Sanzar Partnership? New IOM company

[kryten22uk]

Hi Kryten22uk, just wondering why you want to switch from Ltd. to Sanzar? Especially when most of the replies on this thread seems to go against Sanzar? I would like to know your thoughts on it please

Regards,
Nabeel

To be fair, most of the comments early in this thread were by people mistaking Sanzar for an EBT. Then the usual concerns about EBT's were discussed. This operation (and others like Tax Design, The Tax Alternative, Contractors Union) claims to operate differently without the use of loans. They all seem to think that the operation is totally legit as it makes USE of specific current legislation as opposed to finding ways around legislation.

My reasons for considering leaving Ltd is purely greed. I like the sound of a higher gross income. I cant think of another reason for signing up for this type of aggressive tax planning (if anyone has another motive then please indulge). I also dont like the "will they, wont they" screw me in a Special Commision review. Given that many people are of the opinion that if you get Charles Hellier as the SC then you're screwed not matter what your setup/contract/lawyer. If you dont then you're likely to be fine. ... How do you plan against that?! I suppose I could get insurance against tax losses...

All in all, these setups are quite new and for the large part are tarnished by the IoM EBT brush. Noone knows for sure what will happen. I guess we will be the guineapigs. Boils down to the same simple overarching investment principle: is the risk vs return balance in your favour?

[kryten22uk]

I am using Montpelier who are IOM. Highly recommended. PM me if you want more details.

Hi, I tried searching the Montpelier website before, but found it thoroughly confusing. Is there a section where they explain their services/options for contractors?

[ASB]

One minor point you might like to consider and that probably has not been explained too clearly. If you get paid through a series of repeated loans and are UK resident for tax purposes, you are evetnually liable for all due taxes when the original loan is repaid. So unless you are lined up to live and work forever, I should have some serious savings tucked away for when you retire. Or even simply leave the scheme...

HTH

Quite.

However a large number of IOM based schemes rely upon certain aspects of the UK-IOM DTA (which is not going to change in a hurry).

Where income is generated from an IOM operation this is then charged to tax in the IOM. Since the recipient is not IOM resident they choose to tax this at 0%. Provided the income is paid in a certain way this income ceases to be assessable to UK tax because of the specific attributes of the DTA.

Hence loans are often not involved.

Will these arrangements be successfully defended when attacked? Ultimately I doubt it, but HMRC are in a bit of a bind with them - they are certainly difficult to attack.

[BrilloPad]

Will these arrangements be successfully defended when attacked? Ultimately I doubt it, but HMRC are in a bit of a bind with them - they are certainly difficult to attack.

And some schemes are harder to attack than others! So far HMRC using scare tactics and delays...

[Bradley]

HMRC Already Know

I dont want to divulege all I know as HMRC will read this but it complies with certain tax judgements

HMRC are well aware of this type of scheme.

I don't know the full details but its no doubt something to do with the Padmore case and the use of foreign partnerships combined with trusts.

These types of scheme are now ten a penny. Not exactly smart thinking on behalf of the providers who are invariably marketing something that was thought of 10 years ago.

HMRC have legislation at their disposal that will invalidate the use of these schemes and they will charge penalties on the basis that you should have known that something was dodgy about the schemes.

[BrilloPad]

HMRC are well aware of this type of scheme.

I don't know the full details but its no doubt something to do with the Padmore case and the use of foreign partnerships combined with trusts.

These types of scheme are now ten a penny. Not exactly smart thinking on behalf of the providers who are invariably marketing something that was thought of 10 years ago.

HMRC have legislation at their disposal that will invalidate the use of these schemes and they will charge penalties on the basis that you should have known that something was dodgy about the schemes.

You mean this case? http://216.239.59.104/search?q=cache...lnk&cd=2&gl=uk

"HMRC have legislation at their disposal" - you mean as quoted in the above case?

Not all schemes are the same. Maybe HMRC will win and maybe not. I dont think it is clear cut. But I know alot of people here will disagree with me.

[Bradley]

Avoidance Legislation

You mean this case? http://216.239.59.104/search?q=cache...lnk&cd=2&gl=uk

Yes, that's it at SC level.

"HMRC have legislation at their disposal" - you mean as quoted in the above case?

No, I'm referring to ITA 2007 s720. This taxes income from any "arrangement" set up by a sponsoring individual purely to avoid UK tax. The only reason why these partnerships are set up in IOM is to avoid UK tax.

I take it that the one you are linked to is some form of Padmore variant?

[malvolio]

You mean this case? http://216.239.59.104/search?q=cache...lnk&cd=2&gl=uk

"HMRC have legislation at their disposal" - you mean as quoted in the above case?

Not all schemes are the same. Maybe HMRC will win and maybe not. I dont think it is clear cut. But I know alot of people here will disagree with me.

Your call. The potential to lose 6 years back tax plus interest and the same again in fines sounds like a business risk too far to my conservative way of thinking. Also HMRC can already assess your global income for UK tax and deduct taxes already paid offshore to get to a UK-based tax bill: since in the case of the IOM that nothing to deduct, you're still facing a big tax bill at some point. Just becuase they haven't got around to it yet doesn't mean they won't.

[Bradley]

The Thickness of a Prison Wall

Not all schemes are the same. Maybe HMRC will win and maybe not. I dont think it is clear cut. But I know alot of people here will disagree with me.

All of these schemes are the same. The point is that they are marketed by some grubby little man saying "we've got a scheme that means you don't have any tax to pay but don't tell anyone". If they're so sure of their product they should shout it from the rooftops and invite HMRC to attack it confident in their ability to win the argument.

But even the above misses the point. The fact is that you have a moral duty to pay tax if you're going to live in and benefit from this society. Not any more or less, just the right amount of tax. Entering into this type of scheme is immoral. I bet that if you asked 100 people in the street what they thought of these schemes the vast majority would say that they were crooked.

I'd read this report to show what this type of scam and others are costing the UK http://www.tuc.org.uk/touchstone/Mis...ngbillions.pdf.

BTW the quote is from Dennis Healy in the seventies who said that the difference between tax avoidance and tax evasion is the thickness of a prison wall.

[NotAllThere]

... just the right amount of tax. ...

You are Dim Prawn and I claim my right not to pay poll tax.

The right amount of tax is that defined by legislation, interpreted by HMRC and, eventually, decided by the courts.

"Oh, you're using a loop-hole to pay less tax. That's not fair".
Yes it is - you can use the same loop-hole yourself.