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Thousands of workers hit with massive tax avoidance bills.

The 2019 loan charge means ill-advised IT and NHS contractors face staggering bills from HMRC.



It is turning into one of the ugliest, most emotional and turbulent battles ever fought between the tax authorities and alleged tax avoiders. The Money pages of the Guardian have rarely seen such a huge volume of angry, heartfelt letters from people who describe themselves as normal families whose lives are being destroyed, they say, by huge and unfair demands from HM Revenue & Customs.

The battle is over the innocuously named 2019 Loan Charge. This measure is designed to claw back unpaid taxes by people who, HMRC says, used so-called disguised remuneration schemes since April 1999 – with the demands for repayment kicking in from this April.

For some, the bills are utterly life-changing. We spoke to one family whose bill is more than £400,000 – owed by a 56-year-old who worked in IT for years and who says his only option now is bankruptcy.
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Another IT worker said his estimated bill is £300,000. “I’m 54, have assets of £100,000 and earn less than £50,000 a year. I’ve already lost my partner due to the stress of this and have had suicidal thoughts. This will bankrupt me. All I did was follow advice and do what was the norm at the time. This all happened 10 to 20 years ago, and one of the clients at that time was HMRC.”

Not all were high-earning IT workers. We were contacted by a healthcare professional who was a locum in the NHS for two years. He said: “I was advised to sign up with an umbrella company by my agency [and] advised that they were fully compliant with HMRC, I would not have to worry about end-of-year paperwork because it was fully managed by them. There was never any mention of ‘loans’ at any point and I do not recall ever signing any paperwork agreeing to receiving my income through a loan.”

The person has been told they now face a tax bill of about £20,000.

So what were they doing that has resulted in such enormous bills? The heart of the issue is how contractors were paid using loans rather than salaries, thus sidestepping usual income tax and national insurance arrangements.

The schemes were hugely complex, but a simple example would be this. Let’s say the IT worker is hired for £3,000 worth of work. They are advised by their accountant to use an employee benefit trust (EBT), usually set up by a specialist company.

The £3,000 is paid not to the IT worker but to the EBT, which then pays it back to them in the form of a loan, after some deductions for their fees. There is no tax paid on the £3,000, and the idea is that there is a mutual understanding that the loan will never be repaid.

This is why HMRC calls it “disguised remuneration”. It’s also why many PAYE workers will have limited sympathy for the people receiving bills now, arguing that they were evidently sidestepping income tax.

HMRC has already contacted 40,000 people with loan charge demands, and in total it expects to pull in an extraordinary £3.2bn in tax. In its official guide to the loan charge, it says: “These loans are paid to people in such a way that means it’s unlikely that they’ll ever have to be repaid. In other words, the person receiving money from a loan scheme gets to keep it all. And they don’t pay any tax on this money, even though it’s clearly income. It’s highly unusual to receive your salary in loans and is clearly a method used to avoid paying tax.”

Such arguments enrage the people who have received the bills, who argue that they often had little or no choice when they were working as a contractor but to enter into these schemes.

They are astounded at the retrospective nature of the charges, often dating back more than a decade, long after their tax returns were officially closed, as well as HMRC’s refusal to accept reduced settlements, and what they say is their inability to challenge the charge.


Richard Horsley is co-founder of the Loan Charge Action Group. He says that many IT contractors such as himself fell into the loan schemes following measures at the end of the 1990s, known as IR35, to close tax loopholes used by some contractors.

“At the time, tax professionals and QCs came up with solutions where we went on to PAYE for a portion of our earnings, while another portion was a loan, which was not taxable. We asked if it was legal and were told yes. If we knew it was illegal we would never have allowed ourselves into it.”

He says in his case it meant that effectively 25% of his earnings went in deductions for tax, interest on the loans and the scheme promoter’s fees. But now he is subject to loan charges that effectively mean he will end up paying around 80% tax on his earnings for the period.

Another campaigner, who wished to remain anonymous, says: “We are just the fall guys. I was completely hoodwinked by the scheme administrators, and I feel that HMRC should have acted much, much sooner to advise me that these schemes were not legal. Genuinely naive contractors are being treated like horribly aggressive tax avoiders.” Why, he argues, is HMRC not going after the promoters of the schemes, many of which made millions, but have subsequently dissolved their companies?

