Law firm with share of £20M Scots Govt contracts, office recently opened by Alex Salmond in Qatar, claims HMRC ‘being over zealous’ in gathering tax

Late Payers ? Law Firm McGrigors specialising in tax law & ‘late payment’ recently established new offices in Qatar, opened by First Minister Alex Salmond. MCGRIGORS, a Scottish Law Firm who recently won a little advertised share of £20 MILLION POUNDS worth of taxpayer funded Scottish Government contracts for DEBT RECOVERY & PROPERTY and who recently opened an office in the Gulf State of Qatar which was ‘officially opened’ by First Minister Alex Salmond on one of his ‘trips’ to ‘promote’ Scottish business, has claimed the UK’s Tax authorities, HM Revenue & Customs (HMRC) use of ‘distraint’ against businesses who dodge or fail to pay their taxes on time may be “over-zealous”.

Stuart McNeill, partner in the litigation and dispute resolution team at McGrigors, which is described by business insiders as a “specialist late-payment and tax law firm”said in a Press Release, attacking the use of seizure powers : “HMRC is under huge pressure to collect unpaid tax, but at the same time it is facing cuts in its staffing levels. It is almost inevitable that this is resulting in a more aggressive approach and short cuts, but as well as having drastic implications for late-paying businesses and their other creditors, it may also actually be counter-productive.”

Mr McNeill went on: “By barging in and selling the assets of a late paying company without making a proper commercial assessment of the firm’s medium term viability, HMRC risks sacrificing full payment in a few months’ time for far less cash up front.”

However, in these testing financial times for Scotland & the UK, where some now believe and campaign for the rich & their companies to pay their own fare share of taxes rather than indulge in tax dodging exercises & late payments, a spokesperson for HMRC countered : “We remain committed to doing everything we can to support viable businesses through short-term cash flow difficulties. However, there is little HMRC can do for a business whose viability is dependent on not paying the UK taxes to which they are liable, or on special treatment not available to other customers.”

While McGrigors are eager to advertise their tax specialist skills, their share of the £20 million Scottish Government contracts funded by taxpayers, the majority of whom cannot afford their services, has seen little publicity, although an investigation by independent law journalist Peter Cherbi revealed the law firm was among a host of others who were involved in hospitality offered & quickly taken up by Scottish Government officials. The report on this investigation was published on the Scots Law blog Diary of Injustice, HERE

Perhaps HMRC should now be taking a look at law firms, their partners & activities, including particularly some of those members of the Scottish legal profession and even some members of the judiciary who deal in or frequently fly off to offshore tax havens such as the Cayman Islands. (We know who you are even though you think no one is watching you … – Ed)

Tax law reforms should be inclusive of all in the debate

Not just bringing in the professions earlier on tax law reforms would benefit changes in the law .. wider consultation with many might help ease problems along the way ...

The Scotsman reports :

Government should engage earlier with professions on tax law reforms

By JAMES AITKEN

WHILE it is and always will be a government's prerogative to make changes to the law, I feel it is time we look again at how we amend our tax legislation.

My interest in this issue stems from my experience in dealing with a number of changes and proposed changes to the tax regime in the last few years. This includes the introduction of stamp duty land tax (SDLT) in 2003, the inheritance tax trust changes of 2006, the proposed planning-gain supplement and the recent changes to the capital gains tax (CGT) regime. The various problems with each of these changes have been well documented.

That said, we need to learn from what happened. This is also not just an issue for HM Revenue and Customs (HMRC) or HM Treasury but just as importantly for organisations such as the Law Society of Scotland.

One issue is the period between the legislation being agreed and it coming into force.

I wonder if legislation should only come into force when the underlying government administration is ready, in the same way that much of our legislation requires a regulatory impact assessment. Any delay between enactment and implementation could also be used to further publicise the changes and allow the government, the civil service, individuals and business to prepare. When SDLT was introduced in 2003 we did not even have enough forms.

The second issue is a "first things first" point. Before we even get to the stage of launching a formal consultation, the government should take some time to ascertain whether the issue it proposes to consult on is in fact a real issue. This would be akin to a pre-consultation consultation and could be done outwith the public gaze.

The third issue relates to the length of time a consultation lasts. My preference is for a fairly short period of consultation that has clear deadlines. I also see no reason why consultations should be done in a number of stages. That said, cutting short a consultation such as the SDLT'shas been a disaster. Five years on we are still dealing with particular Scottish issues that were not dealt with in 2003 primarily because the consultation was abruptly halted.

The fourth issue is whether legislation should automatically be reviewed after a certain period. In many cases, it is only after the changes are actually in force that problems come to light. Again, SDLT is a good example. This though would only work if parliamentary time was to be put aside specifically.

