The VAT rate will increase within months. The only question is 'by how much?'

There has already been plenty of media speculation about a prospective rise in VAT whichever party is returned to power after the election. No one wants to confirm this move - because they fear the backlash and being blamed for not winning the election.

The Chancellor has no excuse. The Treasury will have advised him of his options re spending cuts and tax rises. He will have to lay out his plans in next month's Budget. George Osborne's team will also have had conversations with the Treasury as part of the plans for a possible transition. It seems likely that there is a clear need to increase taxes. I will leave the economists to dispute the timing and depth of spending cuts that may also be required.

I will also leave aside the precise numbers and how much can be raised through tax rises.

What I want to do here is to simply highlight WHEN tax rises generate money for the Exchequer. And I'll just focus on those key taxes that contribute the most money each year.

Income tax
Assume a second Budget in June or July - part way through the current tax year that starts on 6 April 2010. It is customary to determine tax rates before the start of the tax year. But let's assume instead that income and corporation tax rates were to be raised in respect of earnings and profits of the tax year 2010-2011.

Remember that the PAYE system, which only affects employees and pensioners, is 'cumulative' in the way that allowances, reliefs and taxes are allocated. A tax change half way through the year results in 6 months worth of the annual tax effect hitting taxpayers in one go. Not good news and, I would have thought, all but inconceivable. At least, not without the introduction of complex adjustments that could throw out many computerised payroll systems.

Still, even if income tax rates were increased for 2010 and a solution was found for the PAYE issues summarised above, what about the self employed and the higher rate tax payable by those with investment or rental income? When would they pay the additional tax? Well, it's not due for payment until 31 January after the end of the tax year - so that would be 31 January 2012. And that's if income tax rates are increased with immediate effect. Such a change would clearly not contribute a major reduction in the deficit this year.

And the impact of a rise in income tax rates is further delayed if any increase is deferred until 2011-2012.

Corporation tax (CT)
CT rates for the 2010-2011 financial year could, in theory, be revised mid year and the resultant complaints could be ignored. But again this tax is paid after the end of a company's accounting period. Assume a year end of 31 December 2010. Any increased CT would only be payable late in 2011. And all those companies with 31 March accounting dates would only pay such increased CT at the start of 2012. So, as with income tax rises, this will not do much for the current year deficit. And the impact is further delayed if any increase is deferred until 2011-2012.

National Insurance (NI)
Most classes of NI are payable along with income tax for the year in question. Thus pretty much the same issues arise as for income tax (see above). The only class of NI that could have material sort term impact is the 'tax on jobs' - employers' NI. An increase of 1% has already been announced to take effect from 6 April 2011. And part of that rise was announced in 2008.

Capital Gains Tax (CGT)
I'll write separately about the rate of CGT. For now let's just note that, like income tax, it is payable on 31 January after the end of the tax year. Thus, even if the rate for 2010-2011 was increased from 18%, this would only have an impact on the tax payable on 31 January 2012.

VAT
We have already seen two changes to the VAT rate in the last 18 months. Firstly a reduction to 15% and then an increase back to 17.5%. Both such changes had an almost immediate impact on the Government's tax receipts. There is no other way to do this.

So VAT will have to rise later this year. The only question in my mind is by how much? I suspect 20% as it's a convenient figure but better minds than mine are welcome to suggest alternatives.

The average rate of VAT in the EU is almost 21%. Only Luxembourg and Cyprus have a standard VAT rate lower than the UK. Each 1% rise in the rate of VAT should generate £4-5 billion of additional income for the Treasury. A rise to 20% would still leave the UK slightly below the average rate across the EU, and could generate almost £12 billion for the economy, the equivalent of around 3p on income tax. And let's remember that we all dismissed the 2.5% reduction from 17.5% down to 15% as being unlikely to have a meaningful impact on spending. And when we reversed the cut and put up VAT by 2.5% to 17.5% did everyone cope? Might this always have been the plan, to use such a rise as a test-run for the impact of a rise to 20%?

