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Another Consulting Overseas Victim

I contracted through this lot between 2003-4 and since then have been out of the UK. Just received a Notice of Further assessment from HMRC "Special Civil Investigations" department for approx 20K for the year to April 2004. Interest is also payable (although not detailed) from Jan 05 and a "surcharge" may also be payable. I tried to telephone/email Consulting Overseas but the phone goes to voicemail and the emails bounced.

So ..... anyone know anything? When I signed up they said the scheme was watertight .. had been approved by their tax lawyers etc.. etc.. Obviously not!

Will now be on the hunt for an accountant/lawyer I guess (any recommendations?) but wondered if anyone had any advice or news? Anything much appreciated.

CUK Contractors Respond:
Fake your own death.

CUK Contractors Respond:
A canoe and a trip to Panama.

CUK Contractors Respond:
I presume you were not insured against any investigation? If not time to bend over.

CUK Contractors Respond:
They used to have office on Middlesex Street opposite Liverpool Street I went there once as well but didnt sign up. I did have a friend though who had used them but he got a letter from the IR years ago about the scheme, apperently it went to court and then due to some ***** up by the tax inspector they got off on a technicality. I havent been in touch with my friend for a while but will drop him a text and see what he can tell me.

CUK Contractors Respond:
They changed their name and operate an umbrella now. I am trying to think who they are now. It is a fairly big name. I know because when I called the umbrella they told me they used to be contracting overseas who I had heard of before. I will think and post again.... [edit] actually it wasn't an umbrella is was an MSC operation like Giant's old one, I can't remember the name, it was about 4 years ago now.

CUK Contractors Respond:
I can't find "Consulting Overseas" on companies house (even under dissolved or previous names). Which is odd.

CUK Contractors Respond:
There's a clue in the name!

CUK Contractors Respond:
This is interesting from their website: "Our solutions for IT contractors are fully approved and insured by Qdos Consulting. The insurance provides you with full protection against an Inland Revenue status investigation, including IR35, not only for your professional fees but also any legal fees that maybe incurred upto £50,000. Find out more about Qdos approval and insurance."

CUK Contractors Respond:
I've just looked at-

Surely they must be operating as brolly, so why do they need QDOS cover? Am I missing something here?

CUK Contractors Respond:
They did the loan scheme if I remeber then changed to standard MSC around 2003-2004 time. Question for the orginal poster which scheme were you on at the time the HMRC are looking at loans or there MSC offering ?

CUK Contractors Respond:
thanks, The current OC website is dud. I'm sure the same individuals have just renamed and setup under a different name.

I was on the Sandfield loan scheme which converted towards the end of 2003 to dividend. I am resident overseas now but assume emigration is not a long term solution! Have been worrying about it for years. It would be good to hear from someone in same situation. Also if anyone can recommend some good prof advice. Not sure if these guys act on a "no win no fee" basis?

I do remember discussion about an insurance policy but wouldn't bet that I'm still covered.

CUK Contractors Respond:
How did this scheme operate? Is it the loan scheme where they supposedly loan you money and then never pay it back, and then take massive fees to cover it? Are others still operating the same thing that they used to?

CUK Contractors Respond:
The one I am aware of involved being loaned money in a foreign currency and the purchase of an FX forward to pay off the loan in a year or so. The currency would be rapidly devaluing, e.g. ZWD. The FX forward would be cheap. Meaning contractor has almost all the money guaranteed there are then (not sure what they did with interest, maybe that was also factored into FX Forward). It had a very high return (>85% I think). I know an ex-collegue on it who got challenged but had moved to Oz. you're not my old collegue are you?

I'm surprised CO are doing nothing. Last I heard a few years back from collegue was that CO were advising everyone to stick together so I assumed they were planning to defend the scheme. They did have all the tax council stuff saying it was ok I think. Just goes to show with these schemes, they are happy to take your money but won't help when the sh*t hits the fan!

Thanks  - no, I'm in Hong Kong, not Oz! Sounds like exactly the scheme I was on though.