Even the Low Incomes Tax Reform Group, which fights the corner for the low-paid and those on welfare, says in its guide to the charge that “some agency workers may have had little choice to participate in such schemes, if they wanted to work.”

‘With tens of thousands of people facing life-changing bills, it is vital that the loan charge is properly examined before it comes into effect.’ Ed Davey, Liberal Democrat MP. Photograph: Alicia Canter/The Guardian

Many MPs are now backing the loan charge workers. This week saw the launch of the all-party parliamentary loan charge group, chaired by Sir Ed Davey MP. He says: “There has been considerable concern raised about the loan charge by MPs and peers. With tens of thousands of people facing life-changing bills, it is vital that the loan charge is properly examined before it comes into effect on 5 April.”

Inside government, those in charge of collecting the levy see it very differently. Officials speak of an unprecedented campaign by those affected by the tax charge, talking darkly about how their social media accounts are bombarded with messages, how anyone who dares to defend the charge is attacked, and how HMRC workers have been individually targeted.

We asked HMRC to justify why it is reaching so far back in time for payments, and why it did not act earlier to stop the schemes – and the bills that have now racked up for contractors.

It says: “We’ve always been clear that these schemes do not work, warning against the use of tax avoidance schemes in the media and in publications such as our Spotlight series on gov.uk as early as 2009. HMRC have opened tens of thousands of inquiries into these schemes starting before 1999, making users and their representatives aware that their tax return was under investigation.”

It argues that the loan charge is not retrospective. It said: “It is unfair to ordinary taxpayers to let anybody benefit from contrived tax avoidance of this sort, and that is why the government has taken action to ensure that everybody pays the taxes they owe.

“The charge on disguised remuneration (DR) loans is not retrospective. It is a new charge, arising at a future date, on loan balances outstanding at that date. It does not change the tax position of any previous year or the outcome of any open compliance checks. Its announcement at budget 2016 provided scheme users with a three-year period to repay their DR loans, or to agree a settlement with HMRC before the charge takes effect.”

It denies that it is not chasing the scheme promoters. “Since the formation of HMRC’s fraud investigation service on 1 April 2016, more than 15 individuals have been convicted for offences relating to arrangements which have been promoted and marketed as tax avoidance schemes and sentenced to over 95 years custodial.”

Burned by suggestions that it is chasing low-income locum nurses and social workers, HMRC analysed the occupations of the people sent charge notices. “We estimate that of the 50,000 people affected, 3% are nurses and less than 2% are social workers.”
Ministers postpone bill debate to avoid likely defeat over tax havens.

MPs’ amendment would force crown dependencies to take action over money laundering.



Ministers have pulled a financial services bill from the House of Commons, fearing the government was almost certain to be defeated on an amendment requiring Jersey, Guernsey and the Isle of Man to clamp down on money laundering.

The Conservative MP Andrew Mitchell and Labour’s Margaret Hodge want the crown dependencies to introduce public share ownership records by December 2020, which the three territories resist.

Mitchell said the government had pulled the bill “in face of certain defeat” because it was backed by a group of rebel Tories as well as Labour and the other opposition parties. The former cabinet minister added, however, that the amendment would be put to a vote whenever the bill was resubmitted.

Hodge said the government had taken an “outrageous step” in pulling the bill because “they knew we commanded a majority. I hope the government will accept our proposals, but if not, we will continue to campaign for public registers.”

Anti-corruption campaigners believe public records of share ownership would restrict the use of anonymous offshore companies by terrorists, dictators, corrupt politicians and criminals.

An anonymously owned Isle of Man company was cited as being part of the “Global Laundromat” money-laundering scheme, a way for Kremlin insiders and well-known Russians to shift cash abroad.

Jersey, Guernsey and the Isle of Man, all major offshore financial centres, maintain they are self-governing territories and it is not for the UK parliament to dictate how they are regulated.

Downing Street indicated the bill had been pulled so ministers could study the constitutional implications for the three crown dependencies. It insisted the UK was committed to maintaining global tax transparency standards.