What do you think?

Official: You can't rely on HMRC guidance

To be fair we have known this for some time. The Courts and the the Tribunal (and previously the Commissioners) will always focus on the wording of the law. HMRC's statements of practice, concessions and guidance notes are as they are described 'on the tin'. They are intended to be helpful but they are not the law.

The judgment in a recent Tribunal case reinforced this position. The facts of the case are not relevant to this blog post - other than to note that the taxpayers, Parnalls Solicitors, had sought, to rely on HMRC guidance notes when arguing their case.

In a concluding statement the Tribunal judge, Roger Berner stated:

"Mr Harvey referred us to a number of extracts from HMRC publications and other materials in support of an argument that HMRC were guilty of inconsistency in arguing the case against the Appellant. We do not consider that these were material to our decision, which depends on the law as we have found it and not on any interpretation which might be attributed to HMRC. We do not therefore refer to such materials in our decision, and we make no comment on their validity or otherwise."

HMRC's guidance can be helpful. It may be right, but it may be wrong. And it is of no relevance when it comes to arguing a point of law. In practice any appeal starts with negotiations directly with HMRC. At this stage, if their guidance is helpful by all means refer to it. But such arguments cease to be relevant once your appeal gets to the Tribunal.

Tax on TV: Sort your paperwork or watch The Business Inspector on Channel 5

If only all small business owners had time to watch TV and would choose to watch a new 4 part series: The Business Inspector, a new programme, that premieres on 10 March. It's sponsored by HMRC!

Although HMRC are not referenced in the programme they are co-producing it and have paid £370,000 for the privilege. Their objective: To raise awareness among small businesses that they need to keep good records.

I well remember the campaigns about record keeping that were run by the then Inland Revenue in the mid 1990s. This was during the reign of the cartoon Hector the Inspector when the self assessment system was first introduced. I only threw out the old cassette and old video last month during a tidy up. Might have been fun to have compared the messages with the new programme. I wonder how the relative investments compare and what the current sponsorship is REALLY expected to achieve.

"STOP giving tax advice - or face a charge of deliberate wrongdoing"

Of course no one needs to stop giving tax advice. And I think it's irresponsible to suggest that such a situation will ensue. But that is what some people are doing after reading the Draft legislation on deliberate wrongdoing by tax agents published by HMRC on 8 February.

The good news is that HMRC have bowed to pressure and are extending the deadline for responses to 28 April. The original deadline of 3 March (just 23 days after publication) was quite disgraceful as it gave far too little time for effective consideration and reasoned responses.

Over the last few days I have rejected the wilder fears from certain accountancy commentators that tax advice is to be banned; and at the same time I have flagged the issue for the IFA and will-writing communities, for the reasons I have set out below.

The first point to note is that the draft legislation goes WAY beyond the aspirations of the consultation document issued in December (Working with Tax Agents: The next stage). As drafted the legislation means that all Tax Agents would be potentially subject to tax geared penalties for giving advice that results in a reduction in someone's tax liability. This is clearly a nonsense and I'm sure it will be changed. As such I favour formal representations to HMRC by the widest possible range of tax agents.

In this context the draft legislation also extends the accepted meaning of 'tax agent' to include voluntary sector advisers (eg: CAB, TaxAid, TOP) and those in the financial services and will writing professions. It also extends to all employees as well the principals in firms/businesses.

I have enormous sympathy with HMRC's ambitions and am a supporter of many of the objectives set out in the Working with Tax Agents consultation documents. I can also see exactly what they were seeking to do with this legislation. Whether the parliamentary draughtsman was inadequateley briefed, chose to extend the potential scope of the rules or was asked to do so we may never know.

