Trust help line email help!

[1234]

Update

Hi All

Update from mate as below response from THL if you settle with HMRC

“The key thing is to settle with HMRC. After this it is up to you whether you chose to settle your loans.”

What does this mean once settled with HMRC that should be the the end of it, how is it that people need to pay back the loans which was their money in the first place?
How can the trustees still have the nerve to ask for money when they set the scheme up into the first place that was mis sold.

What happens if people ignore THL and the loans will they expect a big bill from the later which I find it hard since the trustee shouldn’t exist still after the scheme they setup

Many thanks for any advice

[uplock]

Thanks for all the opinions on this. The opaque nature of THL and DOR, with no physical substance looks like an artificial structure to extract more money from us. I also understand from another thread that DOR directors are the Trustees based in Baker Tilly IOM (BT).

If correct, it looks like the 5% or 10% paid to DOR are going into the pockets of the trustees. As BT trustees have a fiduciary duty to protect our interests as beneficiaries and not to profit from their role as trustees this looks highly suspect and the IOM Financial Regulator should be advised to investigate.

The trust loan arrangement was an artificial transaction, in that we are effectively lending earned income to our selves via a trust. And the trustees and HMRC all agree that this was a tax avoidance scheme and not commercial loans (ie from a bank). I don't believe a court would look solely at the legal form of the transaction but override it with the substance of the transaction (how did the parties act and why) - so I don't believe the trustees would win in court if they tried to enforce the loan. It would also cause a lot of reputational damage to the BT brand, which may be the reason for all the secrecy in using THL and DOR to do their "dirty" work to request a % of the loan from us.

In light of the above I have decided not to accept their "kind offer" and try to get some sleep which I have been seriously lacking worrying about all this.

[here4beer]

Thanks for all the opinions on this. The opaque nature of THL and DOR, with no physical substance looks like an artificial structure to extract more money from us. I also understand from another thread that DOR directors are the Trustees based in Baker Tilly IOM (BT).

If correct, it looks like the 5% or 10% paid to DOR are going into the pockets of the trustees. As BT trustees have a fiduciary duty to protect our interests as beneficiaries and not to profit from their role as trustees this looks highly suspect and the IOM Financial Regulator should be advised to investigate.

The trust loan arrangement was an artificial transaction, in that we are effectively lending earned income to our selves via a trust. And the trustees and HMRC all agree that this was a tax avoidance scheme and not commercial loans (ie from a bank). I don't believe a court would look solely at the legal form of the transaction but override it with the substance of the transaction (how did the parties act and why) - so I don't believe the trustees would win in court if they tried to enforce the loan. It would also cause a lot of reputational damage to the BT brand, which may be the reason for all the secrecy in using THL and DOR to do their "dirty" work to request a % of the loan from us.

In light of the above I have decided not to accept their "kind offer" and try to get some sleep which I have been seriously lacking worrying about all this.

Are you settled with HMRC? Have you spoke with a lawyer to see where you actually stand? I'm hoping my TA will resolve my loan. However once my tax is settled, if my loan can't be released- first thing I'll do is find a suitable solicitor/lawyer.

There must be quite a large group of us now all in the same boat

[neveragain]

Thanks for the info everyone, I've just joined the forum so this is my first post. Like all of you I've spent loads of time trying to workout what to do next... I'm settling with HMRC but right now I am not paying the 5%, 10%, or any other fee to THL, DOR, Baker Tilly or any other shark, and it feels like Dozy B is a little too supportive of paying (for it's worth on that debate).

I think the position we are in is that we owe tax to HMRC as they perceive the income taxable, and the loans to the trusts are legal loans which are outstanding and will be until death, at which time it could impact my estate and what my wife and kids inherit... Unfortunately HMRC are bending the laws to their benefit to claim the tax - to be honest I'm passed caring about this and I'm in the process of settling my outstanding tax amount - it wouldn't surprise me if at some point in the future there's a successful challenge brought against HMRC and we get the tax back... but ultimately settling the tax (which I suggest you do) doesn't legally settle the loan under current legislation...

