Loose Women woman's IR35 win deals another high-profile blow to UK taxman's grip on rules

Claims that Her Majesty's Revenue and Customs does not understand its own rules are all the louder now the UK taxman has lost another IR35 case – this time to TV and radio broadcaster Kaye Adams. Adams, once a panellist on ITV's Loose Women, appealed against a challenge to her self-employed status while presenting BBC Radio …

[robidy]

Yet again going after the tax paying hardworking individual....while letting massive tax avoiding corporates off the hook.

Uber, Amazon, Starbucks, Apple, Facebook, et cetera...why not make them pay tax on turnover...unless they cough up corporation tax based on the spirit as opposed to the letter of the law?

Oh and VAT is paid by their customers...not them...they just collect it for HMG.

[Donn Bly]

Avoidance vs Evasion

There is no "Hook" in the context in which you use it. The "Spirit" of the law is subjective, and a subjective law is a bad law because you never know what side of law you are on. What is legal today can be illegal tomorrow even if neither you nor the law have changed, and since the law itself hasn't changed you end up with a potential "ex post facto" situation . The letter of the law should be an accurate reflection of its spirit or it too is a bad law.

Don't ever castigate someone for following the letter of the law, blame instead the ones who wrote the law and/or responsible for maintaining it.

Tax EVASION is criminal. But in general those companies aren't actually evading the tax. Tax AVOIDANCE is just paying the tax due based on the rules put in place by the taxing authority. It is the responsibility of the GOVERNMENT to fix the laws, not for an individual or corporation to ignore the written law and just do what they or someone else "feel" the law should say.

Two last things --

(1) If you increase the companies costs by increasing their taxes, the increase is just going to be passed on to their customers anyway -- just like VAT. A greedy company is still going to take the same amount in profits.

(2) Taxing on turnover instead of profit penalizes high volume/low margin businesses, increases consumer costs, and contributes to inflation which then lowers your individual purchasing power. You need to consider the side effects of such a policy change.

[robidy]

Re: Avoidance vs Evasion

Starbuck has run at a paper loss in the UK for many years, these are paper losses when "profits/surpluses" are transferred via well known methods to other juristictions using things such as brand licencing charges.

When put under public pressure they can make profits as has been proven.

Gordon Brown tried changing legislation by closing loop holes and like whack a rat at the funfair...new ones popped up as fast as the old ones were closed down.

If corporations know the nuclear option was there most would not push it thus increasing tax paid without increasing consumer prices.

Volume businesses still make profits and can still be transferred like any other business.

[The Nazz]

Re: Avoidance vs Evasion

That would be the Gordon Brown, Chancellor of the Nu-Labour Government that swept to a landslide victory, with huge majority in 1997 would it? A Govt. that massively increased legislation rather than close loopholes? Whose financial "proprietory" had and has repercussions that will last generations.

Whatever did happen to "Nu"?

ChangeUK! Where've we heard that before?

[Symon]

Re: Avoidance vs Evasion

" A Govt. that massively increased legislation" +1

Tony made a new offence each day he was in office, on average. That's more than double the previous governement. "It is now illegal to sell grey squirrels, impersonate a traffic warden or offer Air Traffic Control services without a licence. Creating a nuclear explosion was outlawed in 1998. Householders who fail to nominate a neighbour to turn off their alarm while they are away from home can be breaking the law. And it is an offence for a ship's captain to be carrying grain unless he has a copy of the International Grain Code on board."

https://www.independent.co.uk/news/uk/politics/blairs-frenzied-law-making-a-new-offence-for-every-day-spent-in-office-412072.html

[Anonymous Coward]

Re: Avoidance vs Evasion

but those all sound like perfectly reasonable laws.

[Donn Bly]

Re: Avoidance vs Evasion

And who's "fault" is it that Starbucks didn't show a profit on paper -- Starbucks or the politicians that wrote the laws that they followed to arrive at situation?

I submit to you that the problem is the tax code, not the businesses that FOLLOW the tax code. They are just law abiding corporate citizens that are doing what the law says they should be doing.

The solution is to change the law, not go after the guy who is following the existing one. The problem AND the solution start and stop with the government. Nobody else has any responsibility to fix it - not the individual taxpayers, and not the businesses that are following the existing tax code.

Also -

If you tax on turnover instead of profit on a high volume / low margin business your taxes would exceed the margins. Many companies run on razor-thin margins of 1% or less, but can do it because of high volume. If you put ANY turnover tax on such products, the increase will be added directly price of whatever the consumer pays. Any politician that thinks that you can increase taxes on a business and that the tax won't be passed on is incompetent. Anyone who believes that politician is gullible.

