I gave not redacted full decision in what will now inevitably be called the Chris Moyles tax case. I have read parts. It seems that this Guardian summary is fair:
Moyles, who billed himself as the "saviour of Radio 1" before he quit as presenter of the breakfast show in 2012, claimed to have run up £1m of losses selling £3,731 worth of used cars. He tried to offset the claimed £1m loss in the 2007-08 financial year against tax he owed on his other income, including an estimated £700,000 salary from the BBC, which is funded by licence fee payers.
What happened was that Moyles was sold a tax avoidance scheme, apparently by one adviser but which was created by another adviser. About 450 were sold the scheme. Supposedly the people in question traded in second hand cars. As a result it was claimed they borrowed money. Costs relating to those loans were artificially inflated using arrangemnts that involved BVI companies. The whole arrangemnt lacked any commercial substance according to the tax tribunal decision now made. The losses have now not been allowed for tax purposes and tax will be due.
Moyles will suffer considerable embarrassment as a result if this, and so he should. He went out of his way to save tax and his instincts must have told him the scheme was artificial. He should have realised that this had to be abusive. He has revealed his own greed and that he believes his own self interest comes above any obligation to the society of which he is a member. People won't like that.
But the truth is that it is the advisers who are most at fault here. A now notorious firm of advisers created these schemes and others sold them. Moyles was foolish but these advisers knowingly created and sold tax risk with the intention of undermining the tax revenues of the UK. I believe that this should be a crime.
The creation of tax risk - a knowingly uncertain tax position created with the main or sole aim of securing a gain - can be defined. The taking of advice on the risk is the evidence of intent. It is quite distinct from the taking of advice to mitigate risk in a commercially existing situation, which is an entirely reasonable thing to do. There is no risk of confusion. And the process of sale - whether externally to clients or internally by the creation of structures within a group if companies - is identifiable. This makes all the triggers for a crime prosecution achievable.
I would hope the whole tax profession would support the creation of such a crime; we can do without people creating and selling such risk.
NB Thanks to David Quentin for ideas on tax risk
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I don’t see the problem. The scheme was developed, I assume disclosed under DOTAS, and then ruled as junk using existing powers so the tax will be paid. Although any scheme that requires you to tell HMRC you are a used car dealer when you aren’t using a famous name is clearly something to stay clear of!
I think it is fair to say from your comments on other sites that you don’t see or understand a great deal, and that is your problem
There is an existing offence of “cheating the revenue” – the question is why HMRC don’t prosecute some of these very aggressive schemes, given that few if any advisers would say they could ever had worked. I suspect the answer is that their history of high profile prosecutions is poor and they prefer to get an easy win and claim civil penalties. This seems to me shortsighted – a few prosecutions of Moyles and people like him would kill off this rather nasty little industry.
Because the case was disclosed and failed I ma not sure that there is any realistic chance of that course of action being pursued
Isn’t dishonestly making false representations to save yourself money a Section 2 fraud?
If so (and only a court can decide if something is ‘dishonest’) aiding and abetting is a common law offence, conspiring to defraud is a statutory offence and encouraging or assisting a fraud is a statutory offence.
Personally, I don’t see why Chris Moyles shouldn’t be nicked, it’s a lot of money he tried to con HMT out of. A jury can decide whether claiming to be used car dealer to HMRC when you are not a used car dealer is ‘dishonest’ or not.
Hopefully, “Conspiracy” is still a viable option for the DPP?
To a simple person this is just fraud and should be dealt with accordingly. The “advisors” were promoting fraud and therefore conspiring to defraud the state. Of course they will have wrapped this scheme up in such a way that a straightforward conspiracy to defraud may not apply, and expensive lawyers can apparently turn black into white, but in the end, the claimant or his representative knowingly made a false statement to avoid paying his due tax and paid accomplices to aid and abet them.
If it is not criminal, what is?