I have long deplored the extent to which we are already taxed by legislation and only untaxed by concession and discretion. The anti-terror laws are already used in circumstances way beyond their original intent. The original assurances given that they would not be misused are worthless. Sadly it is much the same with tax law - as those who have negotiated with HMRC will confirm all too readily. There are already too many examples of where, having been asked to trust HMRC not to abuse their powers, that trust has itself been abused.

We have also seen with the health and safety laws (in particular) that law abiding citizens end up taking things to extreme to ensure that they don't get close to crossing the line. Tax law is very different of course and to an extent HMRC want to discourage tax agents from 'planning up to the edge'. But the draft legislation is too widely drawn and too open to abuse by HMRC.

It has evidently been drafted in a hurry and needs to be revised in a number of places - not least to make clear that it can ONLY be applied to counter the real targets rather than only 'in particular' those targets. It is this prospect of wider application that is the biggest worry in my view. I confidently expect that HMRC will bow to pressure and common sense and revise the drafts now they realise how much wider it could be applied than they originally intended.

However, until the draft is amended, it says what it says and the more people who point out that it is much too widely drawn the better.

Gaines-Cooper judical review residence case won by HMRC

Many readers of this blog may be confused by today's media stories about a tax case involving Robert Gaines-Cooper. The Times report is typical: Entrepreneur faces £30m tax demand after residency ruling leaves thousands exposed.

If you didn't know any better you might assume that the Court of Appeal had just decided against Mr Gaines-Cooper. It's certainly true that the Court of Appeal found him to have retained his residence in Britain during what he claimed to be a period of non-residence - dating back to 1976.

Here's the thing though. I wrote about the Court of Appeal's decision in this case back in October 2008! - Gaines-Cooper loses in Court of Appeal - Residence rules revisited

So how is it that his appeal seems to have been heard again by the Court of Appeal?

What the papers have omitted to note is that the most recent case was a Judicial Review. In effect a challenge to the way in which the decision had been made, rather than the rights and wrongs of the conclusion reached. Here the main focus was whether HMRC had failed to correctly apply the tests in the IR20 leaflet. The Court found in favour of HMRC. Quelle suprise!

Whatever the merits of Mr Gaines-Cooper's arguments there are few tax advisers who seriously expected the Judicial Review to succeed. Beyond this case the newer residence rules have been enshrined in what is now HMRC6: Residence, Domicile and the Remittance Basis.

The only good news is that there are moves to establish a statutory residence test that would largely remove the worries about how much discretion HMRC have in future to determine the facts long after the event.

IFAs are now Tax Agents and subject to new penalties

Last week HMRC published draft legislation on deliberate wrongdoing by tax agents. This is part of the ongoing consultation re Working with Tax Agents. The legislation contains a very wide definition of "tax agents" who will be subject to penalties for "deliberate wrongdoings" - which are also very widely drawn.

It's clear to me that anyone who ever provides advice related to inheritance tax is a tax agent for this purpose. This will certainly include many financial advisers. This could have very wide repercussions for those advisers who currently believe that HMRC are not interested in their advice. This is about to change!

Remember that this legislation is focused on deliberate wrongdoings by tax agents. And deliberate wrongdoings are very widely defined by reference to helping clients pay less tax. We think that the target at which HMRC is aiming comprises 'naughty' tax schemes. However it's not currently restricted in this way. Thus it could be used to penalise far more tax agents for far more advice than you might think.

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For the record - here is the definition of 'tax agent' in para 2 of Schedule 1:

(1) A person is a tax agent if the person assists another person (a 'client') with the client's tax affairs.

(2) A person may be a tax agent even if -

• (a) the assistance is given free of charge,
• (b) the assistance is given otherwise than in the course of business,
• (c) the assistance is given indirectly to the client or at the request of someone other than the client, or
• (d) the assistance is not given specifically to assist with the clientís tax affairs, but the person giving the assistance knows it will be used, or is likely to be used, for that purpose.

(3) Assistance with a client's tax affairs includes assistance with any document that is likely to be relied on by HMRC to determine the client's tax position.

