Is CUK advertising dodgy schemes again

[LisaContractorUmbrella]

Err it was named in the OP and is being advertised on your home page with a link! Anyway I just wanted to know a bit more but will probably just end up going with a paye option for peace of mind.
It's a scheme in which you own joint shares with the brolly and they pay you a small paye amount plus dividends on the shares and also then sell the shares back to utilise your annual CGT allowance. I don't know the exact maths but they work it out at around 80% retention.

If you are receiving dividends from what is, in effect, an intermediary then it is likely that they scheme would fall foul of the MSC legislation regardless of the structure. Even if it didn't it would be viewed by HMRC as nothing other than a sham arrangement to avoid paying tax and would therefore be likely to fall under GAAR

[ASB]

If you are receiving dividends from what is, in effect, an intermediary then it is likely that they scheme would fall foul of the MSC legislation regardless of the structure. Even if it didn't it would be viewed by HMRC as nothing other than a sham arrangement to avoid paying tax and would therefore be likely to fall under GAAR

I think that one ends up with shares in a completely seperate entity and these are paying a dividend. Not unlike a normal employee share schemes in that respects.

Except for the fact that the divis will be disproportionate, some shares get sold etc etc.

I am moderately sceptical that it might not pass muster under a serious challenge.

[CDJ]

Still doesn't answer the original question of why such a scheme is allowed to advertise on CUK - by doing so you are essentially endorsing the product (Indeed I notice that the Network One site has CUK proudly emblazoned across its home page - pretty much implying as much).

Its all well and good to tell peeps "do at your own peril, but don't come crying when it goes bang as you'll get little sympathy", but if you are the one promoting the thing in the first place, its more than a little unethical.

Surely CUK should be saying "Thanks but no thanks" and find better sources of revenue?

[cojak]

Still doesn't answer the original question of why such a scheme is allowed to advertise on CUK - by doing so you are essentially endorsing the product (Indeed I notice that the Network One site has CUK proudly emblazoned across its home page - pretty much implying as much).

Its all well and good to tell peeps "do at your own peril, but don't come crying when it goes bang as you'll get little sympathy", but if you are the one promoting the thing in the first place, its more than a little unethical.

Surely CUK should be saying "Thanks but no thanks" and find better sources of revenue?

So why don't you ask Admin? I'm sure he'll reply.

[LisaContractorUmbrella]

I think that one ends up with shares in a completely seperate entity and these are paying a dividend. Not unlike a normal employee share schemes in that respects.

Except for the fact that the divis will be disproportionate, some shares get sold etc etc.

I am moderately sceptical that it might not pass muster under a serious challenge.

Only moderately

[ASB]

Only moderately

It is always difficult to convey irony.

[kal]

This line from their website tells you all you need to know about where Network One are coming from

'Limited companies are not very tax efficient'...

Seriously, who signs up with these snake oil merchants these days, would be less painful to place a precious body part in a vice and wait for HMRC to come along and begin tightening it!

[eazy]

Ramsay Principle & tax Avoidance

Ramsay Principle
PAYE avoidance: application of the Ramsay principle

The Ramsay principle is the shorthand name given to the decision of the House of Lords in two important cases in the field of UK tax, reported in 1982. The principle has evolved through case law. If one is looking at a tax avoidance scheme which involves a transaction effected via a series of steps, one should look at the effect of the whole series and not at the tax position of each individual step. The principle can only be applied when the legislation requires this approach and each step need not be a sham for the principle to apply, so this adds greatly to make interesting legal argument.

United Kingdom House of Lords Decisions : WT Ramsay Ltd v Inland Revenue Commissioners [1981] UKHL 1 (12 March 1981)

The House of Lords decided that where a transaction has pre-arranged artificial steps that serve no commercial purpose other than to save tax, the proper approach is to tax the effect of the transaction as a whole. The decision is not limited to capital gains tax, but applies to all forms of direct taxation, and is an important restraint on the ability of taxpayers to engage in creative tax planning.

Development of the Ramsay principle

The Ramsay list of tax avoidance characteristics and circumstances was modified in subsequent House of Lords decisions. In IRC v Burmah Oil Co Ltd ([1982] STC 30), the Lords held that the Ramsay principle applied to a scheme devised by the taxpayer's advisers, involving the taxpayer's own funds. Lord Diplock considered that, in order for the Ramsay principle to apply, there must be:

1) a series of transactions; which are
2) pre-ordained; and
3) into which there are inserted steps that have no commercial purpose apart from tax avoidance.

The Ramsay principle had hitherto been confined to tax avoidance in the form of artificial schemes containing steps that were, in effect, self-cancelling. However, in Furniss v Dawson ([1984] STC 153), the House of Lords applied the Ramsay approach to a scheme of tax deferral as opposed to avoidance, which was not circular or self-cancelling. Referring to the previous criteria for the Ramsay principle to apply as set out in the Burmah case above, Lord Brightman redefined the necessary conditions:

1)a preordained series of transactions (or one single composite transaction); into which there must be

2) steps inserted which have no commercial (business) purpose (as distinct from a business effect) apart from the avoidance (or deferral) of a liability to tax.