Anyone who has seen the film Minority Report will understand the concept of punishment for a crime before it has happened based on the visions of the thought police. A thought provoking fantasy, one would think, without any basis in reality…….until now.
It is common knowledge that HMR&C are currently exploring the many uses for retrospective tax legislation; a number of MPs have loudly damned the practise following large tax bills received as a result of the expenses scandal.
Hundreds of UK contractors have also been on the receiving end of restrospectively applied tax demands as a result of BN66, legislation introduced to prevent tax avoidance through the use of offshore trust schemes. According to the biggest UK contractor forum many are facing bankruptcy, the loss of their homes and the breakdown of their family life as HMR&C pursue them for tax liabilities calculated for up to seven years before introduction of BN66.
One would think that things could not get any worse but a report in the Telegraph on 19th October proved that BN66 is just the tip of the restrospective iceberg. New guidance given by HMR&C to tax inspectors seeks to give a clearer definition of tax avoidance. The result is an exponential increase in power for the Revenue accompanied by a new threat to those tax payers not in possesion of a crystal ball. The key passage states:
“One definition (of avoidance) is ‘a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question”
So not only does the UK tax payer have to consider current legislation it also has to consider restrospective legislation – it appears in the future we could also have to face tax penalities as a result of legislation that doesn’t actually exist. A scary thought!
For more information on the BN66 legislation please visit http://www.contractorumbrella.com/bn66.html. You can contact a member of ContractorUmbrella on 01206 713 680 or email us at info@contractorumbrella.com.
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