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.