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The longer answer is as follows:
1. The question presupposes that the victims of the loan charge were given a real choice as to the nature of the payments they were receiving. ...
1. The question presupposes that the victims of the loan charge were given a real choice as to the nature of the payments they were receiving. ...
2. Comparison with full PAYE and NIC is not fair because these taxpayers would ordinarily have been working through their own companies and legitimately paying corporation tax and receiving dividends which attracted higher rate tax.
3. The only reason that companies were not engaged was because of the real risk of an IR35 investigation. Even though such investigations would be likely to have concluded in the worker's favour that would probably have been after a lengthy and expensive Tribunal process.
4. It is hardly surprising that contractors would have sought alternative arrangements which avoided the risk of such an investigation. If then told that those arrangements were compliant with the law and HMRC were aware of them, that sounds like a very good reason to adopt them.
5. The comparison is to someone duped by a fraudster into sharing bank security details. I might not make that mistake and you might not either. But hindsight does not mean we should not be sympathetic to a victim's plight.
6. The so-called tax savings are based on the assumption that PAYE/NIC would have applied. But as noted above, that is not usually the correct starting point.
7. Plus these "savings" were swallowed up in fees by promoters because, to contractors, the benchmark figure was the income that would have arisen had the company option still been available. Indeed, contractors would have been better off taking their chances with IR35.
8. Finally, given complete inaction by HMRC for over 10 years, the average participant might be forgiven for thinking that HMRC had no objections to the arrangements.
9. My view is that where HMRC have an open enquiry/timely discovery assessment, then the taxpayers should be entitled to their day in court and the truth will then come out. In other cases, HMRC have just missed their chance.
10. To summarise, yes I think that the victims of the loan charge deserve our sympathy. To say otherwise smacks of smugness, naivety or heartlessness (or a combination thereof).
I hope I have answered your question.
I hope I have answered your question.
