concern about payschemeplus

[Rebecca Loos]

fair point.

[ASB]

EBTs

Anybody still happy with EBT's ?

Look for MacDonald v Dextra.

I don't think it's over yet but it's a pretty clear indication of what may happen. There was also something specific about EBT funding to gain CTR relief in FA2005.

Those who are still using EBTs may consider the advice from the promoters better than the opinion of appeal court judges and senior QC's (and it could possibly be) but unless it does go to the Lords and gets overturned expect some interesting times.

[partimer]

EBTs

Anybody still happy with EBT's ?

Look for MacDonald v Dextra.

I don't think it's over yet but it's a pretty clear indication of what may happen. There was also something specific about EBT funding to gain CTR relief in FA2005.

Those who are still using EBTs may consider the advice from the promoters better than the opinion of appeal court judges and senior QC's (and it could possibly be) but unless it does go to the Lords and gets overturned expect some interesting times.

Moving things on slightly.
Like all things it's only an issue if you get caught. Ask any speeding motorist.
Applying this to EBTs, you have to weigh up the risk
a) Your chances of being investigated
b) The IR being able to force you to stump up anything before you are away with your loot and a one way ticket to Rio

If you reckon you can get away with a or b then why worry.
Remember though that any new scheme has to have IR approval (new legislation) so there probably won't be any new schemes. Also, I believe they can go after retrospective tax.

[Bradley]

Reextra

Rebeccaloos said

I think in the case of Payscheme+ they rely on the fact that the loan they give you, even though being an EBT loan, is not necessarily an employment-related loan

One of the points considered in the Dextra case was the relationship between the loans etc and the employees and the loans etc were attributed to the employees as earnings i.e. what RB quotes above simply won't work any more unless the case is appealed and over-turned.

[AussieInLondon]

Rebecca - thanks again for your voice of reason on this topic! If all someone is going to do is write unsubstantiated fear-factor drivel, it makes for tiresome reading. Some of the "nay" comments, however, are valid and provide a legitimate balanced view.

Personally - I think nothing is risk-free and each of us has to decide whether the risk is worth the margin of gain possible depending on our individual circumstances. I also hear the comment about the person already achieving 80% net under a Ltd structure and can see the case that they might not consider the risk valid to achieve an extra 5% or so ...

I, however, am unable to effectively operate outside IR35 so the Ltd option is not valid for me ... the alternative is an effective tax rate of around 40% which I cringe at, so the margin of benefit for me IS worth the perceived risk of this unusual structure.

To each their own.

[Rebecca Loos]

exactly. The thing is to look at the risk and see whether you can mitigate them. In our case (expats) it is easier hence the possibility of doing something a bit more risky.

But let's not forget that we are talking about something not illegal! And therefore, in theory, perfectly legal

[malvolio]

OK, fine, it's brilliant and the 99.9% of contractors not using it are clearly deranged. Who cares that it's been outlawed in the UK (note that the parent company is not a UK one), that all income derived from interest free loans is treated as earned income and if you don't declare it on your SA it's evasion. not avoidance.

Your money, go ahead, I really don't care. You asked for opinion and my personal one its that it's well stupid.

You should also note that the only people saying it's a good idea are two aussies that could run away at a moment's notice with no liability. UK citizens are caught by UK tax law and would liable to back tax, interest and penalties: basically it's a good move if you have no UK assets at risk.

[boredsenseless]

And of course those aussies haven't yet realised the mutual agreement on tax settlements between the UK and OZ yet then?

[Underscore2]

OK, fine, it's brilliant and the 99.9% of contractors not using it are clearly deranged. Who cares that it's been outlawed in the UK (note that the parent company is not a UK one), that all income derived from interest free loans is treated as earned income and if you don't declare it on your SA it's evasion. not avoidance.

Your money, go ahead, I really don't care. You asked for opinion and my personal one its that it's well stupid.

You should also note that the only people saying it's a good idea are two aussies that could run away at a moment's notice with no liability. UK citizens are caught by UK tax law and would liable to back tax, interest and penalties: basically it's a good move if you have no UK assets at risk.

I know at least 20 contractors who are using EBTs - none of them are ex-pats. I'm not using one - I'm actually going with a composite setup that other fellow contractors have used for the past 5 years. My accountants do all of my paperwork - I just get a wodge of cash sent to me every month. Is it illegal - probably - is it worth it? probably. Am i better off? Well i get over 80% without all the hassle of ltd working. Its a simple risk choice.....but if you are going to do it - you;d be better of going with a small firm rather than some huge EBT type company who advertises everywhere.

[Xenophon]

It seems that many contractors who use umbrellas just pay tax on minimum wage and take regular (often monthly) dividends. Is this more/less/as risky as the loan schemes?