New law to stop spongebob plan??

[Mr D]

I agree with the changes.

If you cannot manage to pay VAT which you collect from customers and PAYE/CIS you deduct from employees/subcontractors you should not be allowed a second chance of running a limited company. Second time around, they should be made to operate as a sole trader or as contractor accountant says, pay a substantial bond to HMRC up front.

It was only a matter of time this happened. The 'Spongebob' method has been abused for years, so the government will prevent it sooner or later like they have with the flat rate VAT scheme, IR35, the loan charge, the list goes on, it's a common theme.

The individuals that have abused the 'Spongebob' method have ruined it for those genuine insolvency cases.

You kidding right?
Government made spongebob plan quicker over time.

Government makes rules. People alter behaviour based on rules. Government concerned about this altered behaviour and makes rules. People alter behaviour based on rules and so on.
Remember the hoorah a couple of years back when NI changes were made? How the self employed responded?
Or the pasty-tax fiasco?
Or the swiss bank account fiasco?


Just because government wants to do something doesn't mean that they will get what they want.

 

[emufeet]

I don't think so, there is apparently no legislation yet, just a report on consultation. So anything, or nothing, could happen

You agree with me, that it's not in this year's Finance Bill? Or am I just not looking hard enough?

 

[emufeet]

The consultation has ended - its changing

You keep saying that - but you can't point us to where it is in the legislation? A consultation report is not legislation. Please show me where it is mentioned in the Finance Bill (or other parliamentary bill). I don't mean the bit about demanding security, or giving the taxman priority in liquidations, I mean about making directors personally liable.

 

[Spongebob]

None of the potential changes in the law being discussed here makes any difference to The Spongebob Plan whatsoever.

The Spongebob Plan isn't about directors avoiding their responsibilities with regard to paying company taxes or creditors, and it isn't about phoenixing companies.

The Spongebob Plan simply gives directors of small companies a route through the insolvency process without having to pay for an Insolvency Practitioner.

https://www.ukbusinessforums.co.uk/...ich-to-pay-an-insolvency-practitioner.316523/

My own experience of the insolvency process nearly 20 years ago involved compulsory liquidation by the local Official Receiver's office. I only found out about the Striking Off procedure afterwards. In my case it wouldn't have been appropriate because my company was already the subject of legal action by HMRC and had had its assets distrained upon by a bailiff acting for a trade creditor.

Nothing in any of these potential changes would have made any difference at all in my case, or in the hundreds of others I have advised on subsequently via this forum.

Once again, certain pious people are confusing the entirely lawful and ethical Spongebob Plan with a roadmap for serial fraudsters.

 

[UK Contractor Accountant]

This is what it says on the Tax Abuse consultation Document link already referenced

Detail of outcome
This response document confirms that the government will legislate in 2019 to 2020 to allow HMRC to make directors and other persons involved in company tax avoidance, evasion or phoenixism jointly and severally liable for tax liabilities that arise from those activities where the company becomes insolvent.

 

[emufeet]

This is what it says on the Tax Abuse consultation Document link already referenced

Detail of outcome
This response document confirms that the government will legislate in 2019 to 2020 to allow HMRC to make directors and other persons involved in company tax avoidance, evasion or phoenixism jointly and severally liable for tax liabilities that arise from those activities where the company becomes insolvent.

Highly likely yes, but not yet in the legislation. The government often says it intends to do XYZ but it's not absolutely certain. Who knows if this government will even be in power for the next Finance Bill?

 

[Mr D]

Highly likely yes, but not yet in the legislation. The government often says it intends to do XYZ but it's not absolutely certain. Who knows if this government will even be in power for the next Finance Bill?

Judging by the only vote of no confidence to date on this government, the next general election is in 2022.
If they cannot lose a no confidence vote this week, when can they lose one?

 

[Spongebob]

Is it not typical of this corrupt Tory government to put their emphasis on tightening up controls at the bottom of the pyramid while allowing their friends at the top to enjoy massive tax breaks?

 

[emufeet]

Judging by the only vote of no confidence to date on this government, the next general election is in 2022.
If they cannot lose a no confidence vote this week, when can they lose one?

True, but at the moment nothing would surprise me - a break up of the Tory party perhaps? A new middle ground party? Who knows?

 

[The Byre]

Is it not typical of this corrupt Tory government to put their emphasis on tightening up controls at the bottom of the pyramid while allowing their friends at the top to enjoy massive tax breaks?

The word 'corrupt' is going a bit far - I would call it 'a convergence of interests'.

If you and all your friends are 'Off-Shoring' like there's no tomorrow and in the process, earning vast sums, it is natural to oppose such things as ATAD (Anti Tax Avoidance Directive) and to structure any legislation to skirt around your personal interests and those of friends who keep you in power.

 

[Newchodge]

The word 'corrupt' is going a bit far - I would call it 'a convergence of interests'.

If you and all your friends are 'Off-Shoring' like there's no tomorrow and in the process, earning vast sums, it is natural to oppose such things as ATAD (Anti Tax Avoidance Directive) and to structure any legislation to skirt around your personal interests and those of friends who keep you in power.

That is a pretty good description of corrupt!

 

[The Byre]

That is a pretty good description of corrupt!

'Corrupt' implies illegal and even criminal behaviour and that is not really the case here.

Every legislature in every country is at it. Ireland has a GDP per capita of about $60k, of which $10k or maybe even more is blatant off-shoring. The Dutch sandwich is so-called because Holland has some very 'interesting' tax laws. Germany levies 0% tax on gains made on property that you have been holding for over 10 years - earn one million Euros, move that to your property investment subsidiary and buy some land, watch the value increase and sell it after 11 years and pay F-all tax. Simples!

It's the same in every country.

 

[Ian J]

It's the same in every country.

Except Greece of course as tax is only optional there

 

[Mr D]

'Corrupt' implies illegal and even criminal behaviour and that is not really the case here.

Every legislature in every country is at it. Ireland has a GDP per capita of about $60k, of which $10k or maybe even more is blatant off-shoring. The Dutch sandwich is so-called because Holland has some very 'interesting' tax laws. Germany levies 0% tax on gains made on property that you have been holding for over 10 years - earn one million Euros, move that to your property investment subsidiary and buy some land, watch the value increase and sell it after 11 years and pay F-all tax. Simples!

It's the same in every country.

Yes, people following the tax laws of countries get slammed for following the tax laws.

I'm amused when I see MPs have a go at companies for doing stuff that the particular MPs voted through in parliament.

 

[Newchodge]

'Corrupt' implies illegal and even criminal behaviour and that is not really the case here.

Of course it is. An MP is elected to act in the best interests of their constituents, not their friends. They are required to declare an interest in any debate in which they or their family has a potential interest. The fact that they don't bother complying properly with the law on this does not make it legal.

 

[Mr D]

Of course it is. An MP is elected to act in the best interests of their constituents, not their friends. They are required to declare an interest in any debate in which they or their family has a potential interest. The fact that they don't bother complying properly with the law on this does not make it legal.

Then deal with the ones not complying with the law.
The media find a few?

 

[Chris Ashdown]

Phoenixing(not sure if thats spelt right) of companies needs greater input from the official receivers of some other government agency so that the new company has no financial or other ties to the old companys management / shareholders, basically the company is either sold in it's entirety of broken up and sold, but the directors and shareholders are not allowed to gain by the phoenix or have jobs in the new company

I guess this would mean a advertised auction for the complete company without its board of directors