Loan charge review - report and outcome

[dammit chloe]

I wonder how NTRT managed it? Their NC1 was a law changing amendment.

Normally they are allowable. My understanding is that because the Conservatives are so precariously in power they simply blocked any legal amendments to the finance bill. Not usually done but we know the sort of people we are dealing with in this Tory Cabinet.

Amendments are not just submitted and voted on. There is an arcane process of vetting and selection ( by the Speaker ) as to what will be allowed to go forward.

That's why NC26 needs to be understood as a means to try and pry open the debate rather than it being a great amendment in itself. It wasn't. We all wanted to get something more killer in there but several stronger ones were simply rejected at vetting before they could be selected.

[AtW]

It was for protection on a certain/unique project.

But what exactly were you protecting, your income from income tax/NICs?

If you only saved £20k in tax, how did that turn into £100k?

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The review had obvious result, it was always a fantasy to think that the Govt will change its mind after having gone that far on the issue and the reason it happened is precisely because of litigation that dragged on for years, so they've decided to make an example as means of deterrent, utterly predictable, inevitable outcome.

Getting promoters done for this is the way forward, even if it will only achieve moral satisfaction of bankrupting them.

[dammit chloe]

But what exactly were you protecting, your income from income tax/NICs?

If you only saved £20k in tax, how did that turn into £100k?

-----

The review had obvious result, it was always a fantasy to think that the Govt will change its mind after having gone that far on the issue and the reason it happened is precisely because of litigation that dragged on for years, so they've decided to make an example as means of deterrent, utterly predictable, inevitable outcome.

Getting promoters done for this is the way forward, even if it will only achieve moral satisfaction of bankrupting them.

HMRC have been quite brazen now in saying that the LC was created to avoid the need to litigate. That may not serve them well in court.

The worst thing is just how long everything takes.

[here4beer]

But what exactly were you protecting, your income from income tax/NICs?

If you only saved £20k in tax, how did that turn into £100k?

I was confident I'd be on the project for more than 2 years, and I thought one of the issues with IR35 was that you couldn't work on a project for more than 2 years, you'd have to move on. I'm not an expert in this field, (and I'm quite clearly wrong) hence being in this mess.

I didn't work through an agency, I'm a ltd Co director. So instead of being super efficient with dividends, SIPP contributions, partner as director, small salary, claiming thousands on expenses etc. - I just lumped it all into this 'perfectly safe HMRC compliant scheme'. Since hearing of the DRLC i come forward to HMRC, and they want PAYE tax on the full amount - PLUS my company now has the relevant liabilities to settle too.

Ps. I'm as shocked as you with the amount I owe. The original amount I was quoted didn't include company liability, only once i began settling - the total bill almost doubled.

anyway, sorry, back on topic.

[AtW]

So you were fully aware of IR35 and were totally financially motivated when you've made a choice to get "paid" by "loans".

What was the project anyway, saving Planet Earth from imminent asteroid strike that would destroy most of life here?

[here4beer]

So you were fully aware of IR35 and were totally financially motivated when you've made a choice to get "paid" by "loans".

What was the project anyway, saving Planet Earth from imminent asteroid strike that would destroy most of life here?

No, aware of its existence, but not exactly what it meant. I am/was a contractor due to the nature of my work, not through choice as such. With regards to Ir35 i wrongly assumed it meant you couldn't work for more than 2 years in the same job as a contractor, the same as when in Spain and other places. I failed in my job as a Director to fully understand this. Since learning of DRLC only 6 months ago and coming forward, I've educated myself but its too late, ignorance wasn't bliss... Typically my roles are 9-18 months, so its not been an issue for the previous 15+ years. And these previous roles are how i know what my income would have been

Everyone is different, buy my decisions aren't swayed by only £10k a year. If I wasn't a director, my settlement would've been about 40% less. Thanks HMRC.

The project? Something i dreamed of as a child, and something i doubt will be offered again. Hence my foolish rush into such ir35 'protection' schemes.

Pretty sure that concludes the off topic banter in here...?

[Robin Large]

Maybe I read it all wrong - but I'm new to this thread and forum...

OK So Hi folks, I am new to the forum - but have been contracting quite some while now - I am very familiar with the IR35 issues but not so much so with LC19 - but I would appreciate a view on this.

many moons ago I looked at the issue of beneficial loans though offshore companies - exactly the schemes that are being targeted by LC19 and at the time I decided that they fell foul of HMRC on a single underlying premise that the idea of establishing a company was to generate a profit and that to knowingly establish a company to make a loss was tax avoidance - by that company.

And so the companies, lets say promoters, were actually breaking the law. All loans would have to have a repayment scheme of some sort, however long that may have been. Consequently I decided against such a scheme and instead made alot more effort around establishing my innocence around IR35.