[ibmalone]

Re: Avoidance vs Evasion

I would say the issue is that they use tricks that are not available to individuals and smaller companies. The corporations that do this are not absolved by simply following the rules like good citizens; there is nothing simple about it, they actively seek out the loopholes and have the money to buy the expertise to do so, expertise that is as good as that available to the governments who write the laws. And yes, our desire as consumers to pay less contributes to this competition, they would do it anyway as it would mean bigger profits, but equally Amazon, for example, can sacrifice more profit and run on thinner margins than competitors that don't have the scope to shuffle their profits to countries that will take less of them.

[anothercynic]

Re: Avoidance vs Evasion

Please. The tricks that are available to the big corporates are available to anyone. In some instances, they will only start reducing tax exposure at a certain point, but pretty much anything that's available in the tax law books is available to anyone.

[Marshalltown]

Re: Avoidance vs Evasion

There is no such thing as "...law abiding corporate citizens...." The idea of "citizen" applied to fictive entities is a problem (in the law as you emphaisize) that ought to be brutally demolished, ideally with very large hammers.

[Dazed and Confused]

Re: Avoidance vs Evasion

When I work in India I have to pay Indian tax, they give a receipt for this which I can use to prove to the UK taxman that I've already paid that much tax on that much income, which I can then claim against my UK tax. If the UK rate were higher, I'd have to pay the difference. If the Indian rate were higher, I'd not owe the UK any money on the deal.

Lots of countries have similar withholding tax rules. The US included, although with the US it depends on the type of work I do. I know that some of the work I do for US based customers I cannot do while inside the US if I wish to remain outside their tax system.

I don't see why this type of scheme can't be applied more generally.

You use the example of Starbucks, they use things like licensing to shift their profit abroad. If they had to bring the UK taxman a receipt saying that for every £1 worth of coffee they'd sold they had to pay their licensing company 99p and the licensing company had paid 1p tax on that then the UK taxman would be able to claim the UK amount of tax less the 1p already paid. The effect is that the company pays tax at the highest rate in the chain rather than the lowest rate.

[BrownishMonstr]

Re: Avoidance vs Evasion

I'm not sure how this would work as Starbuck's parent company is a different legal entity. If I created my own company and licensed something from another company, would the same rules apply?

Would the rules depend on how autonomous the child company is? Because depending how powerful the parent company is, they could exert some pressure on the child company even if the CEO of the child company wished it weren't so.

[Aristotles slow and dimwitted horse]

Re: Avoidance vs Evasion

"I'm not sure how this would work as Starbuck's parent company is a different legal entity. If I created my own company and licensed something from another company, would the same rules apply?"

Hmmm... it's only a different legal entitly on paper. It is in effect part of the same global chain. But in this instance we are playing by legal and accountancy rules so we need to whitewash over that. The fact that the offshore entity has the same name effectively as the UK based entity is just a co-incidence right???

Yes, if you set up an offshore company as a wholly separate legal entity and licensed a product from it, and then pay them a licensing fee that (conveniently) equates to most of the UK profits that you make from shilling that licensed product in the UK, then it would work. You'd just need to lawyer up and make sure that what you are licensing is valid and that you trust your offshore corporate governance.

[Androgynous Cupboard]

Re: Avoidance vs Evasion

The concept of "command and control" of a company is already a well known concept in the tax system, in particular relating to jurisdiction for tax. Just making a new company with new directors doesn't necessarily make it independent.

HMRC believe they can determine the independence of a 1-man company via IR35, one wonders why they didn't have a crack at the larger fish at the same time.

The point is none of these are insurmountable challenges for a suitably motivated HMRC suitably enabled by a similarly motivated and capable government. I suspect we have the former. I very much doubt we have the latter.

[Dazed and Confused]

Re: Avoidance vs Evasion

I'm know that more details need to be worked out.

This probably needs some international agreement, but when the UK based child company puts it's claim in that 99% of profit needs to go to pay offshore parent company then they perhaps they need to provide the tax office details of where the parent is paying their tax. This would allow the UK authorities to talk to the overseas ones. Perhaps the rules should be that it would only legal for a UK company to import stuff (license in this case) for duly registered companies. It would certainly be necessary to follow the chain of transactions. There have already been proposals for a register of beneficial owners to help combat money laundering.

[jmch]

Re: Avoidance vs Evasion

"The letter of the law should be an accurate reflection of its spirit or it too is a bad law." - spot on

"Tax EVASION is criminal. But in general those companies aren't actually evading the tax. Tax AVOIDANCE is just paying the tax due based on the rules put in place by the taxing authority. It is the responsibility of the GOVERNMENT to fix the laws" - also spot on, BUT missing one critical element: tax policy is heavily influenced by lobbyists and well-connected people jumping between public and private sectors. In some cases tax laws are even drafted by consultants with a foot in both camps. So having legal tax avoidance built-in to the tax law is by design.