The shadow chancellor, John McDonnell, said pulling the bill was “more evidence that this government is incapable of getting its business through parliament. People have just had enough of the chancellor dragging his feet on tackling tax avoidance.”

Conservative MPs backing the amendment include the former chancellor Ken Clarke, the former Brexit secretary David Davis and the chairwoman of the Treasury select committee, Nicky Morgan.

A joint statement from Jersey, Guernsey and the Isle of Man welcomed the bill’s deferral and said it provided an opportunity for “meaningful engagement” with UK ministers, although it did not commit to public shareholder registers of beneficial ownership.

“We want to move forward in a way that does not breach the rule that the United Kingdom does not legislate for the crown dependencies on domestic matters without our consent,” they said.

“We are committed to exchanging adequate, accurate and current information on beneficial ownership to combat tax evasion, money laundering and corruption.”

Hodge and Mitchell succeeded in getting a similar amendment through the Commons against the government’s will in May 2018, forcing British overseas territories such as the Cayman Islands and the British Virgin Islands to introduce public registers of share ownership by 2020.

The government has sought to delay that to 2023, to give the territories more time to comply, but the amendment reasserts the original deadline of 31 December 2020. It is not clear when the bill will now be timetabled for debate.
Big banks including HSBC, Barclays and Bank of Ireland face £11bn bill for fuelling celebrity tax dodge schemes
Big banks including HSBC, Barclays and Bank of Ireland could face a bill of up to £11billion for their roles in tax avoidance schemes used by wealthy celebrities, The Mail on Sunday can reveal.

Lawyers and tax experts last night said they were building a war chest to sue a number of banks for creating the schemes or offering loans to investors who took part.

Newport Tax Management and CFS Capital, which are managing a class action against the advisers behind the Eclipse 35 film scheme, claim HSBC, Barclays and Bank of Ireland – along with other major banks – gave an air of respectability to more than a dozen schemes that were set up to avoid tax.

Under the arrangements, investors including actress Sienna Miller and sports personalities such as former England foootball star Wayne Rooney were told they were putting money into films, green energy projects or property in exchange for tax breaks. But the schemes were later deemed illegal and those who invested have been chased for unpaid tax by Revenue & Customs.

Some investors claim they were mis-sold and have sued the accountants who drew up the schemes. Now experts say the banks involved face the equivalent of a PPI-style scandal for the wealthy.

In its annual report last month, HSBC admitted that the impact of legal claims against it, if successful, could be ‘significant’.

Nick Wood, of Newport Tax Management, said that if banks are forced to pay compensation and legal costs, they could face a total bill of £11billion.

‘You could have borrowed £2million from a mainstream bank [to invest in these schemes] based on a one-page assets and liabilities statement – almost at the drop of a hat,’ he said. ‘These clients were persuaded to invest in something that appeared bona fide and afterwards were made to feel like pariahs.’

Rob Rutter, of CFS Capital, added: ‘It’s obvious that tax avoidance schemes were mis-sold on an industrial scale.’ Most of the schemes were sold to investors when City risk-taking was rife before the financial crisis. Some were genuine investments, but unscrupulous firms also created artificial structures to take advantage of tax breaks.

Often, investors’ money was never put into projects as advertised. One prominent example was Eclipse, which was created by a banker in HSBC’s UK Private Bank division. It offered 780 investors the chance to avoid tax by investing in a series of Disney films, including the second in the Pirates Of The Caribbean franchise.

Former England football manager Sven-Goran Eriksson and former Manchester United boss Sir Alex Ferguson are among those who were advised to invest.

Lawyers say investors were won over with promises of red-carpet events, film memorabilia and a cut of any profits. But in reality, the money was never invested in the films.

The scheme was deemed illegal by the Supreme Court in 2016, allowing for the Revenue to claw back the tax avoided, including that on the loans that went into the schemes.

This has led to investors, including pension funds, nursing heavy losses and being told to repay up to 20 times their original investments. Last week, The Mail on Sunday revealed Disney could become a target of legal action for its role.

According to Newport and CFS Capital, there are ten to 15 schemes similar to Eclipse alongside dozens of smaller ones, affecting thousands of investors. They say banks were instrumental in selling them.

Representatives for 248 investors in the Ingenious Media schemes have launched a lawsuit against HSBC, claiming it conspired to defraud them.

