All you people with EBT/Loan/Dodgy Umbrella schemes - what you gonna do? All you people with EBT/Loan/Dodgy Umbrella schemes - what you gonna do? - Page 7
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  1. #61

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    Quote Originally Posted by TykeMerc View Post
    Surely these loans have to be paid back (or they aren't loans) when does that happen and how?

    If a loan is written off at some point in the future how is that treated by the tax man?

    What happens if the body that makes the loan goes bust in some form and a liquidator wants to call in debts to pay off creditors?

    If the answer is that the loans are never paid back or written off then what happens when the person who owes the loan dies?
    Sorry to quote myself, but can anyone answer these questions?

  2. #62

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    Quote Originally Posted by TykeMerc View Post
    Sorry to quote myself, but can anyone answer these questions?
    I may be wrong but I think this is one of the reasons that, in many cases, the loan is made by a Trust not by the companies.

    Trusts are governed by strict regulations and the trustees have to act in the interests of the beneficiaries, and obviously calling in the loan would not be in their interest. There is nothing to stop the Trust extending the term of the loan periodically, and presumably this can be done ad infinitum.

    Even if the scheme promoter goes bust, the loans are protected by the Trust.

    Not sure what happens to the loan if someone dies though.

  3. #63

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    Quote Originally Posted by DonkeyRhubarb View Post
    I may be wrong but I think this is one of the reasons that, in many cases, the loan is made by a Trust not by the companies.

    Trusts are governed by strict regulations and the trustees have to act in the interests of the beneficiaries, and obviously calling in the loan would not be in their interest. There is nothing to stop the Trust extending the term of the loan periodically, and presumably this can be done ad infinitum.

    Even if the scheme promoter goes bust, the loans are protected by the Trust.

    Not sure what happens to the loan if someone dies though.
    The loan is extinguished on the death of the beneficiary, as is the case with other commercial loans.

    Pastalista

  4. #64

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    Quote Originally Posted by pastalista View Post
    The loan is extinguished on the death of the beneficiary, as is the case with other commercial loans.

    Pastalista
    So the estate benefits from income that wasn't taxed? Ok.

    Thanks for the info DR, I thought it might be something like that, but I admit that it makes no sense to me. I'm not in the least surprised that law is in the works to stamp these schemes out, it's hard for that arrangement to look any more artificial and blatant as income disguise goes.
    It's a glasses/nose/moustache getup without the wig and a damn great target at forehead height.

  5. #65

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    Quote Originally Posted by TykeMerc View Post
    So the estate benefits from income that wasn't taxed? Ok.

    Thanks for the info DR, I thought it might be something like that, but I admit that it makes no sense to me. I'm not in the least surprised that law is in the works to stamp these schemes out, it's hard for that arrangement to look any more artificial and blatant as income disguise goes.
    It's a glasses/nose/moustache getup without the wig and a damn great target at forehead height.
    Hector's work is complete. Talking about avoidance schemes like they are evasion is exactly what they wanted to happen. All this talk of "fairness" in the tax system seems to have worked.

    Avoidance has been enshrined in law for a long time - these schemes were no more or less "dodgy" than the BN66 boys' operation and yet I don't see people talking about them like they are criminals.

    Avoidance is still legal. It has simply become the whipping boy of HMRC and the Government / press. When people involved in businesses that use these schemes start turning on their own, it's worse for everyone.

    I have nothing but sympathy for the BN66 folks - where is the reciprocal sympathy for those who used EBT and other loan schemes?

    Pastalista

  6. #66

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    Quote Originally Posted by pastalista View Post
    Hector's work is complete. Talking about avoidance schemes like they are evasion is exactly what they wanted to happen. All this talk of "fairness" in the tax system seems to have worked.

    Avoidance has been enshrined in law for a long time - these schemes were no more or less "dodgy" than the BN66 boys' operation and yet I don't see people talking about them like they are criminals.

    Avoidance is still legal. It has simply become the whipping boy of HMRC and the Government / press. When people involved in businesses that use these schemes start turning on their own, it's worse for everyone.

    I have nothing but sympathy for the BN66 folks - where is the reciprocal sympathy for those who used EBT and other loan schemes?

