Norla EBT Loan Scheme

[VJTheDJ]

I have just been talking to someone about an offshore EBT scheme.
It looks kosher as HMRC have a document that states it is Avoidance not Evasion.
Check it out: http://www.hmrc.gov.uk/manuals/bimmanual/bim44535.htm

The only risk is that HMRC might decide to outlaw it and apply it retrospectively!

[Archangel]

I have just been talking to someone about an offshore EBT scheme.
It looks kosher as HMRC have a document that states it is Avoidance not Evasion.
Check it out: http://www.hmrc.gov.uk/manuals/bimmanual/bim44535.htm

The only risk is that HMRC might decide to outlaw it and apply it retrospectively!

hahahahahahahahaha, no stop it, hahahahahahah, hahahah, ha ha.

[Emigre]

I have just been talking to someone about an offshore EBT scheme.
It looks kosher as HMRC have a document that states it is Avoidance not Evasion.
Check it out: http://www.hmrc.gov.uk/manuals/bimmanual/bim44535.htm

The only risk is that HMRC might decide to outlaw it and apply it retrospectively!

Are HMRC that cynical? Its on their site, it doesn't say you can't do it, in fact isn't it actually telling us that it is legal and they are offering advice on how we can avoid tax?

[EBTContractor]

P11D and EBT taxation

It doesn't seem to be; the HMRC website only seems to mention the BIK in the context of employee type loans. But it does seem odd, after all the loan was granted originally as a result of the employment. Why does the benefit stop on cessation of employment?

Another point is regarding the writing off of the loan. In terms of loans in general this is pretty well covered. The fact that one is no longer an employee at the point the loan is written off will still cause the recipient to attract a tax charge. http://www.hmrc.gov.uk/manuals/eimanual/EIM21743.htm

I know Norla's scheme very well and once employment ceases you won't receive a P11D form for the following year. The loain remains in existence, but isn't reported on a P11D. Thus no repayment, release or writing off to trigger the tax charges. Simple as that.

[ASB]

I know Norla's scheme very well and once employment ceases you won't receive a P11D form for the following year. The loain remains in existence, but isn't reported on a P11D. Thus no repayment, release or writing off to trigger the tax charges. Simple as that.

Ok, I can buy that; and the lack of bik after employment has ceased. But at some point you will die. At this point the loan has to be written off - still triggering the tax charge - or repaid. Now there may be a way of creating a trust on death thus repaying it from the estate could potentially be used to feed back to the beneficiaries of the estate, but until death seems a long time to wait to get the tax benefit - plenty of time for rule changes.

Of course this is just hypothesising and may well be covered; but....

[mouse]

Hi guys - I've been reading the Norla threads with interest.

I naively entered their EBT scheme for my first contract without really understanding what I was getting into - no excuse now I realise but I was recommended by a colleague and I was totally new to the contracting world.
Now I am getting worried about HRMC's investigations and the possibility of a huge tax bill. Ideally I would like to get out asap... any advice?

Can I just transfer to another umbrella company (I'm not a ltd company).

[TykeMerc]

Hi guys - I've been reading the Norla threads with interest.

I naively entered their EBT scheme for my first contract without really understanding what I was getting into - no excuse now I realise but I was recommended by a colleague and I was totally new to the contracting world.
Now I am getting worried about HRMC's investigations and the possibility of a huge tax bill. Ideally I would like to get out asap... any advice?

Can I just transfer to another umbrella company (I'm not a ltd company).

Agencies can be a bit funny over re-issuing a current contract (which will definitely be required since they have a signed contract with Norla as your employer) but it's possible. It's generally easier to swap at a renewal stage as a new contract is drawn up then anyway.

If you want to go Ltd just set one up or get a Formation Agency to do it or to sell you one off the shelf. If you prefer to go the Umbrella route then do a little research as some are appalling while others are fine. Limited MyCo or Umbrella is a matter of personal taste although it can be argued that Ltd can same you some tax.

[mouse]

TykeMerc- thanks for the advice. I will find out if they can re-issue a contract for me. I think I will stick with Umbrella for ease, hopefully I can switch over without too much hassle - unfortunately it's bad timing on my part as I have not long renewed.

[BlasterBates]

Ok, I can buy that; and the lack of bik after employment has ceased. But at some point you will die. At this point the loan has to be written off - still triggering the tax charge - or repaid. Now there may be a way of creating a trust on death thus repaying it from the estate could potentially be used to feed back to the beneficiaries of the estate, but until death seems a long time to wait to get the tax benefit - plenty of time for rule changes.

Of course this is just hypothesising and may well be covered; but....

The other danger when they have millions of pound outstanding is that they may simply recall the loans. You never know who will be managing this company in the future and whether they might get into financial difficulty.

If the company were to go into administration, the adminstrator, would almost certainly do this. As it is his duty to liquidate all assets and that would include all outstanding loans.

Beware!

[BrilloPad]

The other danger when they have millions of pound outstanding is that they may simply recall the loans. You never know who will be managing this company in the future and whether they might get into financial difficulty.

If the company were to go into administration, the adminstrator, would almost certainly do this. As it is his duty to liquidate all assets and that would include all outstanding loans.

Beware!

Indeed. And it did happen :-

http://forums.contractoruk.com/busin...anagement.html

http://forums.contractoruk.com/622625-post287.html