To be criminal there has to be a crime
I am suggesting that crime be created
The trouble is we continue to believe avoidance is legal
It is that belief that has to be changed, by law
We don’t have to ‘believe’ that “tax avoidance” is legal – it’s an undeniable fact. It’s tax evasion that is illegal – amazing that you are still confusing the two, yet consider yourself to be a “tax expert”…
I am not in the slightest bit confused
First the line between the two is very grey and most taxmprofessionalscsay it is clear
Second I am arguing selling avoidance should be made illegal. If I thought it was illegal now I wouldn’t do that
Maybe you should learn to appraise an argument
I really do have a problem with calling any tax avoidance, contrary to the reasonable intention of the lawmakers, “legal”. This gives those who pedal dishonesty a comfort zone. I am afraid the best I can say about such avoidance is that it is “not illegal”: a subtle but useful distinction.
I agree with you
Much more to come on this soon
I think his advisors should be put into a cell and made to listen to his shows. For Life.
I never have suffered that punishment
I suspect one would seem like a life sentence to me
Will there be a penalty paid? And if so how much is it usually as a fraction of the original bill?
Because legal opinion was secured that the scheme was legal if is unlikely that any significant penalties will be due, if at all
How is this tax avoidance and not tax evasion? £3,731 (one car) of revenue for £1million costs, yet Moyles doesn’t enquire as to what’s happening in the business? To any layman, this is evasion.
You might think that
I think that the Tribunal decision agrees with you
This was blatant tax evasion not tax avoidance.
I have read the case decision now
I think it comes as close as it can to saying that
Having been a practising chartered accountant before I retired, I always found these sort of schemes totally undesirable. Certainly they are immoral. But quite apart from that, firstly they rarely work, secondly the total costs accountancy and legal, if you factor in approving the schemes and subsequently defending them and answering all HMRC’s queries in the subsequent enquiry, take away much of the claimed savings, last but not least, the strain of the roughly six year period before the scheme and the tax case is horrendous.
I agree
If eminent QCs are blessing these schemes when they’re being designed, then I’m afraid the legal profession needs to take a long hard look at itself.
Or be prosecuted – hence my proposal
This is a very extreme case. It just so happens that the “advisors” are a small firm called NT. As the article says this stands for NO TAX!!!!
I can’t remember exactly since when advisors are supposed to file their schemes with the Revenue and since when we all, on our tax returns, have to indicate whether we have used any of these schemes. I am sure that most of have have never done so, at least not me…
NT is known as one of the worst perpetrators of supposedly legal cases… The BBC splashed their name widely a few months ago with some stupendous pension schemes.
Now it is not difficult for the Revenue to get after the people who have used such schemes. It is an offence not to declare them and the sellers of these schemes are known. So, even if the schemes are “legal” the people having used them should all get thoroughly investigated. They are the ones who may also have done other stuff. You do not use such schemes without knowing you are on or beyond the acceptable.
At the end of the day, and I do not understand how the tribunal has no power to act here, any scheme must have some materiality. One can argue on Google or even Starbucks. TPAs are always in the grey. I have negotiated a TPA with E&Y for 5 yeas between me and a US company. Of course I optimised a little here and there and they gave in a bit etc… No big harm done, as tax got paid. And the services on both side of the pond were real and no one would ever have been able to determine exactly whether it was a 55/45 or 45/55 quota to be allocated to either side. There was MATERIALITY.
Tribunals should look at materiality. If there is none, then there is no doubt it is tax fraud. And a QC issuing a legal opinion is legally more at fault than the accountants. He is supposed to be the higher authority. Strange actually. Richard bitches about the accountants so often, but I can’t remember him castigating the QCs. Maybe one should look into them a little closer!
(I am not inferring in any way or form that Richard is protecting the QCs by the way!)
The ruling did look at materiality – very specifically
And I have always included layers in the Pinstripe Mafia
Richard Murphy said:
“Second I am arguing selling avoidance should be made illegal”
Why should promoting schemes in accordance with the tax rules (i.e. avoidance)be made illegal?
I guess you mean “selling evasion should be made illegal”.
That would make sense and I would think most people would be sympathetic with that.
No; I mean avoidance
Except I would call it tax risk
This is a theme I will develop
No one should sell evasion now, so suggesting it be made illegal is meaningless
What do you call legally structuring your affairs in compliance with the law to minimise the amount of tax you pay?