And last month, lawyers at Edwin Coe, which has been appointed by Newport, sent ‘letters before action’ to HSBC, Barclays and Bank of Ireland. The banks have 12 weeks to respond before formal cases are filed with the courts.

David Greene, head of litigation at Edwin Coe, said: ‘Prior to the crash, many banks were chasing the dragon of profit by any means, fuelled by commission-driven salesmen. Banks, however, only had an eye on their bottom line and there was widespread marketing of schemes that really did not fall far short of fraud. After the crash and fresh regulations, banks sought to clean up their act but had many skeletons in the cupboard that are only now being addressed.’

All three banks declined to comment. HSBC said in its latest annual report: ‘These matters are at very early stages. It is possible that additional actions or investigations will be initiated against [HSBC Private Bank UK] as a result of its historical involvement in the provision of certain film finance-related services. Based on the facts currently known, it is not practicable to predict the resolution of these matters, including the timing or possible aggregate impact, which could be significant.’

Other schemes are also in the spotlight, with Newport taking an interest in the Elysian Fuels partnerships, which were meant to lead to investments in a renewable refinery and technical centre in Grimsby and a bioethanol plant in the US.

Another is the Omega fund, which promised to invest in hotels, golf courses and homes in Montenegro. But it was later found that in most cases, the land had not even been bought by the fund’s creators. The Revenue clamped down on the scheme in 2015.

Other celebrity investors include David and Victoria Beckham, Robbie Williams and Gary Lineker. It is not known if any of them are involved in the current lawsuits.
More than £100 billion of UK property is secretly owned.

Analysis by Global Witness shows 87,000 properties – 40% of them in London – are anonymously owned by firms registered in tax havens.



More than £100bn of property in England and Wales is secretly owned, new analysis suggests. More than 87,000 properties are owned by anonymous companies registered in tax havens, research by the transparency group Global Witness reveals.

The analysis reveals that 40% of the properties are in London. Cadogan Square in Knightsbridge, where the average property costs £3m, hosts at least 134 secretly owned properties. Buckingham Palace Road is also home to a large number, with a combined estimated value of £350m.

The revelation comes as parliament’s joint select committee on the draft registration of overseas entities bill meets on Monday to hear evidence on the impact of property ownership by anonymous companies.

The government committed to introduce a register of UK property owners at its anti-corruption summit in 2016, but since then progress has been slow.

“It’s increasingly clear that UK property is one of the favourite tools of the criminal and corrupt for stashing and laundering stolen cash,” said Ava Lee, senior anti-corruption campaigner at Global Witness.

“This analysis reveals the alarming scale of the UK’s secret property scandal.”


The combined value of the properties was at least £56bn, according to historical Land Registry data at the time of their acquisition. Once inflation is factored in this would exceed £100bn.

Some 10,000 of the properties are in Westminster, while almost 6,000 are in Kensington and Chelsea. Camden is home to more than 2,300 of the anonymously owned properties while almost 2,000 are in Tower Hamlets.

Global Witness says its investigations have shown how criminals and corrupt politicians use the UK property market to hide or clean dirty cash, and to secure safe havens for themselves and their families.

In 2015 it revealed how the mystery owner of a £147m London property empire owned via a network of offshore companies could be linked to a former Kazakh secret police chief accused of murder, torture and money-laundering.
Power and wealth writes the rules, there will never be fairness until we get whole new breed of politician that doesnt put him/her self above the constituents with entitlements and titles
Inheritance tax loopholes allowing super-rich to pay lower rates.

Analysis shows estates worth £10m or more paid an average of 10% tax.


The UK’s super-rich pay half the rate of inheritance tax paid by the merely very rich, according to an analysis of HMRC data that throws fresh focus on how billionaires’ advisers use a “kitbag” of tricks to reduce heirs’ tax bills.

Estates worth £10m or more paid an average of 10% tax to the exchequer in the 2015-16 tax year compared with an average 20% tax paid by estates worth £2m-£3m, according to data released by HMRC following a freedom of information request by asset manager Canada Life.

