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PTS Tax claim Employee to Employer Loans exempt for LC19

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    PTS Tax claim Employee to Employer Loans exempt for LC19

    PTS Tax, who SP Management pointed me to to get loan figures, claim that for 2 schemes where no 3rd party Trust was involved, and the loan was effectively from my employer to me as an employee, the Loan charge doesn’t apply and I should not declare these loans. Have they given this advice to anyone else?

    #2
    I would get proper independent tax advice from a specialist on that if I were you.
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
    - Voltaire/Benjamin Franklin/Anne Frank...

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      #3
      Originally posted by cojak View Post
      I would get proper independent tax advice from a specialist on that if I were you.
      Thanks Cojak, have raised it already. He’s looking into it.

      Comment


        #4
        Originally posted by Runster View Post
        the loan was effectively from my employer to me as an employee
        What does effectively mean?

        Did you have any other employers at the time?

        Have you repaid the loan? If not, when are you repaying the loan?

        What are the terms of the loan?

        What has happened to the loan receivable?

        What is going to happen to the loan receivable?

        Why were you lent the money rather than just being paid it?

        Plus many other questions...

        Comment


          #5
          Originally posted by Iliketax View Post
          What does effectively mean?

          Did you have any other employers at the time?

          Have you repaid the loan? If not, when are you repaying the loan?

          What are the terms of the loan?

          What has happened to the loan receivable?

          What is going to happen to the loan receivable?

          Why were you lent the money rather than just being paid it?

          Plus many other questions...
          I think the key thing (PTS claim) is that there was no 3rd party trust involved. I’m not defending that claim, merely putting it out there for discussion.

          Comment


            #6
            There is a difference between the HMRC position that sums received via the schemes (AML and others) are taxable and the terms of the loan charge.

            The loan charge arises under Part 7A ITEPA. There are a number of quite specific terms and conditions that have to be met in order for the charge to arise. One of them is that there is a third party involved in the transfer of funds from employer to employee.

            It is also arguable that Part 7A creates a discrete set of tax rules which must be applied in all circumstances that fit the situation described. If following those rules results in an answer that no charge arises, then this is a precedent. This is an argument that has found favour in some cases and not in others. Testing it is likely to be interesting.

            I offer no opinion as to whether the advice from PTS is correct or not.

            Certainly the intention of the loan charge is to bring into tax all (or as many as possible) schemes. The assumption is that they are all "disguised remuneration". I think however HMRC has a tendency to confuse and conflate the decision in Murray Group as to the general rule on liability and those rules in Part 7A.

            Many of the points raised above are perfectly valid in looking at whether there is a tax liability but are perhaps slightly off the mark in looking specifically at Part 7A and the loan charge.

            Be very careful.

            The literal approach to interpreting tax law is no longer a viable one in many circumstances and in particular anti avoidance law.
            Best Forum Adviser & Forum Personality of the Year 2018.

            (No, me neither).

            Comment


              #7
              HMRC are aware of the claim and say its completely incorrect and is taxable. Unfortunately that's (at this stage) probably the only opinion that matters.

              Comment


                #8
                Originally posted by Runster View Post
                I think the key thing (PTS claim) is that there was no 3rd party trust involved. I’m not defending that claim, merely putting it out there for discussion.
                Ok. So in more detail:

                What does effectively mean? If "effectively" means it didn't come from the employer, then DR applies.

                Did you have any other employers at the time? If you had another employer at the same time then the other employer may be "B", if so DR applies

                Have you repaid the loan? If not, when are you repaying the loan? What are the terms of the loan? Together these three deal with where the loan is actually a loan, "a payment on account of the earnings" and whether, viewed realistically, the money you received is actually earnings. This is a normal employment income tax charge rather than DR. But if the employer is offshore then you are likely to have obligations (e.g. reporting it on your tax return, requirement to correct, etc)

                What has happened to the loan receivable?If it has been transferred to another person then DR may have applied on the transfer (depending when it happened).

                What is going to happen to the loan receivable?If it is going to be transferred to another person then DR is likely to apply on that transfer.

                Why were you lent the money rather than just being paid it?This goes to whether viewed realistically it is earnings.

                For completeness, a relevant third person is not just a trust. It can be another company or an individual.

                If the loan is really from your only employer, what happens when it wants its money back? At least with a trust the trustee technically has to do what's supposed to be in the interests of the beneficiaries.

                Comment


                  #9
                  Originally posted by phil@dswtres View Post
                  HMRC are aware of the claim and say its completely incorrect and is taxable. Unfortunately that's (at this stage) probably the only opinion that matters.
                  How on earth is the man on the street, who has taken professional advice, supposed to get this right then?

                  Comment


                    #10
                    Originally posted by Clairol View Post
                    How on earth is the man on the street, who has taken professional advice, supposed to get this right then?
                    The advice needs to be independant, not from those who have a financial benefit from encouraging you to see things their way.
                    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
                    - Voltaire/Benjamin Franklin/Anne Frank...

                    Comment

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