Most people would call that (legitimate) tax avoidance.
Minimising is not the issue for 99.9% of people. Rational people do not minimise tax.
The aim is to minimise tax risk whilst paying no more tax than is reasonably required – a compromise position
That is called tax compliance
“Except I would call it tax risk”
Most people call it a pension.
The next biggest tax avoidance scheme is called ISAs, expanded under your favourite Chancellor.
ISAs are never tax avoidance
Tautologically impossible for them to be so
With all due respect, since ISAs allow to receive exactly the same income that one would otherwise receive from investments without paying tax, my English teacher (who insisted on teaching even mathematicians and scientists to write correct grammatical English) would describe that as legal avoidance of tax.
You let yourself down and weaken the effects of your arguments by appearing to confuse avoidance and evasion.
Please, with respect, do not make yourself look stupid
Of course I am not confusing avoidance and evasion
But avoidance involves tax risk and there is no tax risk in an ISA so it us 100% tax compliant
It is tax compliance not avoidance
“He has revealed his own greed and that he believes his own self interest comes above any obligation to the society of which he is a member. People won’t like that.”
Sadly, Richard, in today’s climate many people will like it as scamming the system with motives of excessive greed gets the approval of the public. Moyles will be seen as a ‘cheekie chappie’ who has celebrity status – people smile at this and now worship celebrity thugs. On the other hand, someone on JSA who is caught earning a bit of cash to get a pair of shoe is treated like a major criminal. The moral compass has lost magnetic north in our country.
The Working Wheels and its sister scheme Working Watches (this name alone should act as warning!)are grubby attempts to raid the Treasury. However Moyles like Carr before him were sold this by “snake oil” salesmen, they were caught up in the spin and didn’t think too deeply about what they were doing. The Working Wheels scheme was a farce, it started life as a partnership and quickly converted to a “joint venture” when the rules clamping down on partnership losses were introduced in 2007. One wonders whether hey duped the QC, who provide the opinion that lent the scheme an air of respectability.
Moyles and Carr are small fry, there were bigger investors in the scheme they were involved in, whose names will remain unknown.
HMRC will trumpet the case won against “Working Wheels” as a great success. Is it really? I think not as HMRC won’t take on, but instead kow tow and pander to the biggest tax dodgers.
This case is a distraction from the tax dodgers that operate on an industrial scale in our society. They lobby behind closed doors to have laws incorporating tax exemptions and reduced rates written/re written on their behalf. They get away with this and let’s call a shovel, a shovel, “corporate socialism” under the “business frendly” flag of convenience.
The deference by some to their logos reminds one of the “worship of idols”. We all know who they are, the multi-nationals. Tax dodging is though but one of the skills in their armament. They have contempt for democracy, because this won’t protect their market position and won’t eliminate potential competition. Fascism is their goal just take a look at who is behind TTIP and TPP!
Aren’t these schemes disclosable ones so now HMRC have won then can’t they simply adjust all tax returns where it’s been disclosed the schemes been used? So no need for HMRC to chase down and no quesiton of them letting anyone off who was involved with this scheme.
Of were you referring to a wider issue of HMRC not chasing down other schemes, which may be bigger?
I do think this demonstrates that courts are now siding with HMRC on schemes that are clearly artificial – whicjh is a good thing. But is clearly not good that advisers can still peddle these types of ideas and get people to pay for it with no risk of being sued as long as they have a barristers ‘sign off’ on the scheme. So go and pay someone £30,000 for an opinion and you’re good to go on selling it in ‘good faith’. What a great business model!
“Fascism is their goal just take a look at who is behind TTIP and TPP! ”
Yes- Investor State Dispute Settlement ()TTIP) -if this is not corporate fascism, I don’t know what is!
Has Carr ever repaid the tax he owed?
We will never know
But I would be astonished if not
Just the tip of the iceberg I’m afraid. Of course lawyers should be jailed for schemes like this. In other walks of life those holding positions of responsibility
who commit crimes get more severe punishment than a layman.
Mind you if the BBC pays out £700k for a DJ, then that is a bigger waste to the public than the tax lost!