Have contacted Accountax to see what they can do. Not sure how they operate though. Do I pay 500 quid for them to review my case and then tell me to "bend over" ... as someone put so eloquently above?

Also surprised that Consulting Overseas are being elusive. They sent me a letter a couple of years back warning that others had received letters and did seem to be planning to fight but I'm not sure whether they won, lost or just went bust.

I know HMRC operate on a "divide and conquer" basis so am really hoping for someone else who's been here and come out the other end.

CUK Contractors Respond:
Shame how, 4 years later, when you might have even forgotten about this, HMRC pull out a blinder like that. I guess they invesigated CO first, and then managed to obtain a list of all its contractors to target. I remember back then that there were a number of firms providing the loan/fx scheme, but it seems like they all disappeared quite rapidly. Good luck - do let us know how you get on.

CUK Contractors Respond:
my mate used the same scheme with Consulting overseas they came after him a couple of years back, the case went to court but they lost due to a screw up by the tax inspector, may be they are having another go.

Thanks all. Have been doing some more research and it looks as though CO are working with a firm of lawyers, Chiltern, to fight HMRC and assist ex-employees. They have a private forum for ex-employees to log into where they have documented progress to date. At the moment Chiltern have reached an impasse with HMRC (it does appear that HMRC have behaved quite slovenly over the whole thing which is now in its 3rd year. e.g. not responding to letters from Chiltern, not following up on actions, declaring that the FX broker used for the loans did not exist (they looked up a directory of banks instead of brokers!) etc...).

The next step is to put selected test cases in front of the Special Commissioners, estimated to happen by end of this year.

Chiltern appears confident that the scheme was valid based on the facts but I know that when it comes to these kinds of cases that can be irrelevant.

A few years back Chiltern also negotiated settlement terms for the first tranche of employees selected for investigation if they wanted to settle. I think the terms were basically 1. no penalty, 2. if Chiltern wins or HMRC drop the case everyone gets a refund. This looks ok I guess but I suppose the more who settle, the less likely it is that the case will win.

I'm unsure about whether Chiltern will also assist those covered in this latest wave of investigations.

CUK Contractors Respond:
you were involved in a certain scheme by some company. You are not accountant nor tax specialist. If the HMRC has sent you a letter claiming tax - this would mean that the HMRC have already prosecuted CO and found that their scheme was illegal. If this is the case why don't you send a letter to the HMRC telling them that "before you pay anything , you will be claiming this amount from OC since they were the body that were operating the scheme and you were merely a customer.

Then ask HMRC to send you the details about the owners/new name of OC and sue them for involving you in a illegal scheme.

I know that these schemes involve loopholes in the law and are technically legal. If HMRC is questioning what CO were doing - then you take the side of HMRC and seek your money from CO.

CUK Contractors Respond:
Hi - I had a letter from HMRC saying I owed an awful lot of money from the CO period 03 - 04 and I was advised by Consulting Overseas to write an appeal sayng that Chiltern were representing me (they pay Chiltern).

I have since been give conflicting advise about what to do - I now suspect that Chiltern have done a deal with the HMRC to get as many contractors to pay them and the HMRC will not seek to go to court if enough pay ? anyone esle recieved awful large bills from \HMrC in the last month ....??????? I belive the wording should be that Chiltern are being paid to represent me on behalf of OC /Sandfield??

I would like to get a group together to see if we can go after the Directors of CO and sanfield as a group if the HMRC are correct and we have been conned!!!!!!!! I already have about 30 contacts willing ....

CUK Contractors Respond:
How many years did you use CO - did you use their actinium scheme?

CUK Contractors Respond:
Personally, I think that anyone using dodgy looking overseas loopholes deserves anything coming their way..... If it looks too good to be true, it normally is.

CUK Contractors Respond:
Just found this forum and am reading with interest - however, after trawling back through the thread a bit I'm confused if the discussion relates just to the Sandiford (?) scheme that CO used to run or if it relates to AML too.

I was never in the first one but was an AML member/employee for 2.5 years before the MSC market went to pieces in February 2007 (at which point I got set up by CO/AML with my own Ltd. co which they quickly had to hand over to me completely.

