Repaying back loans

[flamel]

Isnt paying back the loan a lot more expensive than paying tax on it?

Why would we want to that?

Unless we somehow could arrange for it to be paid back on death bed and then (hopefully) 40 years on inflation would reduce its true cost.

It's the tax, plus interest that HMRC will want.
THEN you pay back the loan plus interest.

KUATB

[tomtastic]

repayment

If the trust has been paid into by the beneficiary, and a loan against that has been made, why can't the trust contents be used against the loan to negate any requirement to repay it?

[webberg]

If the trust has been paid into by the beneficiary, and a loan against that has been made, why can't the trust contents be used against the loan to negate any requirement to repay it?

Because that's not how it works.

The settlor paid into the trust for the benefit of the beneficiary.

The trustee decided that they would make use of that cash by lending it, at interest, to the beneficiary.

In due course, the loan would be repaid and the trust would have liquid cash again and would then decide whether to distribute that to the beneficiary (or perhaps spend it on trust fees).

There is no cash in the trust unless and until the loan is repaid.

[jbryce]

Hi, as I love HMRC I'd really like to keep them in work, so I wonder if all the ideas to reduce the impact of the 2019 legislation could be taken offline. Perhaps in the Big Group?
If we tell them everything, then they'll have nothing to do.

[webberg]

I see, what would happen if the trust then just wrote off the loan, say in the circumstances that the loan couldn't be settled ?

Sign up for taxtopics and as indicated, take this offline?

[DotasScandal]

Sign up for taxtopics and as indicated, take this offline?

Yes, PLEASE.
There is no need to give the mob ideas to refine their extortion strategy.

[LandRover]

Hi, as I love HMRC I'd really like to keep them in work, so I wonder if all the ideas to reduce the impact of the 2019 legislation could be taken offline. Perhaps in the Big Group?
If we tell them everything, then they'll have nothing to do.

Utterly agree.

I find it surprising how many post strategies on CUK. HMRC have admitted they look at bb like CUK.

[BrilloPad]

Utterly agree.

I find it surprising how many post strategies on CUK. HMRC have admitted they look at bb like CUK.

For S58 they printed out parts of the CUK thread and bought them into court as evidence.

[stonehenge]

This thread isn't about strategies for avoiding the 2019 charge. It's about the Trustees demanding 10% of loans be repaid.

What I don't get is this.

The trustees lent me money but I'm also a beneficiary of the trust. Can the trustees really do anything to harm me, seeing as how they are supposed to act in the best interest of the beneficiaries?

Taking legal action against beneficiaries doesn't sound like it would be in their best interest.

[Iliketax]

This thread isn't about strategies for avoiding the 2019 charge. It's about the Trustees demanding 10% of loans be repaid.

What I don't get is this.

The trustees lent me money but I'm also a beneficiary of the trust. Can the trustees really do anything to harm me, seeing as how they are supposed to act in the best interest of the beneficiaries?

Taking legal action against beneficiaries doesn't sound like it would be in their best interest.

I don't know anything about your trust. But a typical employee benefit trust will have a defined listed of unnamed beneficiaries (e.g. employees, former employees and their dependants). There will often also be a "long-stop" beneficiary, usually some sort of charity, if no other beneficiaries can be found. Now sometimes the trustees put money into a sub-trust before the sub-trust lends the money to you. The sub-trust limits the range of beneficiaries (e.g. to you and your dependants). This sub-trust can be irrevocable (or not). If it is revocable then there will be something that sets out when / how its assets can be put back in the main trust (i.e. with the wider group of beneficiaries).

The trustee also want to be paid for their services. Typically, the trustee will want a responsibility fee (e.g. a percentage of the assets in the trust) and a time-based fee (e.g. hourly rate for doing something). These fees (and other expenses) can normally be charged before anything goes to a beneficiary. Most of the trustees who are involved in employee loans are professional trustees who have offices, staff, etc and so will very much want to charge fees.

My understanding is that the deal for many of the loan-based schemes was that the trustees fees were paid upfront for a five-to-ten year period. If that period is coming to an end then the trustees are going to want to get some money from someone. If the only asset of the trust is the receivable from you, how else are they going to get some cash to pay themselves?

If the beneficiaries of the trust are widely drawn (i.e. not just you) then there is nothing to stop the trustees choosing to benefit another beneficiary instead of you. Or they may even think it is for your benefit to pay fees to make sure they don't have to call in the rest of your loan. How far they could go and cause you active grief is not my area though. I would expect it to be very fact specific though. You need to talk to someone who has seen (i) your loan agreement, and (ii) the trust deed, who understands how the money originally got into the trust, who understand the contract law that governs your loan, the consumer credit act, the trust law that governs your trust. Even then, I guess there will be a big grey area. So asking for repayment of £50,000 when you have £500,000 of equity in your house may be different to asking for repayment of £500 from someone with no job and no assets. I just don't know. One thing I would say though is that the consumer credit act is something I would consider first as I've often seen it missed. If the CCA is not dealt with properly then the loan won't be enforceable without the consent of the court.