The law states that estates should pay 40% tax on assets above £325,000 – or above £450,000 if the family home is given to children or grandchildren. But Neil Jones, the market development manager at Canada Life, said the richest of the rich often did not pay anywhere near that rate because they had access to “a myriad of potential solutions in an adviser’s kitbag to help mitigate IHT [inheritance tax]”.

“This difference in the net tax rates paid by estate isn’t always down to the value of the estate or the different type of assets held in an estate,” Jones said. “It’s often about a willingness to plan.”

The heirs of the late sixth Duke of Westminster paid no inheritance tax on the bulk of his £8.3bn family fortune following his death in 2016. Probate records show that Gerald Cavendish Grosvenor, who died aged 64 in August 2016, left a personal estate of £616,418,184 after payment of debts and liabilities.

The rest of his wealth had already been transferred to family trusts which largely passed on to his son Hugh, 28, without incurring inheritance tax. His son also inherited the title, becoming the seventh Duke of Westminster and the world’s 108th richest person with a £9.2bn fortune, according to estimates by Bloomberg Billionaires

The Resolution Foundation thinktank has been campaigning for a radical shakeup of the inheritance tax system to make it fairer for those inheriting smaller sums. Its research director, Laura Gardiner, said the findings showed that “inheritance tax is no longer fit for purpose”.

She said: “Inheritance tax has both a terrible record of raising revenue, despite record levels of wealth across Britain, while still being widely despised, even by people who are never likely to pay it. At the very minimum, there are billions of pounds of worth inheritance tax loopholes that need to be closed. But ultimately we should scrap inheritance tax altogether and replace it with a far fairer lifetime receipts tax [cumulative across a person’s life], which would be harder for the super-wealthy to avoid.”
Even the French are getting in on the act ?

Close friend of billionaire mogul who pledged €100m to restore Notre Dame says the donations should be 90% tax deductiblewhich would land French public with almost all the bill.

French billionaire François-Henri Pinault, who owns firm behind Gucci and Yves Saint Laurent and is married to Salma Hayek, pledged €100m to Notre Dame.

His long-time friend and advisor, former culture minister Jean-Jacques Aillagon, said such gifts should be tax deductible.

The effect of such a policy would be to shift most of the bill to French taxpayers.
UK and territories are " Greatest enabler " of tax avoidance, study says.

UK’s " Tax haven network " ranked among top 10 in corporate tax haven index.


The UK and its “corporate tax haven network” is by far the world’s greatest enabler of corporate tax avoidance, research has claimed.

British territories and dependencies made up four of the 10 places that have done the most to “proliferate corporate tax avoidance” on the corporate tax haven index.

The UK ranked 13th on the list, which was published by the Tax Justice Network on Tuesday.

The shadow chancellor, John McDonnell, said the findings showed the government’s record on tax avoidance was “embarrassing and shameful”.

McDonnell added: “The only way the UK stands out internationally on tax is in leading a race to the bottom in creating tax loopholes and dismantling the tax systems of countries in the global south.

“The rot has to stop. While Tory leadership hopefuls promise tax giveaways for the rich, a Labour government will implement the most comprehensive plan ever seen in the UK to tackle tax avoidance and evasion.”

A government spokesman said tackling tax avoidance was a priority and the UK had “been at the forefront of international action to reform global tax rules”.

The index scores each country’s system based on the degree to which it enables corporate tax avoidance, combined with the scale of its corporate activity, to determine the share of global corporate activity put at risk of tax avoidance by the country.

At the top of the list was the British Virgin Islands, followed by Bermuda and the Cayman Islands – all British overseas territories.

Jersey, a crown dependency, was seventh on the list behind the Netherlands, Switzerland and Luxembourg, with Singapore, the Bahamas and Hong Kong completing the top 10.

The network said that through its network of satellite jurisdictions, the UK bore the lion’s share of responsibility for the “breakdown of the global corporate tax system”.

It added: “The UK, with its corporate tax haven network, is by far the world’s greatest enabler of corporate tax avoidance and has single-handedly done the most to break down the global corporate tax system, accounting for over a third of the world’s corporate tax avoidance risks.

“That’s four times more than the next greatest contributor of corporate tax avoidance risks, the Netherlands, which accounts for less than 7%.”