So I see 4 options regarding the loan:
1. Settle any outstanding loan amount which settles the loan,
2. Have the loan written off by the trustees - which THL and DOR think they can take advantage of the situation and charge 5%/10% + an outrageous admin fee,
3. Wait (& lobby) for parliament to pass a law which makes these loans unenforceable; or
4. Wait until their is a challenge by either HMRC or a class action which determines in court whether the loans are enforceable...

I think I might try and push for #3 and will even go down the route of #4 if needed. It's ridiculous that thousands of people, especially NHS staff can be in the position we are in. In my opinion there is absolutely no way that a judge would allow someone to profit from this as it would be inequitable to do so. Having dug out my deed I can see the name of the settlor and would happily take them to court. I also have the emails saved including the names of the representatives of IQ albeit they have been operating under a new entity since 2014, so if I need to I'd go after those representatives and the former company also - it's not unrealistic that the courts would lift the corporate veil but this is yet to be tried.

I would upload a redacted version of my IQ contract and deed but I can't. I think we all need to push back on THL, I can't decide whether ignoring them is a good way to proceed?

Neveragain, would be great to find out a bit more about what your lawyer said. Happy to PM if you would.

Tried to PM but not allowing me to.

[Contractor2999]

Hi all, first post. I've been reading all the posts to see if I can see anything to help give me the answers I need.

Has anyone seen the documents that The Trust Helpline have with respect to the dummy loan agreements? I'm wondering if it's worth getting a look at what they have by registering on their portal...

The main concern I have is the legality of said agreements and if they'll chase my family upon my death regardless of settling with HMRC. I managed to bypass the THL ID upload check and get the draft deeds directly from DOR, but DOR don't answer any investigative questions about how the trustees can be contacted, what evidence they have as to who they are representing, evidence of loans, copies of agreements.

As DOR do not respond to any emails, I'd be very surprised if anyone got signed Deeds of Release back.

I've also been trying to contact people at Baker Tilly IOM but they refuse to put you through to anyone no matter how hard you push.

I was with Darwin for a short period. It's proving impossible to get a straight response from these companies, assume it's the same for all scheme promoters.

Aiming to get some legal advice about the loan agreements and their enforceability but am fairly panicked now.

[webberg]

I've said it before but I'll say it again.

Settling the tax liability does NOT mean that the loans are unenforceable.

Further, a loan agreement is usually governed by contract law and the rights and obligations of the parties are subject to the same law.

I'm not a lawyer but from what I've learnt from speaking with a number of firms, is that you have to deal with the legal facts in the agreement and that assumptions as to the source and purpose of the funds in the hands of the lenders are usually to be disregarded.

In other words, you may regard the money as "yours" that has been recycled via a lender, but a Court will not.

A Court is unlikely to ask where or how or in what capacity or by what route a lender had funds. A Court will start from "lender had funds that it agreed to lend".

Harsh as it seems, as soon as you start using phrases such as "effectively it was my money already" or "essentially it was earnings", you know you have strayed into territory that a Court will disregard in determining the rights and obligations of lenders and borrowers.

That is not to say that there are not defences against repayment claims, simply that recharacterising the transaction as something a Court says it is not or is unable to contemplate because of contract law, is not a valid defensive strategy.

As I said, defence is available but it is based on legal concepts rather than arguments about the true nature of the transaction.

And will I share those defences and concepts in a public forum? No.

Happy to pick up PMs or I'm sure you can find out info email account easily enough.

[Dozy Bastard]

Contradictory HMRC statement

Now I'm a bit confused about one of the details and wonder if anyone knows the answer?

I read in HMRC's settlement guidance that settlement will be on a net basis:

"Settlement will be on a net basis - Income Tax will be applied on all the DR loans, or other payments made for your client’s benefit, rather than the gross amount paid by the client. This means that the fees deducted from the gross amount by intermediaries (scheme expenses) will not be taxed as part of income or profits."

I took this to mean that if I repaid 5% (which I have) then under the settlement, income tax would be applied to the 95%.

My current position is:
- I've registered to settle but not heard a think from HMRC in nearly six months
- I've engaged with THL to get the loans written off but not yet received the deeds

But now HMRC are saying:

"Any payment will not reduce the amount of earnings or income to be included in the settlement."

