BN66 - Time to fight back (Chapter 3)

[kiwinlondon]

Is a loan a scheme? Its not income

Maybe Niew Libor could start taxing Mortgages as they are loan schemes too... if they made it retrospective they'd have loads of extra money to pay for their holiday homes, garden furniture, barbeques etc etc

[Friendly Accountant]

Loan schemes

some loans schemes have been closed down, and contractors have had their fingers burnt. I think you will find the ones that are still doing so are fairly recent, and contractors who haven't yet been f**ed by the scheme run a high risk of doing so in the future.

I think that the loan schemes that have been successfully attacked so far are schemes that were poorly implemented. Remember, with all of these schemes, there are reputable providers who know what they are doing and there are also cowboys who try to copy the schemes and, often times, don't understand the details of how they work and end up cocking the whole thing up. I think you'll find that loan schemes attacked to date have been copycats with poor implementation.

It has nothing to do with how long the scheme has been around.

And, just to be clear, a loan is a loan. It is not income.

[sal626]

I think that the loan schemes that have been successfully attacked so far are schemes that were poorly implemented. Remember, with all of these schemes, there are reputable providers who know what they are doing and there are also cowboys who try to copy the schemes and, often times, don't understand the details of how they work and end up cocking the whole thing up. I think you'll find that loan schemes attacked to date have been copycats with poor implementation.

It has nothing to do with how long the scheme has been around.

And, just to be clear, a loan is a loan. It is not income.

Good point. Also, as I understand, there is more then one way to implement a loan scheme, so different providers are providing different schemes. They may appear the same to a user, but the back end workings may be different.

Who do you think are the reputable providers?

[BlasterBates]

don't even think about going there, there are literally thousands of contractors either in the UK and Europe who've been duped by "legal loopholes". It has nothing to do with "cleverness". It is pure luck as to whether you actually are on a scheme that isn't successfully attacked.

[seadog]

It is interesting that no mention has been made regarding the fact that Labour announced in 2005 budget that tax avoidance schemes would be closed down in future and back dated to DEC 2004.

Maybe they intend to use this as a contingency.

Does anybody know what is going on with the various 'loan' based scheme's that have been operating for many years? It seems unjust that none of these blatent artificial schemes have been treated in the same way.

If I remememner correctly this only announcement only referred to "employment". It may be that it caught IT contactors who used it as employment but it certainly did not apply to property developers who were using companies onshore to do deals with the offshore partnerships.

So I cannot see how that announcement could be construed as applying to those sort of arrangements.

[BlasterBates]

Good point. Also, as I understand, there is more then one way to implement a loan scheme, so different providers are providing different schemes. They may appear the same to a user, but the back end workings may be different.

Who do you think are the reputable providers?

I would read this before you get involved in one:

loan schemes

Makes a good point if it really is a loan, you have to pay it back and what choice do you have, and if you do cash it in you get taxed on it, after you've left the scheme.

In other words a loan scheme provider can just take you to the cleaners and you don't have a hope of getting your money back.

[Friendly Accountant]

Loan scheme

I would read this before you get involved in one:

loan schemes

Makes a good point if it really is a loan, you have to pay it back and what choice do you have, and if you do cash it in you get taxed on it, after you've left the scheme.

In other words a loan scheme provider can just take you to the cleaners and you don't have a hope of getting your money back.

Firstly, whoever drafted that web page either does not know how these schemes work or does not want to know, because, when set up properly, all of the issues raised on that web site are addressed.

Please recognise that any offshore tax planning scheme is direct competition for the umbrella companies. The purpose of that web page is not to inform, but to scare potential customers of the umbrella company away from its competitors. The source is not exactly impartial.

Again, there are good providers and not so good. Some of these schemes, if set up properly, work.

[RockTheBoat]

Firstly, whoever drafted that web page either does not know how these schemes work or does not want to know, because, when set up properly, all of the issues raised on that web site are addressed.

Please recognise that any offshore tax planning scheme is direct competition for the umbrella companies. The purpose of that web page is not to inform, but to scare potential customers of the umbrella company away from its competitors. The source is not exactly impartial.

Again, there are good providers and not so good. Some of these schemes, if set up properly, work.

well said, my thoughts exactly.

[BlasterBates]

Firstly, whoever drafted that web page either does not know how these schemes work or does not want to know, because, when set up properly, all of the issues raised on that web site are addressed.

Please recognise that any offshore tax planning scheme is direct competition for the umbrella companies. The purpose of that web page is not to inform, but to scare potential customers of the umbrella company away from its competitors. The source is not exactly impartial.

Again, there are good providers and not so good. Some of these schemes, if set up properly, work.

You raised a very good point earlier Friendly Accountant. A loan is not income. True. So the money doesn't belong to you. You depend on the good will of the scheme provider to write it off. If the loan is truly a loan and will stand up in a court, it isn't yours, and there's no way you can prove it will be.

By the way it isn't just that website, there was a posting a few weeks back from an individual, who's just discovered he has a whole lot to pay of tax to pay on his loan as a benefit in kind.

[BlasterBates]

well said, my thoughts exactly.

Virtually everyone I know who's tried some scheme, and some of them have been running in excess of 10 years "successfully", their scheme as either been busted or they've lost money.

Everyone who's in a scheme thinks their's is somehow different, legal with no catch.

I've had two contractors sitting next to me over the last two years, one had EUR 100,000 bill to pay in Germany, the other one has just heard that his scheme went bust, and he was in it 10 years ago, i.e. an accountant running it faces criminal charges. He might or might not get away with it becuase it was so long ago.
I spoke to a management co provider 5 years ago, and he promised a fully legit solution. All the contractors on that scheme are having their lives ruined. That scheme ran successfully for over 10 years. I declined to join the scheme, because like the scheme you are proposing it was fundamentally flawed.
It was loans scheme.