Tag Archives: EBT

Why It’s Nonsense to Say “Rangers Won the Tax Case So the SPL Should Drop Its “Witch-Hunt”!”

The First Tier Tax Tribunal decision which was issued during the week, and which can be found here, was a surprise to many. The decision was a majority one and the dissenting opinion was based on an entirely different interpretation of the law. In light of the National Audit Office report published coincidentally this week, and about which I wrote a couple of days ago, criticising HMRC for its failure to deal properly with avoidance cases, I would now expect there to be an appeal, despite my original view being different.

This piece though is about the relationship between the FTT and the SPL Independent Commission under Lord Nimmo Smith.

Surely, comes the cry from many in the media, and from supporters of Rangers, the SPL Commission must be abandoned? After all, goes the argument, the FTT decided that Rangers were not guilty of anything. How can the SPL Independent Commission arrive at a conclusion which is different?

The short answer is that it can, but as my regular reader knows, I don’t generally do short answers.

To consider the question properly, we need to look at the questions each panel is looking at. Continue reading

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Filed under Football Governance, HMRC v Rangers, Rangers, SPL

The National Audit Office Criticises HMRC for Handling of Alleged Tax Avoidance Cases – And Says It Needs to Do More!

The National Audit Office (NAO) scrutinises public spending on behalf of Parliament.

Its audit of central government has two main aims.

According to the NAO website:-

“By reporting the results of our audits to Parliament, we hold government departments and bodies to account for the way they use public money, thereby safeguarding the interests of taxpayers. In addition, our work aims to help public service managers improve performance and service delivery.”

The NAO itself was one of the Thatcher Government’s creations in 1983, as part of her “war” with the Civil Service. Whilst the National Audit Act started as a Private Member’s Bill, it was seen as being a device by Mrs Thatcher to try to wrest some control of Government Departments back into the hands of politicians, rather than having the reins held by the real-life Sir Humphrey Applebys who manned (and it usually was “manned”) the Civil Service.

The Act also created the Public Accounts Commission, to oversee the NAO, perhaps to ensure that the undoubted independence of the NAO was not taken too far.

Yesterday the NAO released a new report which can be found here.

The Comptroller and Auditor-General, Amyas Morse, was quoted saying:-

Mr Amyas Morse, Edinburgh-born Comptroller and Auditor-General

“HMRC must push harder to find an effective way to tackle the promoters and users of the most aggressive tax avoidance schemes. Though its disclosure regime has helped to change the market, it has had little impact on the persistent use of highly contrived schemes which deprives the public purse of billions of pounds.

“It is inherently difficult to stop tax avoidance as it is not illegal. But HMRC needs to demonstrate how it is going to reduce the 41,000 avoidance cases it currently has open.”

The report summary goes on to say:-

The tax avoidance disclosure regime introduced in 2004 by HMRC has helped the department make some important headway in reducing the opportunities for avoidance. However, there is little evidence that HMRC is making progress in preventing the sale of highly contrived tax avoidance schemes to a large number of taxpayers.

In each of the last four years, over 100 new avoidance schemes have been disclosed. While HMRC believes most of these would be defeated if tested in the courts, there is no evidence that their usage is reducing.

Today’s National Audit Office report recognizes, however, that DOTAS has helped HMRC to change tax law and prevent some types of avoidance activity. Since the introduction of the regime, HMRC has initiated 93 changes to tax law designed to reduce avoidance. DOTAS has also helped to change the market of tax avoidance schemes, and the larger accountancy firms are now less active in this area.

Tax avoidance is not illegal and is therefore inherently difficult to stop. A potential avoider can use a scheme to gain a tax advantage until HMRC can prove that the arrangement is not consistent with tax law. This is a resource-intensive process which can take many years and often requires litigation.

HMRC has increased its focus on the tax affairs of high net worth and affluent individuals. While its high net worth unit set up in 2009 brought in £200 million of revenue that would otherwise have been lost in 2011-12, there are still 41,000 open avoidance cases relating to marketed schemes used by individuals and small businesses, and HMRC has yet to demonstrate how this number will be reduced.

The large number of users of mass-marketed schemes presents a challenge to HMRC. It has identified around 30,000 users of ‘partnership loss’ schemes and disguised remuneration schemes. It has sought to tackle such schemes by litigating a few ‘lead cases’ to demonstrate to other users that the scheme will not succeed in the courts. While HMRC has a good success rate when it litigates, its investigations can take many years to resolve and it cannot always successfully apply the rulings in lead cases to other cases.