The fifth issue relates to the devolved settlement. The UK is now a much mo
re complicated place for legislation. There are competing bodies and it is no secret that they do not always work in harmony. The proposed planning-gain supplement was a good example of this point. This was as much a Scottish matter – as it dealt with housing and planning – as a UK taxation matter.

My sixth and final issue is the fact the UK has more than one legal system. HMRC and HM Treasury need to ascertain whether there are any particular Scottish issues at a much earlier stage. Organisations such as the Law Society are only too willing to get involved and give advice, preferably at an early stage as possible, ideally before the consultation process begins.

Early engagement is in fact the key to almost all of the issues raised. We can do better.

• James Aitken is a senior associate at HBJ Gateley Wareing and sits on the Law Society of Scotland's tax law committee.

Differences in tax regimes between Scotland & England may emerge

Using among other comparisons, the tricky subject of Inheritance Tax & Wills, the Scotsman reports on differences or loopholes in 'cross border taxes' which may emerge north of the border ...

Watch for loopholes in cross-border tax

By BILL PAGAN AND FIONA MCDONALD

INHERITANCE tax can be a complex subject and, when applied to the specialities of Scots law, it becomes even more intricate.

The establishment of the Scottish Parliament and its subsequent legislation has extended the potential for differing tax treatment between Scotland and the rest of the UK.

Although the Scottish Parliament has no influence over UK tax legislation (other than to raise or reduce the basic rate of income tax by 3 per cent), it can legislate on general law, which in turn can have an indirect impact on taxpayers north of the border. Examples include the law of the land, the law of families and the definition of charity.

The constitutional principle is that UK tax law should be applied on both sides of the border in an equivalent manner. However, its interpretation in Scotland is not the same as in England and Wales.

For example, the different land laws mean that although a buyer can purchase a farm in England and a farm in Scotland on the same day, they will be treated differently for inheritance tax purposes, as the date of acquisition in Scotland is deemed to be the date of registration of the title, whereas in England and Wales the date of settlement is used.

And as agricultural relief from inheritance tax is available to owners following the second anniversary (or in some cases the seventh anniversary) of ownership, the differing legal acquisition dates have an impact on when inheritance tax relief becomes available.

Agricultural relief significantly reduces the amount of inheritance tax due, and can often eliminate it altogether. It is interesting to note that many wealthy investors choose to purchase land in order to protect their estate from inheritance tax when they die. Research shows that 36 per cent of farm buyers in 2007 cited inheritance tax planning as a reason for their purchase.

Scots law also has different principles for wills. In Scotland, neither marriage, divorce, entering or dissolving a civil partnership, nor the birth of a child revokes a will, but the rights in Scots law of spouses, civil partners and children have inheritance tax implications.

Additionally, following the Family Law (Scotland) Act 2006 cohabitees have a right, within six months of a death, to make a claim on an estate where there is no will. As the inheritance tax exemption for spouses and civil partners does not extend to cohabitees there may be inheritance tax consequences.

Charities law provides another robust example of the distinct workings between Scots law and inheritance tax as it generates major issues. The Charities & Trustee Investment (Scotland) Act 2005 defines a list of Scottish charitable purposes (these are different, though similar, to those defined in English and Welsh law).

However, to be guaranteed the usual tax exemptions (except for rates, which are a devolved matter), Scottish charities must fall within the charitable purposes as defined by English and Welsh law, not Scots law.

As a result, there may be charities that fall under the remit of the Office of the Scottish Charity Regulator, but which do not qualify for the tax exemptions. Gifts or bequests to such charities will therefore be subject to inheritance tax.

Elsewhere, the rules under Scots law for establishing the order of death (for example in a joint accident), or to have someone presumed dead if they have gone missing or been in an accident also vary from those elsewhere in the UK, and extra care should be taken when considering the inheritance tax position.

Charity and succession matters, wills and trusts are just a few of the many intricacies that overlap in the interpretation of Scots law and inheritance tax, and thus result in differing treatments in Scotland than the rest of the UK for inheritance tax purposes.

It is a multifaceted issue that, combined with the activity of the Scottish Parliament, raises serious questions and challenges for the Scottish legal profession.

• Bill Pagan and Fiona McDonald are solicitors at Pagan Osborne. They are the authors of Inheritance Tax In Scotland 2007/08, which provides an overview of how the specialities of Scots Law and the intricacies of inheritance tax overlap.

The full article contains 698 words and appears in The Scotsman newspaper.
Last Updated: 06 January 2008 6:12 PM