- My engagement with Blackstar (Europe) Limited ("BEL") included enquiry support and defence. Why am I being asked to pay Grey Eclipse Limited (“GEL”) for the same thing?
The situation we are proposing improves the position for clients. Currently HMRC is winning most First Tier Tax Tribunal and Upper Tier Tax Tribunal cases. The best chance of ultimate success is to, not only continue on-going support but also cover the costs of appealing a lost Tribunal case to the Court of Appeal and Supreme Court if necessary. This level of cover was never available before and offers our clients the best chance of success.
As you will be aware HMRC is taking a heavy hand with clients involved in scheme planning and sometimes if the client is unable to agree with them, this leads to dispute and the possibility of further Tribunal cases on relatively minor points. This creates further costs for you and we want to protect you from this.
We have also been forced to use considerable resource defending our own position in the face of sustained HMRC attack.
This restructuring offers the confidence that Blackstar Defence ("BSD") will be around to fully support you.
- How can I be certain that GEL will be able to fund BSD?
GEL has been set up with the sole objective of creating a funding source for BSD. Similar to other defence projects previously run by BSD (JR), we do require a minimum number of clients to subscribe in order to cover costs involved in taking defence work forward for those subscribing clients.
If we are under subscribed the monthly subscription may need to increase appropriately or we will advise clients of their options. Enquiry support and defence work for clients not subscribing will cease on 15th November 2017.
- Why will I be subscribing to Grey Eclipse and not paying Blackstar Defence directly?
We have sought specialist legal advice in relation to this matter and the advice received recommended that we use an intermediary funding company so that at any particular time it is holding funds not BSD (which is more vulnerable to attack from HMRC).
- What is the situation with Abbey Tax in relation to the defence of EFRBs and E Securities?
Abbey Tax sold insurance policies to BEL to defend EFRBS and E Securities. These policies have been assigned to BSD. Abbey Tax has confirmed the EFRBS policy will not pay out due to the time limited being exceeded. At the present time, Abbey Tax has not confirmed whether they will pay out on the E Securities policy. We are currently in discussion with Abbey Tax and our own barristers in relation to this.
Tribunal costs for EFRBS clients are therefore not covered and E Securities costs uncertain. This has clearly weakened our ability to fully support clients of these planning solutions hence the need for the proposed subscription solution.
- Do these changes affect the defence of BEL planning in the Tax Tribunal System?
Yes, due to the problems with Abbey Tax, if an insufficient number of clients decide to engage GEL to fund BSD, then BSD may not be able to cover the legal costs associated with tax tribunal hearings. In the unlikely event of this eventuality, we will make you aware and propose alternative solutions.
- When is the first tier tribunal expected for EBTs, EFRBs and E Securities? Is there funding for these tribunals?
EBT
Following the adverse Murray Holdings (Glasgow Rangers FC) ruling, we are awaiting HMRCs next move. We believe that the fact pattern for companies who used BEL advice is significantly different to the Murray Holdings case so we will advise affected clients once more information is known.
EFRBs
The First Tier Tribunal for EFRBs has been set for October 2018. The lead case has been agreed.
E Securities
HMRC and Blackstar have shortlisted 5 clients who could potentially all be lead cases in the tribunal system. All of these clients have been informed and have provided witness statements. Court papers have been issued so a hearing is imminent but no date has as yet been set.
As per the initial communication we have sent you, BEL is in liquidation and there will not be funding for tribunal defence of any historical BEL planning without the sufficient client contribution to GEL.
- Why was Europe placed into a creditors’ voluntary liquidation?
BEL ceased trading in 2013 following severe pressure from HMRC, of which most clients will be well aware. Subsequently, the 2014 Finance Act brought with it the Accelerated Payment Notice regime, which signalled an end to disclosed (DOTAS) type planning. This type of planning had been BEL’s core business since its formation.
The nature of BEL business had changed fundamentally from planning to defence. With this in mind the directors decided that BEL was not required and a defence only firm should take its place.
- I have joined the E Securities Judicial Review, how will this be affected by the changes?
The judicial review is ongoing and we do not anticipate it to be affected.
- What is the status of the E Securities Accelerated Payment Notice (APN) Judicial Review (JR)?
The Blackstar Judicial Review is stayed behind the DAVID ROWE, ALEC DAVID WORRALL & OTHERS vs. THE COMMISSIONERS FOR HM REVENUE & CUSTOMS case. Once this verdict is released, we expect to see our own case move forward.
- How much will it cost me to join?
We anticipate a sufficient number of clients will decide to join this opportunity. At the current projected numbers, the monthly subscription fee to continue to enjoy enquiry support and defence services will be £150 plus VAT (plus the one off commitment fee).
- What is the purpose of the commitment fee?
The fee is a commitment from the client to support this endeavour and is intended to partially cover the initial set up costs.
- How long will I have to pay this for and will there be any further costs?
We anticipate that these costs will cover you going forward until all matters are finally resolved. This could be a minimum of 4 years. This will cover all Court costs, save for any adverse costs and this represents a better position than was the case before. Under the old contract you were only covered up to Upper Tier Tribunal, i.e. stage 2 of 4 whereas now you will be covered up to and including stage 4 of 4.
- What will happen if I do not pay the monthly subscription to GEL?
Without subscription to GEL, BSD will be unable to provide ongoing support to you. If you discontinue we may not be able to stay your case behind others and you could be exposed to direct HMRC pressure.
- When will I need to begin paying the subscription to GEL?
