Contractors – A Settlement Opportunity?

Many contractors, especially in the IT industry will currently be pondering whether or not to reach agreement with HM Revenue and Customs under their Contractor Loans Settlement Opportunity.

The first question which springs to mind is why HMRC have put the pack together.  It may have been issued with the best intentions but to a lay person I am reliably informed that it appears bulky, daunting and technical.  It also repeats a number of points.

Secondly, it refers to the Boyle case and invites taxpayers to consider its conclusions.  Few, I suspect will manage the 29 pages of complex technical analysis and case law precedent referred to.  It is clear though that the taxpayer lost – convincingly!

Following on from this, if HMRC are comfortable with the decision in Boyle why are they offering a Settlement Opportunity with no penalty rather than just lining up the taxpayers like skittles, to collect tax, interest and penalties?

I imagine this may be because the legal team at HMRC have reached the sensible conclusion that ‘circumstances alter cases’.

Any aficionado of case law will appreciate that when a Tribunal says they ‘did not find Mr Boyle a straightforward witness’, his chances of winning are pretty much zero, and his version of key facts is unlikely to be accepted.  As the Tribunal did not find him credible as a witness, they were obviously minded to find against him.

On this analysis, a well advised IT Contractor may ponder whether their personal circumstances are sufficiently different to enable them to be distinguished from Boyle?  If so, is there an argument that they have no personal liability?

HMRC have set an interesting conundrum for affected taxpayers.  Perhaps they have had advisors in from Ladbrokes?!  Should affected punters stick or twist?

Bearing in mind the amounts involved in many of these cases, deciding what to do is not something to be done lightly.  It makes sense to ‘study the form’ and get professional advice.  I would also suggest it would be sensible for that advice to be independent of the advisors who set the scheme up.  This is to avoid the risk of there being a conflict of interest or people advising on schemes they are personally attached to.

What do other people think about the Contractor Loans Settlement Opportunity terms?

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