 |
ClearSky Accounting Specialist contractor accounting. No nonsense fixed fee service from £95/month. Find out more. |
What is BN66 and how does it affect contractors?
Posted Apr 12, 2010
Budget Note (BN66), published in the March 2008 Budget, announced a clampdown on what was seen as the abuse of loopholes in double taxation treaties which exist between the UK and other nations (see original PDF note).
Over the years, a number of offshore schemes have reduced contractors' tax liabilities using complex structures based in the Isle of Man, Guernsey and other locations. Such arrangements will typically be in the form of a 'partnership' or 'trust' whereby a contractor (or other individual) can live and work in the UK, but pay much reduced tax by virtue of the double taxation treaties which exist between the UK and the offshore location.
BN66 and retrospective taxation
Controversially, the new rules, which came into effect via the Finance Act 2008, contained retrospective clauses, meaning that individuals who have used such offshore arrangements to lower their tax bills would be liable for all tax 'saved' over the previous two decades. Tax avoidance legislation was initially introduced via the Finance Act (No.2) 1987 to prevent individuals from using double taxation treaties to reduce their tax liabilities on their membership of overseas partnerships.
This retrospective element was recently tested at the High Court in the Montpelier / Huitson case in which it was ruled that HMRC could legally claim for backdated taxes from a contractor who had used an offshore scheme saving a reported £85,000 in the process.
Industry experts were long expecting a tightening of offshore tax avoidance loopholes, but the use of retrospective legislation is unprecedented and has been widely criticised by tax and business groups.
You can find out more in our BN66 overview.
Contractor Services
- Professional Indemnity Insurance - Essential cover from Hiscox
- The fair umbrella company - take home more pay with paraplus
- InTouch Contractor Accounting - specialist online service & great advice
- Parasol - the UK's favourite umbrella company
- Contract Experts - ClearSky Accounting on 08000 325 326
- Helix Management Ltd - Up to 90% retention. Same day payments.
- Umbrella Company - 12,000 contractors can't be wrong!
- Together we're stronger! - Join PCG, representing contractors
- Cloud 9 Group - Umbrella Solutions only £27.50 per week
- Qdos - IR35 experts - Providers of low cost contractor insurance
- K & B Accountancy Group - Fixed fee contractor accounting only £75pm
- Free IR35 & Tax Review - Call ICS on 0800 195 3750
- Contractor Mortgages - the best deals, based on your contract rate alone!
Related Articles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