"If you increase the companies costs by increasing their taxes, the increase is just going to be passed on to their customers anyway" - Companies who absorb any additional costs would be more cost-competitive than those passing costs to consumers, so it's not always going to be the case

"Taxing on turnover instead of profit penalizes high volume/low margin businesses" - When those high volume / low margin businesses are using tiny (or indeed, negative) margins to drive competitors out of business (looking at you, Amazon), you will find me unsympathetic. Also, tax on turnover vs profit isn't binary. Individuals aren't taxed on 'turnover', they are taxed on 'turnover minus whatever deductions are given as an incentive'.

Businesses aren't really taxed on profit, they're taxed on 'profit minus whatever other bogus expenses they're allowed to bung in' (bringing us again to my first point, which is that big businesses can write their own rulebook as to what is deductible).

[Dazed and Confused]

Re: Avoidance vs Evasion

Businesses aren't really taxed on profit, they're taxed on 'profit minus whatever other bogus expenses they're allowed to bung in' (bringing us again to my first point, which is that big businesses can write their own rulebook as to what is deductible).

The point is that the existing rules are allowing them to stick bogus stuff in. As others have said it's the fault of those that write the rules that they are allowed to claim stuff that they probably shouldn't be allowed. If the politicians spent a quarter of the time doing the job they are paid to do that they spend whinging about people who follow the rules, then perhaps they'd write better rules and we'd not have the problems.

If the rules were better we wouldn't have so many problems.

Fix the rules.

[Dr. Mouse]

Re: Avoidance vs Evasion

"it's the fault of those that write the rules that they are allowed to claim stuff that they probably shouldn't be allowed"

Ah, but this is where things get interesting: The rules are generally written for genuine cases, then exploited by other companies in ways which were never envisaged* by those writing the law.

Let's take one of the most regularly cited "profit shifting" loopholes: Intellectual Property. If Starbucks UK licenses IP from Starbucks (Some place with low tax), this is seen as profit shifting for tax reduction. It's basically a fiddle.

However, this is allowed because of the genuine cases. For instance, if I am manufacturing a product in the UK, part of the design may be licensed from another company. That other company may be located in a low-tax country. If we "closed the loophole" and stopped companies from being able to offset the cost of licensing IP from low-tax countries, you'd either put this legitimate company out of business or force them to move manufacturing to another country, under a separate company registered elsewhere, paying tax in a different country and losing the exchequer money.

"Closing the loopholes" is far from easy. A better way would be to completely scrap the current tax code and come up with something which is fit for purpose in todays global economy.

* I'm giving them the benefit of the doubt here.

[anothercynic]

Re: Avoidance vs Evasion

You are all correct here... this is why law as written has to be particular. Being vague leaves things wide open to abuse. But I keep banging that drum every time this debate starts on here...

[fnusnu]

Only an idiot would recommend a tax on turnover

[robidy]

Depends on the motive...if you want to reduce the reliance on say the double dutch sandwich model then it's an awesome stick....(see previous well written reg articles).

[TonyJ]

VAT - a tax paid based on turnover not profit.

[Dazed and Confused]

Re: VAT - a tax paid based on turnover not profit.

No, only on cars. For everything else, VAT is a Value Added tax. I charge my customer based on a turnover figure, but I claim back the VAT on the supplies I buy in. So under normal circumstances it's a profit related tax.

There are odd exceptions. So if you print books then your supplies are all subject to VAT while your product is not. So your quarterly VAT return is a letter to the taxman say "Hey guv, you owe me this much". But in most cases it's a profit tax.

Cars are the exception, if you buy your staff solid gold desks with diamond encrusted pen holders, that would be a legitimate business expense and you could reclaim the VAT on it. If you need to buy a car for your saleman to visit customers, that wouldn't be a legitimate expense for the purposes of VAT and you'd not be allowed to reclaim the VAT on the car.

[CommanderGalaxian]

VAT is a Consumption Tax not a Turnover Tax

No. VAT is a consumption tax, paid by the end consumer of the goods or services - everybody in the chain before it gets to the final consumer is able to offset input vs output VAT.

[JBowler]

It's called a sales tax

Or, for individuals, an "income tax"; individuals pay tax on their turnover, not their actual income, which is turnover less expenses (e.g. cabbage.)

[Dazed and Confused]

Re: It's called a sales tax

Or, for individuals, an "income tax"; individuals pay tax on their turnover, not their actual income, which is turnover less expenses (e.g. cabbage.)

In the UK most tax payers are taxed on income and there are very few deductibles they can offset against their tax. This is largely what IR35 is about. If you run your own company or are self employed you can deduct your expenses.

[fnusnu]

And if you have a shred of evidence that they are not paying their taxes, please take them to court. You are guaranteed to win.

