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  1. #1

    Nervous Newbie


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    Default Touchstone Business Development

    Hi

    Has anyone come across Touchstone before?
    I was approached by them with the following proposition...
    Most directors pay themselves via salary and dividends, resulting in high corporation and dividend tax bills, with no funds being used to benefit the future trade of their business.

    We at Touchstone Business Development have shown numerous companies how to use their profit to potentially benefit the future trade of their business, without the need for any funds to go offshore, whilst simultaneously reducing their Corporation Tax liability.

    The Business Development model was grounded in the Companies Act.

    Chapter 10, section 172 part (c) states:

    “A director of a company must act in the way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—
    (c)the need to foster the company's business relationships with suppliers, customers and others”

    As a result, since 1925 (Atherton v British & Helsby Cables Limited 10 TC 155) to the present, HMRC and the Courts have accepted that cash contributions to Business Trusts which are in principle made “wholly and exclusively” for the purposes of improving the trade of the business, are accepted as deductible against the taxable profits of the contributing company.

    As such, a formal relationship can be created between your Ltd Company and an established Business Development Trust by signing a legal document called a Deed of Adherence. As the Director of your Ltd Company you will be asked by the Trust to name a number of clients and suppliers that are contributing to the success of your Company. These companies can therefore be named as potential beneficiaries on the Trust Deed.

    The Trust has full discretion over any asset/funds received and can choose to make payments to any named beneficiaries. As the potential beneficiaries are clients and suppliers of your company it is reasonable to suggest that the money your Ltd Company has contributed into the trust has been done so “wholly and exclusively” for the purposes of improving the trade of the business – which is exactly what the Companies Act compels you as director to do.

    As a hypothetical example, a company that could be contributing to your Company’s success could be your agency or client – they pay you after all. Therefore, they could be named as one of the potential beneficiaries. If the agency/client at some stage in the future receives a cash bonus from the Trust, is it more likely or less likely that the agency/client would look upon you and your Company favourably when it comes to awarding future contracts or increased day rates?

    The answer is obvious and this method of benefitting trade has been successfully used by tens of thousands of UK Companies for decades.

    Any funds that your Ltd Company contributes to a Trust are treated exactly the same as any other business expense whereby the expense will reduce the profit of the company meaning no corporation tax is due on that amount. The amount contributed to Trust is denoted as an Administrative Expense on the company tax return in an open and transparent fashion with HMRC as has been the case for decades.

  2. #2

    Respect my authoritah!

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    TL;DR (If I understand correctly) - set up a trust using your company funds. Make your favourite clients and agencies beneficiaries. You give them money from the trust. They give you higher rates/more work.

    Sounds like kick-backs and bribes to me.
    You won. Get over it.

    --drunk on abuse of power--

  3. #3

    Contractor Among Contractors

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    Default

    Quote Originally Posted by LondonPM View Post
    If the agency/client at some stage in the future receives a cash bonus from the Trust, is it more likely or less likely that the agency/client would look upon you and your Company favourably when it comes to awarding future contracts or increased day rates?
    Or you could just take a lower day rate and improve their margin.
    This is at best bollox. Avoid.

  4. #4

    Double Godlike!


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    Touch stone?

    I would rather touch myself

  5. #5
    eek
    eek is online now

    bored now

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    If you want to see what the end result of this scheme and your greed is look at any of the threads within HMRC Scheme Enquiries

    HTH BIDI
    merely at clientco for the entertainment

  6. #6

    Super poster


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    yet these companies are still in business so somebody must be signing up....
    This default font is sooooooooooooo boring and so are short usernames

  7. #7

    Godlike


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    The greatest trick the devil ever pulled was convincing the world that he didn't exist

  8. #8

    Nervous Newbie


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    Default Details please?

    Can someone with some actual experience of these guys, or at least of a comparable scheme (i.e. one that exploits this trust relationship to avoid tax) explain what is actually the level of risk here, what would happen if HMRC caught up with them to find them operating outside of what was intended by the law and what the ramifications might be for a participant?

    "Don't be greedy and take it from me that it's not worth it" isn't super helpful, and tbh if your goal is to help other contractors by dissuading them it isn't going to do a very good job. Equally, taking that example from the email infers the wrong intention entirely for their business model, so to say it is about kick backs from agencies misses the point entirely.

    I think their email is intentionally vague because of the nature of the workaround. I received the same email, and have actually spoken to them on the phone a couple times where they have been a little more forthcoming about what the model entails:

    What they described to me was that you set up a trust, and name their associates who they tell you about as the beneficiaries. You put some money in that trust, and they pay you out 84% of that, which comes from other people in their network who have named you as beneficiaries on their trust. Their role is to facilitate this network and exploit this loophole, and their supporting team and their administration absorbs that remaining 16%

    If that's what's actually happening then I'm totally fine with that. You control how much you put in the trust, so if you start small and you don't get your 84% back then you've not really lost anything.

    I'm just trying to get a real understanding of what the risks and impacts could be, to determine whether I take a punt on it.

    If someone could help out with some proper facts and an open discussion on stuff like this, I would really appreciate it.

    Thanks

  9. #9

    Some things in Moderation

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    Quote Originally Posted by Mr Cool Ice View Post
    Can someone with some actual experience of these guys, or at least of a comparable scheme (i.e. one that exploits this trust relationship to avoid tax) explain what is actually the level of risk here, what would happen if HMRC caught up with them to find them operating outside of what was intended by the law and what the ramifications might be for a participant?

    "Don't be greedy and take it from me that it's not worth it" isn't super helpful, and tbh if your goal is to help other contractors by dissuading them it isn't going to do a very good job. Equally, taking that example from the email infers the wrong intention entirely for their business model, so to say it is about kick backs from agencies misses the point entirely.

    I think their email is intentionally vague because of the nature of the workaround. I received the same email, and have actually spoken to them on the phone a couple times where they have been a little more forthcoming about what the model entails:

    What they described to me was that you set up a trust, and name their associates who they tell you about as the beneficiaries. You put some money in that trust, and they pay you out 84% of that, which comes from other people in their network who have named you as beneficiaries on their trust. Their role is to facilitate this network and exploit this loophole, and their supporting team and their administration absorbs that remaining 16%

    If that's what's actually happening then I'm totally fine with that. You control how much you put in the trust, so if you start small and you don't get your 84% back then you've not really lost anything.

    I'm just trying to get a real understanding of what the risks and impacts could be, to determine whether I take a punt on it.

    If someone could help out with some proper facts and an open discussion on stuff like this, I would really appreciate it.

    Thanks
    Well we DO just talk about dissuading people because we have a whole forum of people worried about how they are going to pay HMRC.

    If you want straight advice, read this http://forums.contractoruk.com/hmrc-...following.html

  10. #10

    Contractor Among Contractors


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    Default

    Sounds great. Have a bash. What could possibly go wrong? Let us know how you get on.

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