But here's my thought. Those contractors 'caught' by LC19 have not actually done anything wrong. OK they haven't paid any taxes on the 'loan' but they shouldn't have to - its a loan.

However should that loan then be declared as income by the promoter there arises a tax charge (fair enough) . if the repayment of the loan hasn't been requested then it is the promoter who is at fault and also guilty of not paying the late repayment charges on such a loan?

If the promoter decides to recall the loan or to convert the loan to some other payment instrument then surely the contractor would have a say in how that conversion happened, and be able to direct it in a more efficient manner? And there wouldn't be any late penalty or interest from HMRC accrued either?

EG the outstanding loan is 80K - they ask for repayment - you agree terms of repayment over 4 years - 20K per year, you then request that as they now have 20K per year of your money they then pay it as salary at the going rate for today? Then pay that out to pension scheme?

Or has this all been chewed through before?

[bigman]

OK So Hi folks, I am new to the forum - but have been contracting quite some while now - I am very familiar with the IR35 issues but not so much so with LC19 - but I would appreciate a view on this.

many moons ago I looked at the issue of beneficial loans though offshore companies - exactly the schemes that are being targeted by LC19 and at the time I decided that they fell foul of HMRC on a single underlying premise that the idea of establishing a company was to generate a profit and that to knowingly establish a company to make a loss was tax avoidance - by that company.

And so the companies, lets say promoters, were actually breaking the law. All loans would have to have a repayment scheme of some sort, however long that may have been. Consequently I decided against such a scheme and instead made alot more effort around establishing my innocence around IR35.

But here's my thought. Those contractors 'caught' by LC19 have not actually done anything wrong. OK they haven't paid any taxes on the 'loan' but they shouldn't have to - its a loan.

However should that loan then be declared as income by the promoter there arises a tax charge (fair enough) . if the repayment of the loan hasn't been requested then it is the promoter who is at fault and also guilty of not paying the late repayment charges on such a loan?

If the promoter decides to recall the loan or to convert the loan to some other payment instrument then surely the contractor would have a say in how that conversion happened, and be able to direct it in a more efficient manner? And there wouldn't be any late penalty or interest from HMRC accrued either?

EG the outstanding loan is 80K - they ask for repayment - you agree terms of repayment over 4 years - 20K per year, you then request that as they now have 20K per year of your money they then pay it as salary at the going rate for today? Then pay that out to pension scheme?

Or has this all been chewed through before?

Chewed through before....

[Albert49]

So you were fully aware of IR35 and were totally financially motivated when you've made a choice to get "paid" by "loans".

What was the project anyway, saving Planet Earth from imminent asteroid strike that would destroy most of life here?

Your post count may be majestic but you are a self righteous insensitive twat, the threat of the loan charge with the clause that death before April 6th means it can be avoided has already lead to at least 2 suicides and as that date approaches may lead to more, I suggest you keep your opinions to yourself.

[here4beer]

OK So Hi folks, I am new to the forum - but have been contracting quite some while now - I am very familiar with the IR35 issues but not so much so with LC19 - but I would appreciate a view on this.

many moons ago I looked at the issue of beneficial loans though offshore companies - exactly the schemes that are being targeted by LC19 and at the time I decided that they fell foul of HMRC on a single underlying premise that the idea of establishing a company was to generate a profit and that to knowingly establish a company to make a loss was tax avoidance - by that company.

And so the companies, lets say promoters, were actually breaking the law. All loans would have to have a repayment scheme of some sort, however long that may have been. Consequently I decided against such a scheme and instead made alot more effort around establishing my innocence around IR35.

But here's my thought. Those contractors 'caught' by LC19 have not actually done anything wrong. OK they haven't paid any taxes on the 'loan' but they shouldn't have to - its a loan.

However should that loan then be declared as income by the promoter there arises a tax charge (fair enough) . if the repayment of the loan hasn't been requested then it is the promoter who is at fault and also guilty of not paying the late repayment charges on such a loan?

If the promoter decides to recall the loan or to convert the loan to some other payment instrument then surely the contractor would have a say in how that conversion happened, and be able to direct it in a more efficient manner? And there wouldn't be any late penalty or interest from HMRC accrued either?

EG the outstanding loan is 80K - they ask for repayment - you agree terms of repayment over 4 years - 20K per year, you then request that as they now have 20K per year of your money they then pay it as salary at the going rate for today? Then pay that out to pension scheme?

Or has this all been chewed through before?

The general consensus is don't use another scheme to solve the loan scheme. If it's anything other than fighting or settling, leave it alone. If you try to be a clever dick twice, i can imagine HMRC really throwing the book at you the second time.

In my scheme, the loan IS a loan. I do owe money, there is interest and time stated. The only reason I haven't paid back a penny, is due to fiduciary Trust laws, "now isn't a good time for me", so they have to act in my best interest.