ICS EBT Loans - No comment from ICS
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    Default ICS EBT Loans - No comment from ICS

    I, along with many, made use of the ICS EBT/PBT loan solution. However, they seem to be reluctant to discuss the new retrospective HMRC legislation with regard to loan schemes.

    I cannot understand why no one from ICS has been proactively contacting users to provide advice on guidance.

    I invite any ICS representative to comment.

    I am sure I am not alone in being very concerned about this situation.

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    Yeah, I'm the same boat. I asked to speak to someone at ics and I got given the number of a 3rd party advisor who when I asked about possibility of ICS being liable become very defensive. Nothing since.

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    Out of curiosity, what advice would you be expecting?
    All they can tell you is that you'll be left holding the bag.
    (Which is how Gauke wanted it)

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    Quote Originally Posted by jes107 View Post
    Yeah, I'm the same boat. I asked to speak to someone at ics and I got given the number of a 3rd party advisor who when I asked about possibility of ICS being liable become very defensive. Nothing since.
    Were you directed to Windermere Partners? That is who I was directed to and their advice was to obtain a settlement figure and put some money aside because it looks likely we will need to pay up. No mention of any legitimate tax planning, which could be available. For example, you could pay off the loans, over the next two years, and release the original capital from the trust in a tax efficient way. An example of that would be to move it to a retirement trust. In that way, you could draw from the trust and make use of you tax allowance in your retirement years, when you are likely to need less to live off, and so could manage not going to the higher rate of tax. That is just one potential strategy that I would expect them to be advising us on. There are doubtless other strategies that could be employed to at least mitigate the liability. I am under no illusion that tax will be payable but if you can use legitimate tax planning to at least reduce the liability, that would make this bitter pill at least a little easier to swallow.

    ICS remaining silent just leads me to believe we have no support at all. I read an article that suggest settling now with HMRC could cost more that waiting until after 5th April 2019. I don't know if that is true or not but these are the very things ICS and/or Windermere Partners should be discussing with us now. I feel very let down.

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    Quote Originally Posted by DotasScandal View Post
    Out of curiosity, what advice would you be expecting?
    All they can tell you is that you'll be left holding the bag.
    (Which is how Gauke wanted it)
    That is not strictly true. There are legitimate mitigation strategies that can be arranged between you and the trust but that would involve paying the loans back over the next two years and then releasing the original capital in the most tax efficient way. Waiting until after 5th April 2019 will mean you historical loans will be added to your 2018/19 income and taxed accordingly, which will mean it is very likely your historical loans will be taxed at at least 40%. By settling now, you settle each year individually and so will be able to make use of any remaining allowance available to you for each year and you won't have to pay NI either (that is what two HMRC representatives have told me in recent phone conversations).

    I want ICS to be advising me as to the best way to move forward. Should I just contact HMRC and say I want to settle? Should I do nothing? Should I try and repay the loans and the release the capital from the trust in the best and legitimate way possible? It is these sorts of things ICS/Windermere Partners should be advising on.

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    Quote Originally Posted by Smurfburger View Post
    That is not strictly true. There are legitimate mitigation strategies that can be arranged between you and the trust but that would involve paying the loans back over the next two years and then releasing the original capital in the most tax efficient way. Waiting until after 5th April 2019 will mean you historical loans will be added to your 2018/19 income and taxed accordingly, which will mean it is very likely your historical loans will be taxed at at least 40%. By settling now, you settle each year individually and so will be able to make use of any remaining allowance available to you for each year and you won't have to pay NI either (that is what two HMRC representatives have told me in recent phone conversations).

    I want ICS to be advising me as to the best way to move forward. Should I just contact HMRC and say I want to settle? Should I do nothing? Should I try and repay the loans and the release the capital from the trust in the best and legitimate way possible? It is these sorts of things ICS/Windermere Partners should be advising on.
    I would suggest there won't be many people in a position to repay all of the loans they have been issued?

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    Quote Originally Posted by WalterWhite View Post
    I would suggest there won't be many people in a position to repay all of the loans they have been issued?
    More importantly, there are provisions in the legislation precisely against attempts to repay the loans and "redistribute in a tax efficient way".

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    The OP raises some valid points some people may be able to repay in full or part and that provision against re-distributions may need probing legal testing

    It is frustrating to have been abandoned by the people have sold and profited from these although that has not been the case always.

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    The 2019 charge laws have provisions to prevent avoidance by repaying money and having it returned to you.

    We asked HMRC back in January about their view should the loan the repaid and the trustee then distribute the funds in accordance with the trust deed that was drawn up perhaps a decade ago.

    HMRC was unable to offer a clear view.

    They thought that the distribution of funds back to the borrower might be variously a trust distribution (taxable), an avoidance scheme (taxable) or both.

    Suggestions that:

    a. It was HMRC's job to collect tax due, not the maximum tax possible, and therefore ruling out non taxable options was contrary to their mandate; and

    b. Such as simple process, legally executed in accordance with rules drawn up years ago, cannot possibly have been in the mind of the draftsman of the 2019 law and therefore cannot have been intended by Parliament;

    Were met with the "try it and we'll see you in Court".

    If you were a wealthy investor in a tax scheme with wealthy mates and an ability to fund a tax hearing (somewhere between 250k and 750k) then good for you.

    Otherwise how are we going to test the boundaries here?

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    Quote Originally Posted by DotasScandal View Post
    More importantly, there are provisions in the legislation precisely against attempts to repay the loans and "redistribute in a tax efficient way".
    Agreed, there are provisions in the GAAR and TAAR but they do not include genuine tax planning else that would affect a lot more people than just contractors paid through loan mechanisms. As long as the correct amounts of tax are paid on the amounts received from the trust, I don't see how even HMRC could come back to you and say, "because you were originally paid by loans, then the only tax applicable is PAYE."

    Once the loans have been paid back, the original capital can be released in the most efficient, but legal, way possible. Some will be in a position to do that if they have sufficient funds to repay the loans in the first place. However, many won't...

    I don't know what happens if the original trust has been closed down.

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