"Dodgy" offshore schemes

[JRCT]

If it was a genuine loan absolutely nothing but the fact is that these are sham arrangements which have no purpose other than to avoid tax - hence the attention from HMRC

I understand that, but surely if they're attempting to avoid tax then they talk it up as a sham loan, but on paper it has to be treated as a genuine loan. Therefore, repayable.

[Alan @ BroomeAffinity]

A loan that isn't repayable isn't a loan. I'm not entirely sure how the providers square this.

Unless they claim a precedent has been set when a parent "lends" their 17 year old money.

[DonkeyRhubarb]

I understand that, but surely if they're attempting to avoid tax then they talk it up as a sham loan, but on paper it has to be treated as a genuine loan. Therefore, repayable.

Typically the lender is a Trust and the borrower is a beneficiary of the Trust.

The trustees are legally bound to act in the interests of the beneficiary, hence why in practice the loans would never be called in. In some cases the loans do have a set repayment date but then they just get rolled over into new loans ad infinitum.

[BlasterBates]

A loan that isn't repayable isn't a loan. I'm not entirely sure how the providers square this.

Unless they claim a precedent has been set when a parent "lends" their 17 year old money.

In the Rangers case the loan is repayable. As far as the trustees are concerned it isn't much of a victory as they'll be taxed on any further benefits down the line.

Just deferred tax really.

They pay the loans back in 12 years.

[JoJoGabor]

Look I think these schemes are dodgy as hell. but still HMRC have not proven them to be illegal. At the moment all they are doing is fishing for weakness, to gather information, or offering a discount on what they perceive as tax owed. If they were that certain the schemes are illegal they would not be offering a discount, they would be using the full weight of the law to get 100% of taxed owed plus penalties.

Personally I don't think they would or will succeed in proving these schemes illegal, but I couldn't take the stress of those letters and legal wrangling over several years, I'll pay a bit more tax and sleep soundly thank you very muchly.

[LisaContractorUmbrella]

Look I think these schemes are dodgy as hell. but still HMRC have not proven them to be illegal. At the moment all they are doing is fishing for weakness, to gather information, or offering a discount on what they perceive as tax owed. If they were that certain the schemes are illegal they would not be offering a discount, they would be using the full weight of the law to get 100% of taxed owed plus penalties.

Personally I don't think they would or will succeed in proving these schemes illegal, but I couldn't take the stress of those letters and legal wrangling over several years, I'll pay a bit more tax and sleep soundly thank you very muchly.

The problem for HMRC is actually getting one of the scheme providers to Court. Fighting HMRC is a very expensive undertaking and, even if you win, it's unlikely that you'll get your costs back so the usual scenario is that a settlement is reached or the company phoenixes; the immediate problem is resolved by no legal precedent is set.