The index covers 64 jurisdictions and is based on a corporate tax haven score reflecting how aggressively they use tax cuts, loopholes, secrecy and other mechanisms to attract multinational activity; and a global scale weight, reflecting how big a player is in cross-border activity, the network said.

Eight out of the 10 jurisdictions whose systems received the highest corporate tax haven scores for enabling avoidance were part of the UK network of territories and dependencies, the Tax Justice Network said.

These were the British Virgin Islands, Bermuda, the Cayman Islands, Turks and Caicos Islands, Anguilla, the Isle of Man, Jersey and Guernsey.

The Tax Justice Network said the scale at which jurisdictions have enabled corporate tax avoidance risks to entice multinationals has made countries’ corporate tax rates “meaningless”.

It warned this had also triggered a “race to the bottom” that would further deplete tax revenues.

Alex Cobham, the Tax Justice Network chief executive, said a handful of the richest countries had waged a world tax war “so corrosive it had broken the global corporate tax system beyond repair”.

The network called on governments to introduce a single tax approach that would fully align multinationals’ taxable profits with the location of their economic activity.
The wealthy businessman who paid just £35.20 in tax.

A wealthy businessman who lived a life of luxury paid just £35.20 income tax, a BBC investigation has discovered.


Frank Timis rented a £14,000-a-month penthouse and spent thousands dining in London's finest restaurants.

But his personal tax return for 2017 shows he paid just £35.20 in tax, after claiming that he had hardly any income from his worldwide business empire.

Mr Timis's lawyers say he has fully complied with all of his tax obligations.

Documents leaked to BBC Panorama and Africa Eye also reveal how Mr Timis managed to do this.

They show that in 2017, Mr Timis received payments totalling £670,000 from his offshore trust.

These were mainly payments called distributions, which should have been taxable. But shortly before he submitted his tax return, Mr Timis allegedly asked the trust to turn the distributions into untaxable loans.

A backdated loan agreement was created making the loans look legitimate.

John Christiansen, from the Tax Justice Network, said it looked like Mr Timis was dodging tax: "It all points to this being a manoeuvre to cheat the tax man. And, if that is the case, because it's been done retrospectively, there seems to be prima facie evidence that this is tax fraud and it should be investigated."


Leaked documents

The BBC investigation has also spoken to the man who ran the trust that helped Mr Timis with the apparent tax dodge.

Philip Caldwell is named as chairman at the meeting in Switzerland that agreed to backdate the suspicious loans.

His signature is on the minutes, but he says the meeting never happened and that the minutes of the meeting are fake: "It has my signature on it but what I can say is that no such meeting ever took place. I wasn't there. I wasn't in Switzerland at the time."

The leaked documents also suggest that Mr Timis didn't pay a single penny in UK income tax in 2016.

Mr Timis's lawyers say the allegations are denied in the strongest possible terms: "Mr Timis has fully complied with all of his tax obligations and at all stages has taken professional advice to ensure that he has done so."

The Romanian businessman is no stranger to controversy. He has two convictions for supplying heroin in the 1990s and has been involved in a series of failed mining ventures in Africa.

Frank Timis has floated two mining companies on the junior stock exchange in London.

One of them - Regal Petroleum - was hit with the exchange's biggest ever fine in 2009 after misleading investors about an oil discovery.

Regal Petroleum told investors it expected to find oil in Greece, even though it knew the well in question was dry.

Mr Timis's lawyers said he only held a minority stake in Regal and was not on the board at the time the company received the fine.

They said: "Mr Timis was personally investigated and cleared by the FCA in relation to his role in Regal Petroleum."



One of the truely classic ways ... of avoiding domestic tax.

One of the founder's of such schemes ?

Non other than Meyer Lanksy ... known as the " Mob's Accountant " in the early part of the last century in the U.S.A.

That's not , of course , suggesting for one minute that the monies in those offshore accounts were gained illegally !

Or , the offshore bank was , itself , was acting as a " Laundrette. "

We can all leave that to The Eye ?
HMRC outlay on Amazon over six times what firm paid in corporation tax – GMB.

UK tax authority spent £11m to use online giant’s web-hosting services in 2018, says report.



https://www.theguardian.com/technology/ ... on-tax-gmb


I hope OUR TaxMan got a good discount ... for cash ???