[robidy]

Tax avoidance is different to evasion.

[Spanners]

re: robidy

Tax avoidance is different to evasion.

Legally yes. That is why people get cross about it.

[Nano nano]

pro rata

They could pay tax on profit in each country, pro rata by turnover in each country.

[robidy]

Re: pro rata

That would be the holy grail but would also require Ireland, Luxembourg, Holland and a few others to be on board with the plan...just for the EU.

[JBowler]

Re: pro rata

Tax on gross "turnover" (i.e. receipts, not mouldy fruit inside pastry) just works. Individual countries can chose to apply a negative tax if they feel so, whatever; that is up to their duly appointed dictator. This tax is difficult to avoid because, apart from used car salesmen of the Arthur Daly persuasion and lots of builders, the receipts go into the banks and the banks are big, nasty, and very easy to monitor.

Let's forget the myth of income tax; it was invented to rob the poor. We all learnt this in school; flash a fiver (or, in my case, a farthing) and someone bigger than me will tax it off me, forcibly: income tax.

Sales tax, that's selling the apples you scrumped locally to the innocent school persons and then paying half the profit (turnover, receipts) to the gorilla. If gorilla want whole profit scrumping stop idiot.

[werdsmith]

Regardless of all this pub-talk partisan politics nonsense, make a well publicised league table of tax avoiders and create a culture where the public can see who is helping to support the nation that is feeding their business, and who is leeching all money back to overseas HQ.

Then the public can vote with their feet.

Every time somebody gets a great deal with rapid delivery and good after-sales service from Amazon, they are complicit and benefiting from tax avoidance. Amazon can afford to do things this way because they don'[t have the same tax burden that a domestic business does.

[Adrian 4]

If I see a league table of tax avoiders, I'm pretty close to a league table of lower prices.

Short-termism is rampant in consumer spending.

[Kubla Cant]

unless they cough up corporation tax based on the spirit as opposed to the letter of the law

That's not how the law is supposed to work. It's a set of rules. Follow the rules, and it's legal, break the rules and it's illegal. If the laws don't say what they mean they should be changed.

It's also worth pointing out that the reason these multinationals don't pay tax here is because they transfer their profits to places where the tax is lower. I'm not saying we should reduce taxes, but governments can't be unaware that every percent increase has a measurable effect on the amount of profit that's exported. An intelligent government* would calculate tax rates to optimize revenue.

*The present behaviour of politicians on all sides, and the civil service mandarins who advise them, suggests that such a thing is an impossibility. Paying tax to this lot is like handing a tenner to a drunken beggar.

[Anonymous Coward]

The problem with setting rates to optimise revenues is that it's a difficult target. The tax rate that forces one company to start looking for loopholes might be a lot higher than the next one, depending on their governance structure, supply chain, and shareholder attitudes. It'll also be subjective to change for each company every time they have an AGM, or even appoint a new CEO. At best you'd be able to set a rough average, which would fluctuate depending on overseas as well as domestic factors.

You also have to take into account that the corporation tax rate and the dividend tax rate together are meant to be roughly equivalent to the equivalent income tax rate. If you break this relationship you end up having to use other means to stop self-employed workers from juggling their salary and dividends to their advantage - i.e. idiotic regulations like IR35.

Another danger is that you end up with a tax regime that seems perfectly sensible for multinationals, but is completely out of whack for small businesses and domestic companies that are trying to compete with them. However, judging by the state of Britain's high streets that ship sailed some time ago.

The problem as I see it is not in the tax pecentages we are charging at all; it's that we are allowing multinationals to siphon off profit from the UK without paying any tax on that profit in the UK, whilst expecting domestic companies to pay their full due. To take this to it's logical extreme it will mean that most companies trading in the UK will end up being based abroad - on paper at least - and the UK will lose nearly all of it's corporation tax revenues down the same hole. The relevant question here is how bad do things have to get before small companies have to relocate their business to a brass wall plaque at an accountants building in a tax haven in order to remain competetive with the big boys.

The solution to these problems isn't going to be achieved by just fiddling the tax rates. There's going to have to be some serious efforts towards closing the profit siphoning loopholes as well. Lumping the tax burden onto VAT rather than corporation tax is superficially attractive, but is still vulnerable to companies reclaiming overly-high costs on what they "buy" from head office overseas. A move away from tax on profits and towards a sales tax (i.e. just based on the final sales revenue, not just the value added) might work at redressing this balance, but would need a wholesale revue of all the ways we extract taxation from companies - which would be long-winded and painful.

The powers that be don't like to do things to inconvenience big business - it threatens the lucrative consultancy posts politicians often take after they leave office. That's why the tories (supposedly the party for entrepeneurs) and labour (the party for workers) both continue with policies and tax regimes that favour big business over everyone else.

