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BigBoyBigTime
17th March 2004, 20:04
I'm not a PCG member, so I can't call their team and find out what they think of them, hence I'd like an opinion of EBTs here.

I can't see what the problem is with these if you're just an employee and it's you're company's responsibility to pay you net of deductions. However, I have been naive before. :o

www 1staccountancy biz
17th March 2004, 21:12
You are a beneficiary of the trust which could put you in a tricky position should the IR decide to inspect the scheme.

They will look at the overall relationship between client, agency, trust & employee/beneficiary and if it's deemed to be a tax avoidance scheme then you could be deemed liable for additional tax and possibly penalties as well. :x

drphibes
17th March 2004, 22:57
You are a beneficiary of the trust which could put you in a tricky position should the IR decide to inspect the scheme.

They will look at the overall relationship between client, agency, trust & employee/beneficiary and if it's deemed to be a tax avoidance scheme then you could be deemed liable for additional tax and possibly penalties as well.

So if the trust has previously been ok'd by the IR, then you should be OK to join the scheme. Not sure how these work, I am thinking about offshore schemes in particular.

fiddleabout
17th March 2004, 23:39
> You are a beneficiary of the trust which could put you in a tricky position should the IR decide to inspect the scheme

It's a crying shame seeing you posting such pathetic bollux Darren. Maybe if you tried to match the fees and service offered by my accountant ...

www.************.co.uk (http://www.************.co.uk)

WWW ITDoctors co uk
18th March 2004, 00:03
You are a beneficiary of the trust which could put you in a tricky position should the IR decide to inspect the scheme.

They will look at the overall relationship between client, agency, trust & employee/beneficiary and if it's deemed to be a tax avoidance scheme then you could be deemed liable for additional tax and possibly penalties as well.

Now come on Darren we both know the UK government has no jurisdiction over offshore schemes, especially those they use themselves. If you know different, please quote examples.

tim123
18th March 2004, 09:33
No, but they do have jurisdiction over the individual receiving the money. And as a UK resident you are liable to declare and pay UK tax on your worldwide earnings from whatever source

Now, I don't know how these EBT's pass the money to the individual (nor how it gets there in the first place) so there is some scope there, but ISTM that were the revenue minded to target the individual recipient of money from the EBT, they would not find it that difficult to show that the money was 'income' and not a gift and that it should have been declared as such on a Tax return. It should be clear that any individual signing up for an offshore scheme and not declaring the funds that he receives is risking a prosecution for evasion.

tim

WWW ITDoctors co uk
18th March 2004, 09:59
You are logically correct Tim but do you imagine that these EBT schemes would exist at all if your assumptions were correct.
The income does not appear on a self assessment form because it is a loan.

These schemes used to operate as UK companies but due to legislation introduced in 2002 have moved offshore.

I view these things with deep suspicion but the more I find out about them the more untouchable they appear to be.

To be honest you need to spend a little time researching the subject before coming to simplistic conclusions.

HTH

Rhino

glynuk
18th March 2004, 11:59
Tried the PCG helpline and it wasn't very helpful!

The person I was put thru to didn't even know that these schemes were being targetted, even though she was a 'tax expert' who followed the budget v.closely.

planetit
18th March 2004, 12:24
I don’t think the PCG would be able to help you much with this question. Their general advice is to avoid schemes like this.

mailman
18th March 2004, 12:46
money for your services gets paid to your Isle of Man company which then transfers your "salary" to another off shore banking account which you can access via debit and credit cards etc.

No money coming in to England at all and no tax payable. Would that work?

Mailman

malvolio
18th March 2004, 14:17
... the budget contains explicit provision to target all schemes that promote tax avoidance, including those reliant on off-shore funding, if Hector is not planning to close them down somehow and/or penalise those people that use them. ;)

And FWIW it I actually agree with the PCG on this one - if it looks too good to be true, it probably is.

fiddleabout
18th March 2004, 14:32
Oh mailboy - you are my idol - a scheme that will outwit the evil Hectors dreamed up in zero seconds flat by a mere lad without the benefit of any legal or accountancy advice too I presume.

If you did get any advice then my advice would be to sack your advisors because they've fed you a load of drivel :)

mailman
18th March 2004, 14:33
what is wrong with the idea?

Easy to redicule someone...but why dont you back yourself up and enlighten us with your oh so expansive knowledge :rolleyes

Mailman

fiddleabout
18th March 2004, 17:18
I don't need to know exactly why it fails to know that it fails. If a scam like that were possible someone would be selling it. I've done extensive research into offshore schemes and I can assure you nobody is doing that.

All the money that you get hold of goes through some very complicated stuff to avoid problems with the tax man. I think I'd rather trust some clever legal eagles to get it right than someone who freely admits that they don't even understand the legal way of conducting their business.

www 1staccountancy biz
18th March 2004, 17:42
:x :rolleyes :x

www 1staccountancy biz
18th March 2004, 17:48
It's a crying shame seeing you posting such pathetic bollux Darren. Maybe if you tried to match the fees and service offered by my accountant ...

The fees are the same & haven't lost a client in over 14 years.