I've received HMRC letters giving me notice that they are inquiring into my tax affairs for 2 tax years that I was under AML and in both cases they have said it relates to earnings and dividends relating to my empllyment with Actinium. The letter says they don;t intend to ask me any specific questions at this point.

Is anyone else in this situation? HMRC will not elaborate further with me directly. I have managed to contact a former director of Actinium who says they have picked a handfull of individuals under that sceme and are 'drilling down' into their individual returns and into the AML scheme - he said Actinium are actively involved in suplying HMRC with details they request and have their tax council on board too.

Their position is that they have councils advice that the sceme was legal and legit - but he did ssay that HMRC's stated intention is to prosecute.

Anyone else in the same situation (or is anyone actually one of the poor sods who have been picked on for personal attention)? My own position is that AML committed that they'd received councils advice that it was legit and I would ultimately go after them (or their insurer) for reimbursement if that advice was wrong. I think the problem is that they may end up doing a deal with HMRC where lots of employees take the hit and AML disapere from the face of the earth with HMRC blessing.

Anyone who is specifically affected by this I'd be interested in hooking up so we can share info.

CUK Contractors Respond:
I was in the AML scheme for a couple of years too, and have received the same letters. Prior to AML, I was with MTM/Montpelier, and am under investigation for this scheme as well. In fact, there aren't many years in the past 7 or 8 where I'm not under the screws

Unlike Montpelier, the fact that AML are no longer trading is a concern since I don't see that there's a huge incentive for them to fight this as vigorously. On the other hand, I was under the impression that the scheme was covered under the MSC legislation, so I don't see what grounds HMRC have for attacking it. Perhaps they are going after other MSCs as well?

The problem with these investigations is that they can drag on for years. The Montpelier one has been going on for 5 years now without a resolution. If the Revenue ultimately wins then you face interest penalties (currently 8.5%) on top of the back tax.

Presumably, if the Revenue succeeded in proving that the dividend payments should have been treated as salary, then they could go after AML for unpaid Employers NI, and I guess the directors could be held liable for this.

PS. One thing which is different about the AML investigation, than the Montpelier one, is that the letters do not mention interest penalties or invite us to make any payments on account to mitigate them. You will have to take my word on this but the letters are also a lot friendlier and so far they have not accused the employees of doing anything wrong.

I could be mistaken but it sounds to me like they are targetting the Company in the first instance. That's not to say that they won't come after us in the end but at least there is a chance that they may waive any interest penalties.

CUK Contractors Respond:
The tax you might owe must be enormous. Let's take an example where a contractor brings in revenue of 100k each year. Approximate calculations are:-

================================================== ====
Gross = 100,000
PAYE = 30,500
Employee NI = 4,500

i.e. HMRC will have expected some £35,000 in taxation from you each year.
================================================== ====

Now, assuming MTM/AML/etc pay you a nominal salary of 25k and the rest as a loan:

Salary = 25,000
PAYE = 4,000
Employee NI = 2,000

So you have paid £6,000 in taxation each year. You have probably paid no tax for the loan.
================================================== ====

In this example you could owe £30,000 in taxes for each year ... £150,000 for 5 years. Plus interest. And can they add 100% to the value of the outstanding tax?

I think you'd be better off leaving the country and throwing away your passport...

CUK Contractors Respond:
The AML scheme was nowhere near that aggressive, with a similar retained income to being outside ir35. In hindsight, the MTM scheme was probably taking the p*ss somewhat.

They will only add 100% to your tax bill in the case of evasion. At no point have they accused anyone of doing anything illegal, and they are "only" talking about interest penalties.

The worst case scenario is that you have to pay back the tax which you would have paid in the first place + interest. Of course, their interest rate is a couple of points higher than you could have got in a savings account but not the end of the world.

The real problem arises where people (and I know a few) have already spent the money.

Fortunately (or unfortunately), the amount of money I've got riding on this is not enough to justify really drastic measures, otherwise I'd be doing exactly what you suggested and talking to a travel agent right now


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