TL:DR - we're right stuffed

[djstardust]

Everything

In this country is fucked.

If private companies can do so well and run like clockwork, what does that tell us about our civil service and the people in charge of government?

A total joke.

[fnusnu]

Re: Everything

And the remainiacs want yet another layer of government from Brussels...

[Nano nano]

Re: Everything

Not government ... common standards.

[[e-mail]]

Re: Everything

"Not government ... common standards."

Well they won't be German, French, Italian, Polish or whatever after the Lisbon Treaty comes into full effect so "Organic Asset of the Federated States of Europe" would be a pretty common standard.

And the move from individual countries to Administrative Regions won't stop this sort of tax fiddle, it will make it easier for the corporations and their pet legislators since only Brussels will be allowed to complain and - based on the current situation - they will be too busy snuffling in the payoff trough themselves to want to cause a fuss and upset their gravy train.

[Dr. Mouse]

Re: Everything

"after the Lisbon Treaty comes into full effect"

*YAWN*

That old debunked myth again? You guys should really try to get some new material. You were funny at first, but it's all become a little stale.

[myithingwontcharge]

Re: Everything

Someone actually downvoted that reply? Can only be the nutter that made the original bonkers claim. :-)

[Joe W]

Re: Everything

Well, that mess was not caused by the EU, what is your point?

[Anonymous Coward]

Re: Everything

Re: "And the remainiacs want yet another layer of government from Brussels..."

If we stayed in the EU, we would better off if the UK Parliament was abolished. Unfortunately, "democracy" won't allow that as an option.

[MonkeyCee]

Re: Everything

Just to be a pedant, the problem isn't so much Parliament, but admission to it.

It's gated* by the local party selection committees, so less than ten thousand people decide who our potential MPs can be. And if anyone attempts to change the makeup of them, they get get attacked. Viciously. The factional divisions in the big parties are deep and bitter.

The current lot are terrible because the current political situation consists of the Tories engaged in full civil war with each other, with Labour playing the waiting game hoping they'll actually split. Both are willing to let the country go through a crisis in order to gain political power, rather than actually govern. If I had to pick Corbyn or Rees-Mogg for PM I'd have to take a long think, then after making it a long shower.

* I'll ignore the Lords for the moment, which despite it's unelected nature works surprisingly well. To my personal shock :)

[Thrudd the Barbarian]

Re: Everything

May I suggest the Slab'o'concrete or the Inert Carbon Rod as options for election to Parliament.

[Adrian 4]

Re: Everything

I recall the bucket'o'lard on HIGNFY. Would that do ?

[Symon]

Re: Everything

I think you'll find Slab O'Concrete is a Sinn Féin candidate, and therefore will not be taking her seat in Parliament.

[Intractable Potsherd]

Re: Everything

The problem is the existence of political parties. They reduce, not increase, democracy. Anyone who is a party candidate has loyalty first to him/herself, then the party, and only then (possibly) to the electorate, and then maybe the country.

Part of it is laziness on the part of the electorate - they don't have to do anything other than support the donkey in the appropriately coloured rosette, regardless of actual policies or performance.

Any serious proposal for change should involve making political parties illegal - anyone who wants to be elected has to be independent.

[Spanners]

Re: Everything

The problem is, not so much, political parties . The problem is "party whips". They force MPs to vote against the needs of their constituents, their consciences and even the promises they got elected for.

For those of us who know it, Gilbert and Sullivan wrote a song that says why...

"I thought so little, they rewarded me

By making me the ruler of the Queens' Navy!"

That was true when it was sung in 1878 and it is true now. Get elected to Parliament for shoddy reasons, do what your party whips want, do not think and you will do well.

[Mark #255]

Re: Everything

All hail Douglas Adams:

"Because if they didn't vote for a lizard," said Ford, "the wrong lizard might get in."

[Dr. Mouse]

Re: Everything

Let's face it, they couldn't do a worse job than the clowns we have in government! (The very same clowns Brexiteers wanted to give more power to and reduce oversight of)

[[e-mail]]

Re: Everything

Dr Mouse, the majority of the "Right Honourable" men and women in the UK Government are Remainers and had no intention of seeing us leave even though they promised faithfully to abide by the result of the referendum.

What makes you think anyone who voted Leave would want that bunch of liars, charlatans and incompetents to have MORE power?

[Dr. Mouse]

Re: Everything

"What makes you think anyone who voted Leave would want that bunch of liars, charlatans and incompetents to have MORE power?"

Because that was a big part of what you guys said you wanted: Parliamentary sovereignty, all laws made by the UK parliament, etc... Well, this is our Parliament and it is making the rules. How well is that going for ya?

[TonyJ]

It's time...