    Pastalista
    I think the sympathy comes from the fact that the legislation was applied retrospectively
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  7. #67

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    Quote Originally Posted by LisaContractorUmbrella View Post
    I think the sympathy comes from the fact that the legislation was applied retrospectively
    Absolutely, I investigated and rejected the Montpelier approach years ago, however I support the BN66 cause (I've sent letters etc) because I object to the retrospection.
    I'd take the same supportive stance if the EBT loans were attacked retrospectively. Retrospective law goes fundamentally against my appreciation of the word justice.

    I've no problem with people exploiting loopholes in badly written tax law, it's the Governments fault if they draft crappy legislation, but my personal and long held opinion is that if income is disguised in a ludicrous fashion then it will get clobbered at some point and it deserves to.
    Loan schemes (I've looked into a few over the years) have always appeared to be fairly absurd disguises and I'm not at all surprised they're now Georgette, the only surprise is that it's taken this long for the Government to get around to attacking them.
    I'd expect people who use such approaches to know they're using a risky strategy and take appropriate steps.
    I happen to think that tax avoidance is perfectly moral and reasonable where as tax evasion is criminal activity, I object to avoidance being termed as if it is evasion or immoral.

  8. #68

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    What annoys me a great deal is that when you look at the way the schemes are advertised, the unwary/naive punter could be totally unaware that it was a tax avoidance scheme rather than a pretty regular brolly type company.

  9. #69

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    Quote Originally Posted by LisaContractorUmbrella View Post
    I think the sympathy comes from the fact that the legislation was applied retrospectively
    And what makes you believe that HMRC won't be telling EBT users that they should never have used the schemes and that full PAYE + NI + penalties + interest is due? If you do believe that they won't, then perhaps you can explain to people that used companies like Talent Resource Management who are now being investigated (see other threads) what their defence should be. Perhaps too the amount of criticism being levelled at them can also be explained - the dual taxation loophole was just as narrow as the EBT loophole and nobody (at least that I can find) is saying, "well, you were of course completely stupid for using it but we're sympathetic because the legislation is retrospective in nature". There just appears to be a view - dual taxation people - unlucky, EBT users - greedy, stupid, stupidly greedy, unfair evaders of taxation.

    Do you honestly believe that Hector is going to give EBT scheme users a pass prior to 09/12/10?

    I personally sympathise with anybody that used any kind of scheme that, at the time, was legal and is now deemed to be otherwise. I believe that they were exercising their right to mitigate their liability to taxation in any legal way possible and they should not be criticised for that.

    Pastalista

  10. #70

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    Quote Originally Posted by pastalista View Post
    And what makes you believe that HMRC won't be telling EBT users that they should never have used the schemes and that full PAYE + NI + penalties + interest is due? If you do believe that they won't, then perhaps you can explain to people that used companies like Talent Resource Management who are now being investigated (see other threads) what their defence should be. Perhaps too the amount of criticism being levelled at them can also be explained - the dual taxation loophole was just as narrow as the EBT loophole and nobody (at least that I can find) is saying, "well, you were of course completely stupid for using it but we're sympathetic because the legislation is retrospective in nature". There just appears to be a view - dual taxation people - unlucky, EBT users - greedy, stupid, stupidly greedy, unfair evaders of taxation.

    Do you honestly believe that Hector is going to give EBT scheme users a pass prior to 09/12/10?

    I personally sympathise with anybody that used any kind of scheme that, at the time, was legal and is now deemed to be otherwise. I believe that they were exercising their right to mitigate their liability to taxation in any legal way possible and they should not be criticised for that.

    Pastalista
    Not sure I totally agree. The risks have been well publicised for many years, going back to the hordes of people flying over to the Isle of Man to cash their Matabele Gumbo Bean postal orders in the 80s. All these schemes depend on a QC's opinion on a convoluted set of otherwise unlikely commercial arrangements, and QCs are very good at saying what you want them to tell you.

    However it is also fairly clear HMRC are keeping away from the retrospective application this time around, else they wouldn't have bothered with the 9/12 anti-forestalling regulations. All they've done is put a line in the sand and said "All these schemes stop here, and we will get round to all of them as soon as we can."

    So past users should be grateful they got away with it as long as they have, but anyone staying in one now needs their head read.
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