(4) Assistance with a client's tax affairs also includes -

• (a) advising a client in relation to tax, and
• (b) acting or purporting to act as agent on behalf of a client in relation to tax.

(5) If a client is assisted by more than one individual in a firm or business, each individual may be regarded as a separate tax agent.

And inheritance tax is included in the definition of 'tax' at clause 39.

HMRC’s part in the MPs’ expenses fiasco

Following on from my own posts on the subject of the tax issues of MPs' expenses I was approached by tax writer Chris Reece. In this guest post on the TaxBuzz blog, Chris Reece asks why HMRC has allowed the MPs’ expenses problem to lurch towards crisis?

The subject of MPs’ expenses has generated a huge number of column inches already, without more than a passing mention of the tax implications. This is a pity as, in my opinion, had HMRC shown adequate leadership in facing up to the issues, the UK would not be anything like such a deep constitutional crisis.

Confidentiality issues mean that I am going to have to make assumptions and skirt around a number of the more interesting matters of detail. That is not a bad thing, however, as it is the general principles which I believe expose HMRC to criticism, not what may or may not have happened in any individual case.

So, what do we know, what don’t we know and what must we assume? We know that under the July 2006 version of the Green Book (Parliamentary salaries, allowances and pensions) it is clearly stated that the Additional Costs Allowance (which is what appears to have been the root of all the revelations in the newspapers in recent weeks) ‘reimburses Members of Parliament for expenses wholly, exclusively and necessarily incurred when staying overnight away from their main UK residence … for the purpose of performing Parliamentary duties’. This reflects ITEPA 2003, s 292 and confirms that MPs were not at the relevant time subject to a materially less stringent expenses regime than any other employees.

However, it is clear from the details published in the newspapers that the Parliamentary Fees Office has not been applying the ‘wholly, exclusively and necessarily’ restriction as strictly as case law has taught us it should be applied. Now I’m going to make an assumption here: that under whatever auspices and whichever nomenclature, the Fees Office and HMRC agreed a dispensation that would allow the payment of the Additional Costs Allowance to MPs without attracting a tax charge on payment. I will make a second assumption: that HMRC allowed a dispensation for expenses incurred ‘wholly, exclusively and necessarily’ and was not asked to go further and ‘allow’ a more generous expenses regime. I am hesitant about that second assumption but the alternative is to assume that HMRC agreed to allow MPs a more generous regime than the law permits and that would be unthinkable.

So we have a situation where HMRC has agreed in theory to the Fees Office paying out expenses incurred ‘wholly, exclusively and necessarily’ for the purpose of performing Parliamentary duties. I cannot imagine that the subsequent mess can be put down to the small discrepancy between ‘in the performance of the duties’ and ‘for the purpose of performing Parliamentary duties’, so I will not mention it again. Anyway, the Fees Office then starts paying out Additional Costs Allowance on a far more generous basis than HMRC would have expected when agreeing to a ‘wholly, exclusively and necessarily’ regime. That is not necessarily a cause for alarm. Employers have always been prone to taking a rose-tinted view of what is an allowable expense. That is why HMRC carries out assurance visits after having agreed a dispensation: so that both parties can be comfortable that they are singing from the same hymn sheet.

This is where the story starts to get harder to imagine: what happened to that assurance visit? We know that HMRC carries out checks on a small number of the self-assessments of unnamed individual MPs, because it has said that it does. But we cannot expect HMRC to discuss in public whether it has carried out an assurance visit on the Fees Office. Thus I will have to make a further assumption: that HMRC has not carried out that visit. I make that assumption on the basis that what happened in reality was so far removed from the ‘wholly, exclusively and necessarily’ restriction that HMRC cannot have seen it and waved it on: once again, the alternative is to assume that HMRC allowed MPs a more generous regime than the law permits and that once again would be unthinkable.

