Employers loan/ Commercial Loan Arrangements - thoughts please

[lowpaidworker]

While the loan (and what happened before the loan was made) can be challenged under lots of rules, the April 2019 loan charge cannot apply if it is "plain vanilla" as I've described above.

Don't forget there are things you may not know about (see my earlier post) that may mean that the loan is not plain vanilla. Also, if your employer has been liquidated then the April 2019 loan charge may still apply because someone else has the loan receivable (e.g. a former shareholder or the crown) and so the quasi-loan rules apply.

What if your old employer is still going still have the loan documents. These loans were commercial (in a written nature) and direct to you from them.

Employer was IOM based

Got an inkling many like me in the same position. This was all the rage post 2011

[lowpaidworker]

What if your old employer is still going still have the loan documents. These loans were commercial (in a written nature) and direct to you from them.

Employer was IOM based

Got an inkling many like me in the same position. This was all the rage post 2011

In addition my former Employee is still going. So according to law I assume HMRC are going after them ?

How can they push this onto me when there is a valid legit Co still going ? Whilst not UK IOM is part of the British Crown !!

[webberg]

I can't answer any of the three questions above.

Having though spent a lot of today reviewing HMRC requests, although they take 5 pages and 60+ questions, what it boils down to is:

Why did the employer make you a loan and not just pay you a salary?

If the making of the loan is linked to being an employee but it's not to help you with say a season ticket, car/house purchase, etc, then why was it paid?

The short (and correct in my opinion) answer is that the loan was a form of reward.

A reward for working - as an employee.

I think before you get into the detail of loan terms etc, answering the above is necessary.

[Iliketax]

What if your old employer is still going still have the loan documents.

No idea. You'd have to find out if all those points I wrote earlier about what I called "plain vanilla" loans apply. The April 2019 loan charge has nothing to do whether you still have the loan documents. And even if you have loan documents (and I expect that they would be produced for almost every scheme out there), there can still be other tax charges before or when the loan was made. This is something you need to take your own independent professional personal tax advice on.

[Finalwhistle]

Why did the employer make you a loan and not just pay you a salary?

If the making of the loan is linked to being an employee but it's not to help you with say a season ticket, car/house purchase, etc, then why was it paid?

The short (and correct in my opinion) answer is that the loan was a form of reward.

A reward for working - as an employee.

I think before you get into the detail of loan terms etc, answering the above is necessary.

Why did the employer make you a loan and not just pay you a salary?
I spotted a personal investment strategy whereby I could only enter with a minimum of £120k and could not received this amount as salary in a quick enough timescale; so taking a loan was the quickest way of drawing funds.

If the making of the loan is linked to being an employee but it's not to help you with say a season ticket, car/house purchase, etc, then why was it paid?
see above. I need the loan to claim a place in an investment opportunity.

The short (and correct in my opinion) answer is that the loan was a form of reward.
this cannot be proven until the end of the loan arrangement. I'm contractually permitted to pay the loan back after 10 years. Whether I can do that is based on the investment. Just because i'm not making repayments now doesn't mean I have no intention to. HMRC can't enforce me to pay anything in April 2019 as I could pay back the entire lot in 10 years. So they are charging me an extra fee on top of the interest rates i'm already paying on a loan. bonkers.

A reward for working - as an employee.
yes, a reward in the form of a loan from my employee to enable me to exploit opportunities I wouldn't have otherwise had. The employee also benefits from the beneficial interest rates. it can not be proven whether this was a real loan or not until the end of the loan agreement... if the loan is written off then yes it becomes tax deductible. if its paid back then all is good.

I think before you get into the detail of loan terms etc, answering the above is necessary

[Iliketax]

Why did the employer make you a loan and not just pay you a salary?
I spotted a personal investment strategy whereby I could only enter with a minimum of £120k and could not received this amount as salary in a quick enough timescale; so taking a loan was the quickest way of drawing funds.

So you got cash before you'd earned it? Nice negotation skills.

[Delendog]

what happens if the employer filed for voluntary liquidation but has been stopped completing it by claims from HMRC?

Can anyone answer this, do HMRC try and get the money from the employer that it has stopped completing liquidation OR do they come straight for the employee?

[Finalwhistle]

So you got cash before you'd earned it? Nice negotation skills.

What can I say, I was an exemplar employee ;D

[Iliketax]

What can I say, I was an exemplar employee ;D

Absolutely. Employers will love you. I bet they don't find many people who are happy to work for no salary and a benefit worth a couple of thousand a year.

[Finalwhistle]

Absolutely. Employers will love you. I bet they don't find many people who are happy to work for no salary and a benefit worth a couple of thousand a year.

It would appear from this forum that there maybe a few more than you think!