn’t understand the scheme or had no choice.

I have no sympathy for anyone who's obliged to pay the tax they've evaded (not avoided) over the years. The individual contractors may have been obliged to use an umbrella company; they weren't obliged to take their earnings as "loans" and if they did so, would have needed to sign an agreement with the wealth management house marketing the scheme - if it was missold to them as a legitimate arrangement, then they might have some right of recourse against that house (though most of them were set up as opaque groups of companies, many registered in jurisdictions in which it's not easy to enforce judgments, and any assets are held in equally opaque trusts).

But, for the most part, this isn't something that could have been entered into innocently. You'd need to have gone looking for it.

Feigning ignorance when it's blatantly obvious you SHOULD have been paying tax and weren't is their own fault.
I know someone who got caught by the scheme. She worked as a contractor for almost a decade (because she had caring responsibilities for a family member too and sometimes had to take a month or two off during the flare ups). It was the only payment scheme operated by the agency and while she signed the papers, she is definitely not an expert in offshore finance issues. It was explained to her that she will get around 80% of her paper contract value, with deductions made for "tax and admin" - it was in line to the tax she was paying before as a PAYE employee, so she did not suspect any foul play - after all, a major employer counter-signed the same agreement.
Now, if this actually was a salary, as many of posters think - should not the employer also be on the hook then for decades of holiday pay and pensions?