The initial subscription period will cease on the 15th of November 2017. For clients joining in that period the commitment fee will £1,000 plus VAT. For clients joining after the initial subscription period, the commitment fee will be £2,000 plus VAT.
- I have engaged BEL for several different pieces of planning, do I have to pay separately for each or will one subscription cover them all?
If you had previously engaged BEL for more than one planning solution (e.g. EFRBS and E Securities) then the first subscription will be at full price (£150 + VAT). Subsequent subscriptions will have a 50% discount. You will only have to pay one commitment fee per company.
- I have more than one company who has used BEL planning. Will the companies enjoy the same 50% discount applied to companies who have used two different pieces of BEL planning?
The second company will enjoy a 50% discount on the monthly subscription fee.
- Aside from the 50% discount on the commitment fee, what are the advantages of joining before the 15th of November?
The reason we have set a deadline is that we need to know how many clients are going to subscribe and have incentivised that. If sufficient clients do not subscribe early then we may not be able to continue offering enquiry support and defence.
Clients subscribing prior to the 15th November 2017 will be prioritised. After the 15th of November 2017 the commitment fee will increase and clients returning after the 15th of November 2017 will have their subscriptions backdated to that date to be fair to the earlier clients. Additionally we will reserve the right to admission.
- What happens if BSD disappears anyway?
We are drawing up contracts to lock BSD into a contractual relationship with GEL. However, this arrangement puts BlackStar on a sound footing moving forward so unless HMRC or another third party intervenes then this should not be an issue.
- I am fed up with the hassle. Can I just settle?
Of course and in fact HMRC want you to do exactly this. Currently, there is no financial advantage in doing this other than in relation to potential future interest charges. For some clients looking for certainty this may be an option. We can assist you with this if you choose this route but settlement opportunities are not attractive at the present time.
- HMRC keeps coming up with new lines of attack, will these be covered?
One subscription should provide sufficient resource to cover all future eventualities. However, we have seen HMRC take some very radical steps in recent years and we cannot predict every tactic that they may employ.
- What will happen if insufficient numbers of clients decide to engage GEL to fund BSD?
Should this be the case GEL will make you aware and advise your options.
- When is the deadline for subscription?
There is no deadline. However, clients who join during the subscription period will enjoy the reduced commitment fee of £1,000 plus VAT.
- Can I join at any time?
Yes, however the commitment fee will increase accordingly.
- How long will I have to subscribe for?
To bring the planning solutions to a conclusion we anticipate something in the region of 4 years.
- How will my subscription be paid?
Your subscription will be collected on or around the 15th of each month via Direct Debit.
- My company is in a liquidation process, will it be able to subscribe for enquiry support and defence?
We have had many client companies with similar circumstances. If the company is in a liquidation process then it is not appropriate for it to engage us directly for the enquiry support and defence services proposed in our email. However, there is a real danger that HMRC will attempt to move the company debts to individual director shareholders and/or attempt to have individuals disqualified as directors. We have already seen several instances of this. Having sought legal advice on this point we can now engage affected directors and shareholders on an individual basis. Please contact us for further details.
- I have read that outstanding loans from structures using trusts will be taxed if not repaid by April 2019. Will my subscription cover me for advice in relation to this?
We will be able to provide you with advice in relation to your options. BSD or GEL do not anticipate providing planning advice in relation to potential solutions. It is however likely that we will be able to direct you to third parties who can provide this.
- Is the 2019 loan charge legislation likely to apply to the E securities planning?
The 2019 loan charge legislation will not affect the E Securities planning as there are no loans outstanding and is therefore outside the scope of Part 7A. The outstanding point on E Securities is that the individuals have an onerous obligation to pay for the remaining 99% shares that they have agreed to purchase.
- Specifically what support does the monthly subscription cover me for?
As appropriate, for historical BEL planning, we will provide;
HMRC enquiry support
Defence in the tribunal system and beyond if required
Written representations
Witness statements
Settlement support
- I have paid my APN, do I still need to subscribe?
Yes. APNs are outside of the defence works and any defence works for the APNs have been paid for by clients separately. The defence cover for the efficacy of the planning will not continue unless you subscribe. Payment of an APN is a payment on account, not settlement of the disputed tax.
- If Abbey Tax do honour the E Securities insurance policy, will there be a reduction in the monthly subscription?
That is our intention. The amount of the reduction would depend upon the amount of clients who subscribe.
- I have clients who undertook Independence. Will they have to subscribe separately?
Although it was individuals who used Independence (not the companies who established the EFRBS), the HMRC Regulation 80 assessments and APNs have been issued to companies so at the moment it is the Company who will need to subscribe with Grey Eclipse. In the future, HMRC may seek to issue assessments against the individuals at which time they may need to engage with Grey Eclipse personally.
- How are any potential adverse HMRC court costs being spread?
If HMRC are successful adverse costs will be spread amongst the subscribing group for the specific planning involved e.g. E Securities, EFRBs etc.
- What will happen if the planning I engaged for comes to closure in the Tax Tribunal and court system earlier than the 48 months period?
In this case, you will cease paying your subscription for that particular planning.
- Will the enquiry support and defence cover third party transactions or advise used in relation to the call up of E Shares?
At the present time, HMRC have issued Accelerated Payment Notices to all E Securities clients regardless of the subsequent fact pattern. Since implementation many companies have made calls on E shares using different methods (not all of which we are aware of). As this was not part of the initial advice from BEL, we would be unable to provide defence in relation to it. You should contact the agent provider of the advice.