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bigduckontax, Accountant
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I have recently received a 11 page document from the First

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I have recently received a 11 page document from the First Tier Tax Chamber Tribunal who have dismissed my case. This is a complex case on partial surrenders made on an offshore PBB eg 35k tax bill on an investment that made zero profit. I wish to appeal further how much costs am I likely to incur and where do I go for professional tax advice or someone that has the confidence to win this case which clearly produces an unfair tax liability.
Hello, I'm Keith and happy to help you with your question.

You go to a trusted, local solicitor or accountant well versed in the taxation of offshore investing to represent you and take your case forward. The initial consultation will cost you at least 100 quid plus VAT and probably more. In view of the first tier decision it is a pity such a professional was not representing you there.

What tax is being levied by HMRC as a matter of interest?
Customer: replied 4 years ago.

Hello Keith

I was more interested on what fees I would have to pay for a Second Tier appeal, I udenrstand all court costs are paid by the appellant should I lose the case. The tax is income tax, nuts, I am in effect being charged income tax twice 1/ when I earned the money in the UK and 2/ when I withdraw it from the policy. Complex regs exist when more than 5% is withdrawn as in my case.

Appeal to the Upper Tribunal can only be made on a point of law which includes an incorrect interpretation of the law or if the First Tribunal has made a decision that on the evidence before it no tribunal could reasonably have made. The losing side in an appeal to the Upper Tribunal pays the other side's costs as well as their own. An appeal to the Upper Tribunal would be expensive. Your fees alone would probably well exceed 2K.

Look at Income Tax (IT) logically. There are many instances where IT is charged twice. You earn money and are taxed upon it. You then put some in the Building Society and the interest is also subject to IT. Investing in PBBs is an almost direct parallel.

Sorry to appear so negative, but I think you are on a hiding to nothing going for an appeal.
Customer: replied 4 years ago.

Thanks. The difference here is im not being charged income tax on interest, i am being charged income tax on the orignal amount.



Sorry I am having difficulties here. Will you please spell out what you mean by PBB? Currently there is confusion.
Customer: replied 4 years ago.

personal portfolio bond sorry should be ppb

Now I am even more confused. There appear to be no taxable events on the purchase of PPBs.
Customer: replied 4 years ago.


I have written to my MP that outlines the issue more clearly. The law basically sucks, in the meantime Im 35k out of pocket on the back of regulations that are very very com[;icated/


Dear Mr Kwasi Kwarteng MP

We were in communication and met a couple of times in 2011 to discuss my complex (and unfair) tax demand by HMRC on an offshore PPB bond.

The issue was an HMRC income tax demand of approx 35k on an offshore bond that made little or no profit.

My case was heard by the First Tier Tribunal in December 2012. The results of the tribunal have only recently come to my attention due to closure notices being sent to an incorrect address. My case was dismissed by the tribunal (see attached tribunal closure notice). However, the tribunal has indicated that HMRC have been well aware of the flaws in the system for many years and have done nothing to correct the system.

Tribunal Point 34

Unfortunately for the Appellant, it follows that all of his grounds of appeal must be dismissed. The Tribunal would however note that the system of taxation of part surrenders in excess of the 5% allowance is one which penalizes the unwary or ill-advised, often with quite disproportionate consequences as in this case. HMRC, and for that matter the insurance industry, have been aware of this major fault in the system for many years but have done nothing to correct it.

In addition the tribunal indicates the tax calculation discriminates against persons who take policies out in other EU countries.

Tribunal Point 35

As noted in paragraph 7 above, in the case of a UK policy, the policyholder is liable to income tax only at the excess of the higher rate over the basic rate (s 530(1) ITTOIA), but in the case of an offshore policy, the policyholder is liable at the basic rate as well (s 530(4)(b)). On the face of it this treatment discriminates against persons who take out policies with insurers in other Member States of the EU and against insurers in such Member States, such that the free movement of capital and the freedom to provide services might be in issue.

As one of your constituents I expect you to write to HMRC and ask them and parliament why they have not taken measures to change the law so it reflects fair an just tax calculations in these circumstances. I also expect you to fight my corner and if necessary raise a Private Members Bill and raise this issue with the relevant departments.

I am considering appealing this case further and certainly would if I could afford the professional fees of professional lawyers. I feel the tribunal has shown genuine sympathy in my case and indicated several possible avenues or laws for investigation and appeal. However, my circumstances have changed and I am currently unemployed. If you have any funds available for your constituents in rare circumstances like this to appeal injustice please let me know.

This tax case has caused substantial stress and depression at a time when my main focus should be finding employment. I am highly disillusioned with our institutions and laws and the thick skinned policy of HMRC to ignore my pleas and failure to admit the tax demand is unreasonable and furthermore as highlighted by the Tribunal they have been aware of faults in the system for years but continue to persecute ordinary tax payers.

I look forward to hearing from you and the positive actions you will take.

Your faithfully
Benjamin Franklin once famously said that in life there are but two certainties death and taxes. He did not say anything about fairness!

The law seems pretty clear on this matter. You would appear liable on an element of taxation well established and also known to be grossly unfair. However, until Parliament changes the law I see little point in submitting an appeal. You will be throwing good money after bad and it will be prohibitively expensive with little or no guarantee of success. As I said in my first answer you should have sought professional advice much earlier.
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