AML Compliant with HMRC

Monday 22 February 2010

The following article has been released by AML to reassure those contractors who use them as an Umbrella Company;

Huitson (Montpelier) Judicial Review

Does this affect individuals working through AML?

The simple answer is no. AML want to reassure you that our structure does not use (and never has used) partnerships and also does not rely on any double taxation agreement “loopholes” and therefore Budget Note 66 (BN66) does not apply.

The recent articles released by market competitors who provide umbrella solutions and personal service companies, are in our opinion brought out to scaremonger contractors into using their solutions. 

The AML structure has recently undergone a full review with leading Tax QC in December 09 and confirms AML’s business model remains compliant with HMRC legislation and relevant case law. Put simply, BN66 does not affect the AML remuneration structure and retrospective legislation should not apply where genuine employment arrangements are in place. 

As background to this case, on 20 June 2001 the claimant became a client of an Isle of Man Tax Consultants (Montpelier). These consultants provided advice to the Claimant (and many other UK residents) with respect to a tax avoidance scheme, seeking to take advantage of the United Kingdom – Isle of Man Double Taxation Arrangement ("the DTA"). 

The decision was given on the Judicial review on 28 January 2010 with the result that Mr Justice Parker upheld the 2008 Finance Act which let the Revenue plug the loophole retrospectively and ultimately the review was lost. 

What has been confirmed by Section 58 FA 2008 (BN66) is effectively designed to close the DTA (double taxation agreement) " loopholes " which existed and were exploited through the Isle of Man partnerships regime. The recent decision will almost certainly be of limited rather than general application and does not have any impact on the AML employment arrangement.

As AML is not an MSC, the PAYE and debt transfer provisions contained in S.688A can have no application, which is also supported by the recent Counsel Opinion.