Why then do I accuse HMRC of a lack of leadership? Because if it had given the Fees Office the assistance it needed, by carrying out a routine assurance visit, as HMRC so often does with other employers all over the country, the Fees Office would have been put straight about its misunderstanding of what ‘wholly, exclusively and necessarily’ means and MPs would not now be trying to explain why they made claims that in time past they were assured were within the rules.

There is one further alternative: that HMRC has given the Fees Office all the guidance it needed, that many of the expenses reimbursements failed the ‘wholly, exclusively and necessarily’ test and that an additional liability arose as a result. I feel safe in guessing that if MPs accused of making unreasonable claims had been subjected to tax on those unreasonable claims, they would now be making it well known that they had paid whatever tax was necessary. It is thus not unreasonable to assume that the MPs have not paid that tax. If not, and HMRC has identified it as payable, one must assume that the tax has been paid by the employer and grossed up accordingly. Maybe MPs earn more than we ever thought?

The above post represents the views of the author Chris Reece. I raised a number of related issues last year in my own first set of questions about the tax consequences of the MPs' expenses row.

Discovery assessments issued re film schemes in 2003-04

When I saw the headline in the Mail on Sunday today I assumed it related to the story I wrote about last week - that sideways loss relief tax avoidance schemes are being challenged by HMRC.

Such schemes were the natural successors of the old film partnership schemes. However it is these film schemes that are the focus of the Mail's story: Stars face massive payback demands as HMRC probes £2bn film tax loophole.

The paper reports that HMRC have been investigating film partnership schemes for a few years. And that investors have received tax demands in recent weeks on the basis that a specific 2003-04 film scheme was not trading on a commercial basis. HMRC suspect that is was intended as a tax avoidance scheme rather than a film investment scheme.

I am not surprised at such developments generally as I recall having reservations about much that was going on in this field at that time. What does surprise me however is to see all the focus on Ingenius Media (run by Patrick McKenna). Ingenius were generally regarded as one of the most reputable promoters of film schemes when I was considering such investments for clients around ten years ago.

If Ingenius are under attack then it's likely that many other promoters have also been fighting the taxman over the last few years. The Ingenius story makes the news of course because of the high profile names who invested in it. Such information has been obtained from the public record at Companies House as the respective investment vehicles are Limited Liability Partnerships.

In the light of news of what are, presumably, discovery assessments, we can expect at least one high profile case to be heard before the Tribunal to 'settle' the issue. Given the sums involved I would expect the outcome to be appealed so the final outcome will not be known for years.

This is clearly part of HMRC's efforts to scare off people from investing in overt tax avoidance schemes - even those where the 'avoidance' involves taking advantage of specific tax reliefs introduced to encourage risky investment.

This latest news also bears out the warnings I have been offering that such schemes are rarely as straightforward as the promoters suggest. And most of all, that it is invariably many years before the final outcome is known; ie: before the investor knows for sure that he can retain the tax refund he secured at the outset.

I have said it before and will say it again: These issues all justify the views of many accountants who do not want to spend time advocating such schemes to their clients. These accountants know that to do so without first understanding the issues and being able to explain the risks, as well as the benefits, would be unprofessional. And once the risks are fully understood only a small proportion of clients are ever interested and only a fraction of them finally go ahead. Most accountants have better ways to spend their time.

What's your view?

Previous relevant posts:

• HMRC challenge sideways loss relief tax avoidance
• HMRC confuse tax avoidance and tax evasion again
• Beware of HMRC spotlights - EBTs now included
• Were you wasting time advocating this tax scheme?
• The beginning of the end for structured tax avoidance schemes?
• Bending vs breaking tax rules

HMRC challenge sideways loss relief tax avoidance

The latest form of tax avoidance to come under HMRC's 'spotlight' concerns investments made with the intention of obtaining trade loss reliefs ('sideways loss relief').