I'm not saying that your scheme won't work having not seen how it works, however GB did say he will be targeting these schemes specifically & that they must make themselves known to the IR.

fiddleabout
18th March 2004, 21:28
What do you charge to set up a Ltd. for your clients then?

www 1staccountancy biz
19th March 2004, 11:08
Free as part of the package.

fiddleabout
19th March 2004, 11:34
Is that for whatever name I like or would it just be some name that happened to have been set up already?

www 1staccountancy biz
19th March 2004, 12:15
That's for a brand new company in the name of the client's choice (providing it's available at Companies House) with the client as first director, shareholder & choice of company secretary.

The company is formed within 12 working hours through our e-link into Companies House which means we don't need to carry a stock of new companies as this way is quicker & paper free....other than the new money laundering procedures of course. All documents are then emailed and posted to the client.

fiddleabout
19th March 2004, 13:21
Sounds like you know what's required then Darren - even got time to spare on here while your yops kids do all the work - nice :)

I won't give you further advertising opportunities by asking about electronic filing to save your clients some money as I'm sure you've got that in hand too just like our accountant.

I'm just wondering why, if everything is going so swimmingly, you felt obliged to spread unwarrented FUD about offshore? I suppose it pays to though as they do offer the best net % of all the options available with no IR35 fears at all and if GB had rolled out what we were all expecting you'd have been deep in the brownstuff.

www 1staccountancy biz
19th March 2004, 14:45
:lol

:hat

WWW ITDoctors co uk
19th March 2004, 15:04
Its not over until the fat jock sings:)

BigBoyBigTime
19th March 2004, 19:57
I see the light and it's green.

Thanks everyone.

Judgejools
25th March 2004, 11:51
Hi,

EBTs still exist and are legal in the UK. They've been around for about 15 years and still are, despite the new legislation in November 2002. However, that legislation took out a lot of the intrinsic Tax benefit that close companies enjoyed through the use of EBTs. In short, a company can only claim corporation tax relief on the money they’ve put in an EBT after an individual takes it out of the trust as a fully taxable PAYE payment.

Many UK companies still use EBTs as they were first intended; as a remuneration strategy for key individuals. EBTs weren't, contrary to popular belief, a "scheme" at all, they were a totally legal and accepted form of strategic planning that the IR were fully aware of. It was only when they started to be used too aggressively for the wrong reasons and set up incorrectly that the IR decided to do something about them; hence Nov 2002 rules.

So, you can use them, but roughly half of the tax benefit just isn't there anymore. However, there are other ways of funding similar trusts in a tax efficient manner, if that's what you are after.

Regards

glynuk
25th March 2004, 12:18
...and how do these similar trusts work?

fiddleabout
25th March 2004, 17:03
In short, a company can only claim corporation tax relief on the money they’ve put in an EBT after an individual takes it out of the trust as a fully taxable PAYE payment.That is certainly the case for UK companies but fortunately the IR has no way to tax offshore companies. That is why all the worthwhile EBTs operate from outside the UK. There was some earlier attempt to curtail their activities in 2000 which is when many UK based EBTs move offshore.

The new registration requirement is causing a little concern at the moment so we have withdrawn applications for new business from www.************.co.uk (http://www.************.co.uk) temporarily until the legal eagles have worked their magic - then it will be business as usual :D

tim123
25th March 2004, 17:20
Yes fiddle,

But how does the money get into the off-shore company in the first place?

Do the agency pay it direct?
Do you pay it into a UK Ltd first
something else?

tim

Judgejools
25th March 2004, 18:35
It doesn't suit many UK Ltds to move abroad and they have to use what open to them onshore. If its just a one man band you're talking about then they might be flexible enough to be employed by an offshore company (if the end client/recruitment agency doesn't mind making payments offshore) and potentially use an EBT. Ireland, for one, still allows them under certain circumstances... Isle of Man as well.

If, however, it's a question of a larger company that cannot relocate/reregister offshore or a contractor who doesn't want to, then they obviously can't utilise an offshore based EBT. If that's the case, the funding of such trusts has to be done in a totally different way.

Regards

P.S. Why are you worried about the new registration requirement if you're stating that the IR have no say over offshore companies...?

fiddleabout
26th March 2004, 10:51
P.S. Why are you worried about the new registration requirement if you're stating that the IR have no say over offshore companies...? If the tax avoidance scheme is not UK based then each and every UK user is personally responsible for registering the deatils with the IR.

Obviously GB is hoping that this will effectively kill them off. I'm not sure about that - if everbody who uses one of these schemes sends them a 500page paper submission on how it works then maybe it would be the IR who get killed off :)

We will just have to wait for the small print in the Finance Act to see exactly what is involved and what can be done about it.

In answer to how does the money get offshore. In the case of the scheme I was promoting (and hopefully will be again once the details are sorted) ...

End User pays Agent.
Agent pays IOM company.
Contractor works PAYE for IOM company and gets small salary (preserves UK pension and unemployment rights)
EBT is operated by (but seperate from) the IOM employer. EBT pays contractor direct in a form that is not liable to UK tax.