HMRC were made to cover every last cost incurred by the people they're dragging into court. And then, like they like to do, add punitive penalties.

I would even suggest it's time they were barred from targeting any individual or SME until they had crossed a recovery threshold for companies the size of Google et al.

But of course that won't happen because they not only use the same accountancy firms that advise the government and opposition and write the loopholes, but these guys have bigger legal teams and more money to fight back.

Oh and probably have a better understanding of the law.

[robidy]

Re: It's time...

Would that incentivise them to tackle the big boys?

[TonyJ]

Re: It's time...

Honestly... now I've calmed a little, I can't say what would incentivise them.

[A.P. Veening]

Re: It's time...

HMRC staff responsible for erroneously dragging people into court were personally penalized. A proper structure would be a written warning for a first offense, a reduction in rank and pay for a second and dishonorable dismissal for a third. And of course HMRC would be held liable for all costs incurred by those erroneously dragged into court.

[Dr. Mouse]

Re: It's time...

But those "responsible" (or at least those who would get the responsibility pinned on them) are just following what HMRC (their employer) has told them to do.

Those really responsible are at a high level within the department. So you really think, even with an outside body forcing such a rule upon them, they'd be the ones who faced sanction?

Shit flows downhill.

[A.P. Veening]

Re: It's time...

After the first warning, they will/should require instructions in writing from higher before starting another case. When that happens, higher is responsible. Shit doesn't flow downhill when Shit Creek is properly dammed.

[Dr. Mouse]

Re: It's time...

The problem is that, if the consequences were this serious, you would get something like "Follow the procedures in the handbook", followed by a visit and a verbal, untraceable instruction to carry on. The handbook will not have been written by said higher up, and disciplinary procedures would follow a refusal as, from what's written down, the employee is refusing a reasonable request.

"Just don't do it and take them to court for unfair dismissal" you say?

That takes someone very confident of their career and the case, especially taking the government to court. Not everyone has that kind of confidence.

[A.P. Veening]

Re: It's time...

That takes someone very confident of their career and the case, especially taking the government to court. Not everyone has that kind of confidence.

As the consequences of not following those orders are ultimately the same as of those following those orders, HMRC will very quickly be out of people to follow the orders given, so those higher up will face the music themselves sooner or later one way or another.

[macjules]

Re: It's time...

Thank you for a sensible comment, as opposed to the rest above.

[Twanky]

Re: It's time...

'HMRC were made to cover every last cost incurred by the people they're dragging into court. And then, like they like to do, add punitive penalties.'

...and HMRC get their money from where?

I do understand that those found to have been wrongly accused of tax evasion are aggrieved and have incurred expense defending themselves and so should be compensated. I also understand that the expense of defending themselves may deter some people from doing so - which is a further injustice. However, insisting that HMRC pays punitive penalties only increases the amount of the country's tax income not spent on the purposes it was gathered for - ie it's wasted.

HMRC does not ultimately make the rules. Lawmakers do - even if they delegate the authority. HMRC needs to be able to report back to the lawmakers where tax law is open to abuse - in either direction. Lawmakers should be held to account at the ballot box.

[Dr. Mouse]

Re: It's time...

Personally, I believe that ANYONE who is accused of a crime and is found not guilty should have their legal fees (and other expenses) reimbursed. My reasoning follows:

A person should not be punished for a crime they did not commit. However, the mere act of investigating them and taking them to court can constitute a punishment in itself. It costs a lot to defend yourself, takes time, causes stress etc. 2 people I know personally have had this happen to them: One successfully defended themselves but was left in a seriously tricky financial situation afterwards (which came close to bankruptcy and a family losing their home), as well as completely changing their life (the whole had to come back to the UK when they'd made a life for themselves in a foreign country). He had health problems caused by the stress of the situation, as did other members of his family.

The other, after dirty tricks were played over and over by CPS (delaying proceedings, which cost him a the fees of a barrister for a week each time) and he was on the verge of bankruptcy, decided that prison was the lesser of 2 evils and pleaded guilty even though he was provably innocent. He therefore spent time in prison for something he could have, if allowed his day in court in a reasonable manner, proved he was innocent of.

These 2 people were unjustly punished for crimes they did not commit. I have heard tell of many others. The very least the country could do is reimburse the legal fees and expenses incurred by those who suffer such injustice!

[JMiles]

"We will carefully consider the outcome of the tribunal before deciding whether to appeal." Clearly their comment wasn't reported correctly, I believe HMRC's spokesperson had said in fact: "We will bury our heads in the sand before deciding that further non-retrospective retrospective legislation is needed."

[Thrudd the Barbarian]

Is that a euphemism for a self administered colonoscopy?

[Anonymous Coward]

Ah...understanding rules....

HMRC.....the organisation which can illegally store the voice records of the citizens footing the bill....