HMRC say that they are aware of schemes seeking to exploit sideways loss relief by generating trade losses for individuals. Such schemes are often funded in part by borrowing and may include a mechanism that means returns are all but guaranteed. The promoters will have Counsel's opinion that everything 'should' work and that tax relief should be available. Such opinions are invariably hedged with caveats, partly to anticipate the prospect of HMRC taking a more aggressively defensive stance.

This is what now seems to have occurred. HMRC say that in many cases they consider that no relief is due as these schemes fail to meet the basic commercial requirements test. In addition the investors rarely satisfy the 'the ten hours' test. This is the requirement that at least ten hours a week are spent personally engaged in commercial activities of the trade carried on with a view to earning profits from those activities.

HMRC point out specifically that they do not accept that reading scripts or medical journals, watching TV or DVDs etc are qualifying activities. As a result any trade loss that did arise in such cases would be subject to the sideways loss relief restrictions for non-active traders.

Finally HMRC point out that:

Whenever arrangements have been entered into to obtain a tax reduction by way of sideways loss relief we will actively challenge these arrangements and the activities of individual participants and litigate, if necessary. We will also withhold repayments of tax resulting from claims to sideways loss relief in appropriate cases.

It is fair to say that HMRC's view of the law is NOT always upheld by the Tribunal and the Courts. It is also a fact that in the last year the Tribunal has frequently found in favour of HMRC when faced with cases involving alleged tax avoidance.

Anyone making an 'investment' to secure sideways loss relief in future would be well advised to assume that it will be some time before the success or otherwise of the scheme is known for sure. It is equally important to note that receipt of the tax relief itself is no guarantee that HMRC are happy with the scheme. It's simply a natural consequence of the self assessment system.

Previous relevant posts:

• HMRC confuse tax avoidance and tax evasion again
• Beware of HMRC spotlights - EBTs now included
• Were you wasting time advocating this tax scheme?
• The beginning of the end for structured tax avoidance schemes?
• Bending vs breaking tax rules

Should lawyers be exempt from disclosing their tax advice?

Accountancy Age is reporting that the taxman is set for a battle with the legal profession over lawyers’ attempts to keep tax advice confidential.

One unnamed law firm has apparently sent out a circular that says: ‘Bring your tax issues to us so we can ensure that HMRC can never get access to them’ – meaning that they think legal professional privilege does that. The taxman doesn't agree and wants to ensure that the age old concept is not used to aid tax cheats.

The concept of legal professional privilege is more complex than many people assume. However most tax advisers accept, reluctantly, that the rules apply differently to lawyers as compared with non-lawyers. And the application of the rules to lawyers seems to extend to non-lawyers who are employed by law firms. I suspect this is one of the reasons for the movement of some tax investigation specialists into law firms - the most recent example bring those who left Tenon and moved to McGrigors.

The legal and accountancy professions thus find themselves on opposite sides of the argument. Accountants want equality of treatment. But no one expects this to mean that legal professional privilege will be extended to allow taxpayers to secure privileged tax advice from accountants. Lawyers on the other hand however want to retain their exclusive rights and the Law Society has engaged a QC to argue the point for them.

The way that the rules of professional privileged apply to different professions has long been an issue. It started to become of real concern when the rules for Disclosure of Tax Avoidance Schemes were first published in 2004. As a result of challenges by the CCAB the rules were amended to ensure that 'privileged' advice still had to be disclosed albeit without breaching the rules of privilege.

Since then the issue has been bubbling away behind the scenes. I for one am pleased it is now back in the public domain. Whatever the merits of the concept of professional privilege generally surely it should not extend to tax advice which would be disclosable if provided by any other professional.

What do you think?

The Legg report ignores the tax consequences of MPs expenses

Sir Thomas Legg's report on MPs' expenses proved that abuse of the system was widespread with more than half of all MPs required to make repayments. When the scandal first became apparent through the Telegraph's reports last year I started to blog here about related tax issues.

