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EBT or not EBT

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    EBT or not EBT

    I just posted a reply elsewhere on the forum, but wondered whether anyone had any good or bad experiences in an EBT? From what I've heard, the benefits far outweigh the negatives and it seems reasonably straight forward to set up...

    Any comments, greatly received.

    #2
    Originally posted by bigbrainbrad View Post
    I just posted a reply elsewhere on the forum, but wondered whether anyone had any good or bad experiences in an EBT? From what I've heard, the benefits far outweigh the negatives and it seems reasonably straight forward to set up...

    Any comments, greatly received.
    How about reading my blog, there's a recent entry headed "A Taxing Problem" explaining exactly why EBTs are a very bad idea. Bascially it comes dow to how much you want to risk being presented with a six figure tax bill at some point in the (probably not too distant) future...
    Blog? What blog...?

    Comment


      #3
      Originally posted by bigbrainbrad View Post
      I just posted a reply elsewhere on the forum, but wondered whether anyone had any good or bad experiences in an EBT? From what I've heard, the benefits far outweigh the negatives and it seems reasonably straight forward to set up...

      Any comments, greatly received.
      And just who have you heard this from, given that the opinion on here is pretty much "Not with someone elses bargepole"?
      "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

      Comment


        #4
        Originally posted by bigbrainbrad View Post
        From what I've heard, the benefits far outweigh the negatives
        Many of these EBT schemes have not been running very long and (so far) people may have only experienced the "benefits".

        The "negatives" (HMRC) usually come several years down the line.

        Comment


          #5
          There was a perfectly "legitimate" (as the participants were informed) tax scheme, in Germany that ran perfectly well for 10 years, and then the German tax office arrested an accountant in Germany, and all the participants are now facing tax bills of several hundred grand. Even at that stage scheme managers were saying it was legitimate and they would defend it to the hilt. Well German judges don't bother with convoluted arguments on the interpretation of the finer points of tax law, to them its tax evasion so they can slap fines on to boot.

          Good just an example that what might on the surface seems to be a perfectly safe solution just might drive you into financial ruin, and it comes out of the blue.
          Last edited by BlasterBates; 26 October 2009, 10:13.
          I'm alright Jack

          Comment


            #6
            Originally posted by BlasterBates View Post
            ran perfectly well for 10 years
            This is the nub of the problem. It usually takes HMRC 2 to 3 years before they start sniffing around. They can then keep enquiries open for several more years (well indefinitely in fact).

            If the scheme ultimately fails then by the time you find out it will be too late to undo what you did, and you could find yourself facing a massive backdated tax bill with interest added for late payment.

            Remember, no matter what anyone tells you, a scheme can't be said to work until either (a) it is tested in a court of law or (b) HMRC concedes that it is lawful and legislates to close the loophole going forward.

            Not surprisingly, HMRC prefer (a) than (b).

            Comment


              #7
              Originally posted by malvolio View Post
              How about reading my blog, there's a recent entry headed "A Taxing Problem" explaining exactly why EBTs are a very bad idea. Bascially it comes dow to how much you want to risk being presented with a six figure tax bill at some point in the (probably not too distant) future...
              Interesting and informative blogs BTW Malvio
              This default font is sooooooooooooo boring and so are short usernames

              Comment


                #8
                Originally posted by MPwannadecentincome View Post
                Interesting and informative blogs BTW Malvio
                Ta. Spread the word...
                Blog? What blog...?

                Comment


                  #9
                  well explained Malvolio, simple really if it isn't taxable the money belongs to someone else and you just have to trust them, very risky indeed. The worst would be that HMRC tax it anyway and the Trust runs off with your money.

                  I mean if you're going to take such risks, why not just gamble a proportion of the profits on the stock markets, and have some fun, if you lose it there you won't be gnashing your teeth that you were diddled.
                  I'm alright Jack

                  Comment


                    #10
                    Originally posted by BlasterBates View Post
                    Even at that stage scheme managers were saying it was legitimate and they would defend it to the hilt.
                    Taking the assumption that a given scheme is inherently dodgy, the scheme providers can

                    a) Admit it's shortfalls and make the risks clear
                    b) Tell everyone it's wonderful and gloss over the problems with 3 coats of paint.

                    In the case of a), the scheme would last about 5 minutes. Hardly anyone would take it up, meaning that the scheme wouldn't be cost effective to run.

                    So that just leaves us with b)

                    Comment

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