These statements seem contradictory. I suppose I shouldn't be surprised at HMRC making apparently contradictory statements but does anyone know either what I've failed to understand or which is correct?

Thanks in advance.

[uplock]

Now I'm a bit confused about one of the details and wonder if anyone knows the answer?

I read in HMRC's settlement guidance that settlement will be on a net basis:

"Settlement will be on a net basis - Income Tax will be applied on all the DR loans, or other payments made for your client’s benefit, rather than the gross amount paid by the client. This means that the fees deducted from the gross amount by intermediaries (scheme expenses) will not be taxed as part of income or profits."

I took this to mean that if I repaid 5% (which I have) then under the settlement, income tax would be applied to the 95%.

My current position is:
- I've registered to settle but not heard a think from HMRC in nearly six months
- I've engaged with THL to get the loans written off but not yet received the deeds

But now HMRC are saying:

"Any payment will not reduce the amount of earnings or income to be included in the settlement."

These statements seem contradictory. I suppose I shouldn't be surprised at HMRC making apparently contradictory statements but does anyone know either what I've failed to understand or which is correct?

Thanks in advance.

Hi - My understanding is that if you repay the loan to the trust (with evidnece) than HMRC will accept that it was a repayable loan and no tax would be due.

However, in this instance THL are saying on behalf of the trustees that they will write-off 100% of the loan if you pay two sets of fees > (1) £250 to trustees as admin fee for the paperwork and (2) 5% or 10% of the loan value to DOR Ltd who I assume will take the funds as their processing fee. (I am assuming this money goes to DOR not the trust as if it went to the trustees it would be funds sitting in the Trust which you as beneficiary would have entitlement to.)

As 5/10% is not a loan repayment but a processing fee to a 3rd party DOR, HMRC may not allow you to pay tax only on the 95% (ie not give you relief for the 5%) but insist you pay tax on the 100% of the loan.

:-(

[Taxnovice]

PM

Thanks for the info everyone, I've just joined the forum so this is my first post. Like all of you I've spent loads of time trying to workout what to do next... I'm settling with HMRC but right now I am not paying the 5%, 10%, or any other fee to THL, DOR, Baker Tilly or any other shark, and it feels like Dozy B is a little too supportive of paying (for it's worth on that debate).

I think the position we are in is that we owe tax to HMRC as they perceive the income taxable, and the loans to the trusts are legal loans which are outstanding and will be until death, at which time it could impact my estate and what my wife and kids inherit... Unfortunately HMRC are bending the laws to their benefit to claim the tax - to be honest I'm passed caring about this and I'm in the process of settling my outstanding tax amount - it wouldn't surprise me if at some point in the future there's a successful challenge brought against HMRC and we get the tax back... but ultimately settling the tax (which I suggest you do) doesn't legally settle the loan under current legislation...

So I see 4 options regarding the loan:
1. Settle any outstanding loan amount which settles the loan,
2. Have the loan written off by the trustees - which THL and DOR think they can take advantage of the situation and charge 5%/10% + an outrageous admin fee,
3. Wait (& lobby) for parliament to pass a law which makes these loans unenforceable; or
4. Wait until their is a challenge by either HMRC or a class action which determines in court whether the loans are enforceable...

I think I might try and push for #3 and will even go down the route of #4 if needed. It's ridiculous that thousands of people, especially NHS staff can be in the position we are in. In my opinion there is absolutely no way that a judge would allow someone to profit from this as it would be inequitable to do so. Having dug out my deed I can see the name of the settlor and would happily take them to court. I also have the emails saved including the names of the representatives of IQ albeit they have been operating under a new entity since 2014, so if I need to I'd go after those representatives and the former company also - it's not unrealistic that the courts would lift the corporate veil but this is yet to be tried.

I would upload a redacted version of my IQ contract and deed but I can't. I think we all need to push back on THL, I can't decide whether ignoring them is a good way to proceed?

Neveragain, would be great to find out a bit more about what your lawyer said. Happy to PM if you would.

FUIQ - also tried to PM you, feel free to drop me a msg if possible.

[administrator]

Taxnovice and neveragain - you now have access to the PM system so try again please.