A shameful footnote to the whole affair is that the Additional Costs Allowance is tax-free - as determined by the 1983 Finance Act (which, like all tax law, was passed by Parliament who, on this occasion, understood precisely what they were doing).

Having previously identified many tax related questions raised by this scandal I have summarised the 3 most crucial ones below. It would be good to have these addressed as part of the wholesale review of the system for reimbursing MPs' expenses.

1 - Will MPs be subject to the same tax consequences as employees and company directors who repay excess expenses?
Tax law normally determines that such payments to employees and directors should be treated as loans until they are repaid. HMRC then charges tax on the notional interest on this 'borrowed' money. In the case of MPs this would mean paying tax on such interest to cover the period from when they received the money until it is repaid. Their employer is liable to notify HMRC of the dates and sums involved.

2 - Why are MPs exempt from having to supply receipts for expenditure under £25?
Until 2008 the exemption for MPs related to expenses upto £250 and this system has been widely criticised. The Telegraph reported that MPs will have to produce receipts for all claims of more than £25 as part of a major overhaul of their much-criticised system for claiming expenses. However all other directors, employees and those running their own businesses have to keep receipts in repsect of all business related expenditure.

What is the justification of continuing a more lax system for MPs? Either the normal rule should apply to all taxpayers or else MPs should be subject to the same record keeping obligations as everyone else.

3 - Are MPs really exempt from tax in respect of all their 'expenses'?
The tax exemption introduced by Finance Act 1983 is now contained in Section 292 ITEPA. However this only refers to Overnight expenses allowances as defined in para 2.1 of The Green Book and covers "personal additional accommodation expenditure (PAAE)" which is 'available to reimburse Members of the additional expenses necessarily incurred in staying away from their main home for the purpose of performing their parliamentary duties'.

The Additional Costs Allowance (ACA) to which Sir Thomas Legg's report refers is a phrase that has not been used in the Green Book since 2006 but seems to be considered synonymous with the Living Away from Home Allowance, Overnight Allowance, PAAE and the Accommodation Allowance.

However the Green Book goes on to describe other allowances that bear no relation to 'overnight expenses'. Given the abuse of the 'ACA' shouldn't there also be a review of the extent to which MPs have received reimbursement of other expenses - especially as no tax exemption applies in such cases.

Answers on a postcard please.....

IR35 avoidance scheme - Dispute between the promoters

Full details of an old IR35 tax avoidance scheme are explained in the judgment from September 2009 of Montpelier v Jones and Morris.

The case centered on a dispute between various parties who had arguably either conceived, funded or promoted the scheme. The judgment includes:

• a summary of the background to the scheme which followed the introduction of 'IR35' in 1999;
• an explanation as to the development and promotion of the scheme from 2000-2003;
• names of all the companies involved including Montpelier Tax Planning (Isle of Man) Limited, Westwood, OMPS Limited, Contractor Solutions Limited ("CSL"), Executive Solutions Limited ("ESL"), MTM Consultants Limited, MTM (Isle of Man) Limited ('MTM') and www.suomotu.com.
  
• reference to Counsel's opinions (including those of David Milne QC, Philip Baker, Adrian Shipwright and Robert Argles) and extracts from some settled notes of conferences with Counsel;
• reference to E&Y London instructing E&Y IoM to withdraw from participation in the scheme, which was allegedly described as a "political hot potato";
• reference to alternative structures involving the use of Employee Benefit Trusts (EBTs);
• Montpelier's claims of breach of confidence, breach of copyright, passing off and procuring breaches of contract;
• The counterclaim by Mr Jones and Mr Morris that Montpelier repudiated contractual arrangements.

Although this was not a tax case the level of detail contained in the judgment will be of interest to anyone who advises on tax avoidance schemes. And also to those who shy away from them.

As I've indicated in previous posts here, the existence of Counsel's opinion does not guarantee that a scheme will succeed. The ultimate decision in this regard will rarely be known with certainty until after it has been tested in the courts. And that often means a long wait.