*

.....but doesn't have the competence to understand its own rules.

*

Part of the government drive towards a STASI state? Surely not!

[PTW]

HMRC don't write the rules...

KPMG and PWC do

[Lotaresco]

Making Tax Digital

Before HMRC waste time chasing down individuals over imagined IR35 infringements they could do with spending some time sorting out the clustermess that is "Making Tax Digital". I can't see how HMRC got themselves to where they are with that. We're all supposed to be using accounting software supplied by major players (with amusing annual licence fee structures) or pay an accountant to do it on our behalf. Yes, some plucky individuals are supplying Excel sheets that will perform MTD submissions, but that's not helping any organisation with bespoke software or even the large number who don't use MS products.

No only that but the entire crock of manure seems to have come about for no good reason other than some propeller head at HMRC thought it sounded "cool".

[Anonymous Coward]

Re: Making Tax Digital

Groan......... It's all a big nightmare, forcing people to use commerical products , and for what purpose or benefit?

[dajames]

Re: Making Tax Digital

Is that what my accountant was wittering on about? I thought she said "Making Tax difficult" -- it certainly sounded that way.

Individuals are provided with a website to fill in their self-assessment tax returns. That means that they don't have to pay for a commercial tax package, and don't have to work out how to install or use a tax package (commercial or otherwise) -- most of us can use a website.

For PAYE, employers have to use a software package that can send employee tax data to HMRC in an approved format. For small companies (up to 10 employees, I believe) there is the option of HMRC's own "Basic PAYE" which is free and works -- even on Linux -- but I can't see any good reason why HMRC didn't provide a small company PAYE website, rather than releasing a software package; surely it would have cost less in development and support?

It would evidently not have been difficult enough.

[Phage]

All those opinions regarding avoidance vs evasion, and change the laws, handily ignore the fact that Governments are national and corporations are supra-national. This creates a race to the bottom, handily won by Ireland, Isle of Man and other havens.

The reality is that we cannot blame the law-makers for entities that are out of their control. The solution would require a UN equivalent of the HMRC and we know how effective THAT would be.

So yes, I do blame the management of the companies for their failure to recognise that their pursuit of profit, whilst legal, is entirely immoral and unethical. The public recognise unethical and inequitable actions when they see it. Even if they are in situations that are not covered by statute !

The problem lies with people (yes you DB) who tell us that we cannot blame the companies for acting unethically, because they are not compelled to. We should hold them to a higher ethical standard than HMRC Regs.

How can we do this ? Hard one... I have a few ideas

Public vote with their feet after name and shaming

Exclude companies domiciled in tax-havens from procurement processes in both Govt and Private sectors

Introduce turnover taxes for companies domiciled in tax-havens

Make lobbying by said companies a declarable interest

Co-ordinate with our EU neighbours on good-actor suppliers and vendors

etc etc

[codejunky]

@Phage

"So yes, I do blame the management of the companies for their failure to recognise that their pursuit of profit, whilst legal, is entirely immoral and unethical. The public recognise unethical and inequitable actions when they see it. Even if they are in situations that are not covered by statute !"

That is the same public ranging from cash in hand to using ISA to avoid tax? The same public who put hard earned money into a pension because the private business is far more reliable at pensions than the government alternative. And we are talking about a public who ranges from the most disastrous commie believer to the most disastrous righty believer and everything in between. Who have seen governments worldwide trash economies while increased globalisation and trade has made huge leaps in eradicating actual poverty in the world.

"The problem lies with people (yes you DB) who tell us that we cannot blame the companies for acting unethically, because they are not compelled to. We should hold them to a higher ethical standard than HMRC Regs."

But what hangman mob would be so ethical? Look at the idiots demanding more money from business but then crying they want jobs, and even some idiots demanding excessive minimum wages! The loud gum-bangers are the minority while the rest of us are happy with our improving lives. Hell even the loud gum-bangers would cry if their cushy world started taking away the very things they have become accustomed to.

"Public vote with their feet after name and shaming"

That is about all we can do, and people do. But its not enough for some people so more and more demands for 'transparency' are made for the people to see. And almost nobody cares.

I will say this voting with feet and shaming does cause a problem for SJW. Such behaviour is supposed to be rejected and looked down on.

"Introduce turnover taxes for companies domiciled in tax-havens"

Why? Do you own anything? Do you have private property? If the answer is yes then why is theft ok? If the answer is no then you may wish to move to a socialist country.

I assume you intend to reach a retirement age? If so then would you like to be on the welfare system or would you like to actually have something to live on when you get there?

[Spanners]

Re: @Phage

"The same public who put hard earned money into a pension because the private business is far more reliable at pensions than the government alternative."

