Loan Scheme - How dodgy?

[IR35 Avoider]

Since MTM has been mentioned in this thread, for the record I thought I just post a link to another thread, where it is claimed some people have been caught, but MTM have replied and said they are still operating their scheme.

[malvolio]

It's also fair to say that MTM and the like are doing nothing illegal or underhand. It is their clients' problem to declare their taxable income correctly, not theirs.

[ratewhore]

Are you referring to MTM? Sorry, I've lost track as there are so many people referring to so many schemes in this thread.

I'm talking about Steed Solutions...

[tim123]

I know I'm stating the obvious, but the money "received" in loans doesn't belong to you, therefore there's no tax on it, so no avoidance has taken place. .

Actually there is potentially a tax on the loans (if more than 5k) as it's a BIK. But the rest of what you said is right.

tim

[Pondlife]

Firstly you say you pay 10% 'tax' of which 7% is fees. It can't be both!

Secondly, Tim, if it's not his Ltd then surely the loan can be at any rate for any amount without being a BIK (IANAA)? But as previously mentioned if the 'lender' hits financial difficulty they could call in the loan and you probably don't have much of a leg to stand on.

I wouldn't touch it with the proverbial(sp?) pole.

[tim123]

A BIK is anything that you receive by virue of your employment. It doesn't matter how many links there are in the chain, as long as it looks like you are getting the benefit because of a job it's taxable.

It's only the 'interest' that taxable, but on a large loan this still mounts up.

tim