Alaric wrote:By contrast to the thread title the Daily Mail has a piece where the opposite seems to apply.
https://www.dailymail.co.uk/money/taxbe ... phole.htmlThat's HMRC taking action against those who used schemes where they "borrowed" their remuneration on an interest free and non-repayable basis.
I am really struggling with the Daily Mail article. For 10 years I was a consultant/contractor and I was very well aware of the variety of the schemes available which grew in agressiveness over time offering more and more income almost tax free. When I started the going rate appeared to be that you would get about 85% tax free moving to about 98% for the most aggressive schemes when I finished contracting. It was plainly obvious to me that no matter what you were promised HMRC was not going to let people invoicing sometimes in excess of 150k a year pay keep £148k of it. It was also plain to my peers but many of them chose to use the schemes. There seemed to be alot of "everyone is doing it", "if HMRC objected these schemes wouldn't be offered", "how are HMRC going to catch up with me", "people earning far more than me think the scheme is OK", "it's being offered by a payroll company so it must be ok" and so on. I met plenty of contractors who would openly boasted about how little tax they were paying, many of whom spent it on a lifestyle they could not otherwise afforded.
I needed to sleep at night so I paid myself through PAYE and paid the same rates of tax and NI as an employee. Some of my peers told me I was a fool. What was most frustrating was that often contractors taking home 90% of their pay would undercut my daily rate.
So, I'm really struggling with those who now feel aggreived that HMRC are chasing them. Surely they must have understood that schemes ran through a third party which often involved loans to the employee in perpetuity or schemes involving invoicing through off-shore companies carried some level of risk HMRC would not be happy. There were many others involving disguised employment.
I suppose I have some sympathy with the age of some of the debt HMRC are chasing. If it takes more than seven years for HMRC to catch up with people then perhaps there should be some deal available. I suspect there probably is on a case by case bais if you have the ability to pay. I also have some sympathy that there will be a group of people who are not financially well educated, possibly not earning large sums who took these schemes on trust (because as the years went by they got offered not only to those invoicing large amounts but also to nurses, social workers etc.)
But we can't have a society where some people pay almost no tax and therefore contribute almost nothing to society but still use all the services that the rest of the tax payers contribute to. That's just wrong. There has to be some penalty.
We are back to "if it's too good to be true, it probably is", but how do we move to a society where someone (government) steps in sooner. After all, these schemes ran for 20 years or so and the government has some responsibility too. I could argue with myself over that one. HMRC started publishing IR35 guidance perhaps as long as a decade ago. Certainly I became concerned about in around 2011, thus paying myself through PAYE. I know most contractors just ignored it as it would mean they were worse off. Gradually some took it on board, mostly those who used an accountant to do their tax but when you are asking people to move from paying 2% tax to a marginal rate above 50% there would always have been some that stuck their heads in the sand and carried on regardless.