HMRC has an anti-avoidance strategy, but does not monitor its costs and has not yet identified how it will evaluate its effectiveness. This limits its ability to make informed decisions about where to direct its avoidance activity.

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Let’s make a quick checklist of the main points, shall we?

  • HMRC must push harder to find an effective way to tackle the promoters and users of the most aggressive tax avoidance schemes.
  • Highly contrived schemes which deprive the public purse of billions of pounds.
  • Little evidence that HMRC is making progress in preventing the sale of highly contrived tax avoidance schemes.
  • A potential avoider can use a scheme to gain a tax advantage until HMRC can prove that the arrangement is not consistent with tax law.
  • This process can take many years.
  • It often requires litigation.
  • There are still 41,000 open avoidance cases relating to marketed schemes used by individuals and small businesses.
  • HMRC has identified around 30,000 users of ‘partnership loss’ schemes and disguised remuneration schemes.
  • It has sought to tackle such schemes by litigating a few ‘lead cases’ to demonstrate to other users that the scheme will not succeed in the courts.
  • HMRC has a good success rate when it litigates.
  • But its investigations can take many years to resolve.
  • HMRC cannot always successfully apply the rulings in lead cases to other cases.

That report and the undoubted criticism that HMRC will get for not doing enough to bring in the billions of pounds of tax income to which this report relates are likely to have an effect on how the tax recovery strategies framed by the taxman are revised.

I suspect that this is probably the worst time for a high-profile and high-value case relating to allegedly artificially constructed disguised remuneration schemes to have been decided against HMRC by a split First Tier Tribunal, especially where there are reputed to be many thousands of those cases still open, with billions of pounds at stake.

It would seem to place a great deal of pressure on HMRC to take such a case, should there be one, to appeal, even if only “pour encourager les autres”.

However, I can’t immediately think of such a case off the top of my head.

If there was, then the allegedly delinquent taxpayer might have to put his celebratory champagne back on ice for a few weeks until time for appeal has come and gone.

But we don’t know of anyone in that position, do we…

Posted by Paul McConville

264 Comments

Filed under HMRC, Uncategorized

Slightly Longer Thoughts on the Rangers Tax Victory

Over at Scotzine.

Click on this link here.

More detailed analysis to come – and undoubtedly more magnanimity from the delighted supporters of a team presently below Albion Rovers in the league structure!

🙂

However the headline treatment of the decision means that it will not be a distraction from the massively over-subscribed flotation of the company which owns the club, or the company which owns the company which owns the club or the company …

Oh, I should say that the school musical evening last night was fantastic, and a credit to the school and to every one of the singers and musicians who took part.

Posted by Paul McConville

349 Comments

Filed under HMRC v Rangers, Me at Scotzine

The SPL Commission and Rangers – Debunking Myths and Legends – Part 1

Lord Nimmo Smith’s Independent Commission appointed to determine the guilt or innocence of Rangers (oldco and “club”) in connection with four disciplinary charges was due to sit in the coming week, but has been delayed due to the involvement of Rod McKenzie, partner in Harper MacLeod, in a serious road accident.

The reaction to this from the unofficial Rangers side of the fence has been to question why there should be a delay, whilst at the same time disputing the need for the hearing at all. Later I will look at the misconceptions being voiced regarding the postponement, but first I wanted to look at some of the errors about the whole matter.

These are either innocent mistakes, and in that case I hope this exposition helps those who are confused, or deliberate obfuscation, whataboutery and red-herring sowing. It is noticeable that amongst the Rangers supporting bloggerati the same common themes on this issue are raised regularly. I do not suggest that there is a united plan or “conspiracy” regarding this. However it does seem that a number of the observers have taken the same opinions to heart and seek to disseminate them at every turn. Continue reading

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Filed under Charles Green, Football Governance, Rangers, SPL

Rangers Statement Today – “Big Tax Case? Nothing To Do With Us Mate!”

How about a quick pop across to Rangers.co.uk?

Yes?

Okay then – here we go! (With my comments in bold)

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THERE has been growing speculation recently that an announcement from the First Tier Tax tribunal is imminent.

The Club has no knowledge of when such an announcement will be made. However, the Club as it now stands as part of The Rangers Football Club Ltd. has been informed by Her Majesty’s Revenue and Customs that any decision by the First Tier Tax Tribunal will not affect the operations of The Rangers Football Club Ltd.

I like the repeated references to “the club”. Just to make absolutely clear that the club exists, then, now and forever. Nothing to do with the “holding” company, so-called. Continue reading

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Filed under Charles Green, Football, HMRC v Rangers, Rangers