Loan Scheme - How dodgy?

**triboix** · 18 October 2006, 16:07

Originally posted by chav-u-like

For the last 5 months I have been paying about 10% tax on my 400/day rate.

I get a very small salary (about that of a teenage shoe shop assistant) and get the rest in the form of a loan.

The 10% includes about 7% to an accountant for the privilege. The tax man is therefore not getting much

What are my liabilities? Is anyone else out there following such schemes?

Sounds very dodgy! You may find yourself in big troubles in the future...

**MikeP** · 18 October 2006, 16:30

Originally posted by chav-u-like

The 10% includes about 7% to an accountant for the privilege. The tax man is therefore not getting much

£28/day for an accountant

So what exactly does (s)he do for £500/month?

I'd take that as a pointer as to how reputable the whole thing is....

**SasGnu** · 18 October 2006, 17:00

Sounds like you're storing up a whole world of pain

**Denny** · 18 October 2006, 18:19

Originally posted by chav-u-like

For the last 5 months I have been paying about 10% tax on my 400/day rate.

I get a very small salary (about that of a teenage shoe shop assistant) and get the rest in the form of a loan.

The 10% includes about 7% to an accountant for the privilege. The tax man is therefore not getting much

What are my liabilities? Is anyone else out there following such schemes?

Wisconi by any chance? Or Upton ?

Bunch of charlatans.

**tim123** · 19 October 2006, 09:03

For someone with a regularly high income, loan schemes shouldn't even look like they work, for some reason they do (look like they work).

There must be something dodgy in there, otherwise everybody (and I do mean everybody) would be paid in loans.

tim

**ChimpMaster** · 19 October 2006, 09:38

It really depends on how you look at this. Obviously the attraction of a 10% fee/tax against a 35% tax is going to coerce some people into using these facilities.

Another factor is the risk you are personally willing to take on. I.e. is this tax/fee differential worthwhile taking on the chance of back-tax requests from HMRC and fines etc?

A small salary is in itself a giveaway to HMRC. I know loan schemes that are set up to pay close to market rate salaries, with the rest in loans etc. In all cases that I know of, the loan has to be re-paid in some form, to close the transaction between yourself and the loan provider. Forward purchasing of delvaluing currencies has often been used in the past but I believe this has now been closed by the government.

I don't believe that all schemes are illegal as such, though indeed the scaremongering by the government is having the intended effect of discouraging people to use them. Having said that though, the burden of risk is always upon the individual, and rarely upon the loan provider themselves.

**ratewhore** · 19 October 2006, 09:53

Originally posted by TazMaN

It really depends on how you look at this. Obviously the attraction of a 10% fee/tax against a 35% tax is going to coerce some people into using these facilities.

Another factor is the risk you are personally willing to take on. I.e. is this tax/fee differential worthwhile taking on the chance of back-tax requests from HMRC and fines etc?

A small salary is in itself a giveaway to HMRC. I know loan schemes that are set up to pay close to market rate salaries, with the rest in loans etc. In all cases that I know of, the loan has to be re-paid in some form, to close the transaction between yourself and the loan provider. Forward purchasing of delvaluing currencies has often been used in the past but I believe this has now been closed by the government.

I don't believe that all schemes are illegal as such, though indeed the scaremongering by the government is having the intended effect of discouraging people to use them. Having said that though, the burden of risk is always upon the individual, and rarely upon the loan provider themselves.

One of the more rational posts on the non-use of Ltds. Usually it's scaremongering, we're doomed etc etc...

**IR35 Avoider** · 19 October 2006, 10:18

What are my liabilities?

[Pedant] Add up the amount you've received in loans, then add the interest you owe.[/Pedant]

I'm assuming there's a lot more to this than loans - the real issue is how they get paid off. (If there's no intention to repay them then they aren't loans, and you may be colluding in the criminal offence of tax evasion.)

One scheme that paid dividends went bust recently. Administrators were appointed and found that the paperwork for dividends hadn't been done properly, and wrote to dividend recipients to demand return of all dividends (which would then probably mainly go to pay tax, and administrators fees.) And that was a scheme that sounds less dodgy than yours - though that comment is a bit unfair, as without knowing how the loans get paid off, we don't really know what yours is.

There are/were much more heavyweight schemes out there. One of the most impressive involves off-shore trusts and partnerships. Although HMRC have known about it for four years, and claimed it doesn't work, as far as I know people are still using it. I don't understand how it can still be operating if it doesn't work.

Some discussion of the scheme here . Looks like some people have violated their non-disclosure agreements. (The MTM scheme is the one I was referring to.)

**Darren@UptonAccountants** · 19 October 2006, 10:50

Tax

Originally posted by chav-u-like

For the last 5 months I have been paying about 10% tax on my 400/day rate.

I get a very small salary (about that of a teenage shoe shop assistant) and get the rest in the form of a loan.

The 10% includes about 7% to an accountant for the privilege. The tax man is therefore not getting much

What are my liabilities? Is anyone else out there following such schemes?

I presume you're through a limited company? Is it a managed scheme?

Sounds a little on the dodgy side! I'll be happy to look at it if you send through the details.

7% to the accountant...blimey!!

Loan Scheme - How dodgy?