It not that it is more reliable. It is more that it is harder for government 'reforms' to mess up. It is not limited to making me live in poverty once I have opted to live on my savings (old age pension).

I (hopefully) will, one day, collect whatever is left of state pension, occupational pension and a private pension scheme. None of them are adequate - even for someone who is not that far ahead of an average wage. Hopefully all 3 together will mean I can have the heating on sometimes!

[Twanky]

Public vote with their feet after name and shaming

Yes - that would be good.

Real question: have Starbucks UK suffered a measurable hit on revenue that can be attributed to being associated with unethical tax practices by the press? If so, then it shows naming and shaming works. If not, then I guess it shows the majority of the public do not care enough to even change the brand of coffee they drink.

However, the article is about IR35 which is more to do with individual's tax arrangements than trans-nationals'. Personally I was really pissed-off when a company I worked for 'hired' a bod who 'paid' himself by 'borrowing' money from a company in Dubai. IMO that's personal tax evasion.

[Velv]

Tax is complicated

Loving the over simplistic solutions above. If it really was "just as simple as..." as suggest above then don't you think they'd have fixed it by now?

It hasn't been fixed for two main reasons:

1. It is actually very difficult to write laws that are fair across all the business scenarios; and

2. There are sufficient rich people (and companies) exerting pressure to push the rules in certain directions to minimise their tax liabilities.

The current system is no longer fit for purpose in the world that we live. That doesn't mean it's going to be simple to change it and keep it fair. Changes will move the loopholes rather than close them.

[fishdog]

Re: Tax is complicated

No, tax is very simple. It can be as simple as a minus operation and its most complex operation is a fraction.

But there are many vested interests - politicians, lawyers, accountants, judges, HMRC bureaucrats, and general businesses - that profit from it being made ever more complicated, swamped in rules expressed in highly specialised jargon, and incredibly expensive to resist.

[graeme leggett]

Case load

"This is the fifth of six IR35 cases HMRC has lost since it made its disastrous changes to IR35 in the public sector in 2017"

Raises a question and supplementary questions.

How many cases have there been (how many are active at moment)?

How many have HMRC won?

How many have ended in a "settlement" rather than a win or loss?

[Anonymous Coward]

Substitute

I wonder if Kaye Adams could substitute someone else to present "The Kaye Adams Programme" which would be a clear indication of being outside IR35?

[fishdog]

Who writes the laws?

I'm shocked that so many commenters here think that the politicians write the laws.

I'm shocked that so many commenters here think that the big corporates don't write the laws.

So when people write things like "it's the job of the politicians to write the laws so that the big corporates pay taxes" i'm not sure whether to laugh or cry. In actual fact the politicians are paid by big business to rubber stamp the laws written by big business, In other words, their actual job is to approve laws written by big business, irrespective of what you think it says in your "unwritten constitution" ... and there is no way that big business will ever write laws to make them pay more taxes, although they may write laws that say they will under very highly specified circumstances ... that rarely, if ever, occur. A secondary part of the politicians' actual job is to make a lot of outraged noises about the abuses of the public purse committed by big business, while doing absolutely nothing effectual about ending those abuses.

Now this is an American example, but with minor technical differences in execution the biggest big business of them all - government - works on exactly the same principles in the UK as it does in the USA: https://www.youtube.com/watch?v=5tu32CCA_Ig

[Anonymous Coward]

Re: Who writes the laws?

"A secondary part of the politicians' actual job is to make a lot of outraged noises about the abuses of the public purse"... except when committed by themselves

[N2]

Very well done

Pint of champagne.

[RobertLongshaft]

Ah the BBC gravy train - Alan Partridge had it spot on.

The lefties and champagne socialists of the BBC want higher taxes for the wage slaves while they themselves escape using the IR35 loophole.

See Linekar and his £1,7m a year salary he pays 20% on.

[brianpope]

Revenue also EU’s forthcoming anti-tax avoidance rules

These new EU rules would be a step forward to preventing tax avoidance.

Naturally, many at the top driving brexit such as Jacob Rees-Mogg wanted an early EU exit to allow certain companies and individuals to continue to pay little tax. It's good business for big accounting firms and the top wealthy.

As to valid freelancers/consultants, these allow business the flexibility to hire as needed without long-term employee commitments. Businesses can be more flexible and respond to market needs quickly, leading to more efficiency.

Should the IR35 system continue to prevent genuine freelancers from offering services to business that want them, and preventing them from claiming reasonable business expenses themselves, the businesses will find themselves in a situation where said freelancers will demand higher remuneration to accept contracts, else demand usual benefits of employment - holidays, pension, long-term-stable-employment, promotion etc.

Revenue is killing businesses for the sake of a tiny % of few pounds to justify its existence, while at the same time hamstringing flexibility and competitiveness of British business.