Paid as a loan from a trust fund

[DonkeyRhubarb]

Surely the best bit would be when the provider goes bust and the receivers appoint a debt collection agency to collect on all those 'loans'.

That's why if you are set on using a scheme, you must exercise due diligence in your choice of provider. In the past, too many of these companies have simply shut up shop at the first sign of trouble.

Pick someone with a history of tax planning and a track record in taking on HMRC, and avoid one trick ponies which were only set up to run a contractor scheme.

I am not going to recommend anyone but it's not hard to separate the wheat from the chaff.

[LisaContractorUmbrella]

Lisa, I guess "accidental" tax avoidance is only permitted by MPs . On a more serious note, there is much that has yet to be established. How do the authorities view what was ostensibly income being handed over as a loan? Yes, a loan contract is a loan contract, but then we know what happened to the value of contracts with IR35.

Early days. Retrospection beckons if they win BN66.

This is only my personal opinion but I think that HMRC are really not that worried about mechanisms that are involved to operate tax avoidance schemes; their only worry is that people are not paying a 'fair' amount of tax. In reality loan schemes do not offer loans to employees, they are operating an avoidance scheme by exploiting a loophole - in time HMRC will close the loophole - the question is whether we will see another retrospective closure. I believe that their intention is for people to be catagorised only as employer or employee and be paid via dividends or PAYE accordingly. As more and more of these 'schemes' are being dreamed up it seems more likely that we will see the sledgehammer to crack a nut approach that was used with IR35 and the MSC legislation. The problem is that anyone new to the market, who doesn't check out fab forums like this one is likely to think avoidance schemes are a great idea because they don't know any better and the scheme operators will keep coming up with new ideas to try and beat the system.

[BrilloPad]

I have recently heard of "Peak perfomance" a company based in Cardiff. As far as I understand it operates like an umbrella company. The majority of the payments are paid as a loan from a trust fund set up in the Isle of Mann and therfore not liable to tax. The trust fund then folds and a new one is set up. It sounds too good to be true and so probably is. Does anyone have any info on this company and or simmilar schemes?

If you like alot of risk then consider it.

But make sure you get a CTD. See post 1 of the bn66 thread for details.

[malvolio]

If you like alot of risk then consider it.

But make sure you get a CTD. See post 1 of the bn66 thread for details.

Might well be missing a point here, but if you get to keep an extra few percent of your income but then have to lock it away in case you have to give it back... wouldn't it be better to stick to more tradtional ways of managing your money?

[DonkeyRhubarb]

Might well be missing a point here, but if you get to keep an extra few percent of your income but then have to lock it away in case you have to give it back... wouldn't it be better to stick to more tradtional ways of managing your money?

Alternatively, instead of using a scheme, you might as well pay into a pension to avoid tax because that's how long you might have to wait before it's safe to spend any of it!

[ASB]

Might be worth people looking up Sempra. Not sure if this is finally concluded yet though.

Also, in the event of a scheme failing retrospective legislation is not need to go back as far as 2003 (or is it 2004?).

Most users of loan based schemes also seem to be of the opinion that they don't need to declare. They could be right. But HMRC can improse very serious penalties on people who don't declare they are using a scheme and the promoters of said scheme. If they can't hit the promoters they can hit the users anyway. I'm not saying loan based schemes do need to be registered under the avoidance disclosure rules.

There are also very specific rules related to BIK on employment related loans and tax charges when they are written off. Of course the promoters will tell you that the loans are written off after your employment ceases and there is is no BIK because they are not employment related. Question is can you convince HMIT of that - because it is down to the user to do so. When it comes to litigation HMRC have very deep pockets.

[DonkeyRhubarb]

Also, in the event of a scheme failing retrospective legislation is not need to go back as far as 2003 (or is it 2004?).

I presume you are referring to Primarola's PBR statement. With the schemes I am familiar with, the users are not employees, so this doesn't apply. Same goes for BIK.

Non-declaration of the scheme on SA returns would trouble me though.

[malvolio]

Non-declaration of the scheme on SA returns would trouble me though.

That's always been my concern. I've heard of people not declaring the loan as income because it's all tax paid offshore and no concern of HMRC. Very dangerous...

[ASB]

I presume you are referring to Primarola's PBR statement. With the schemes I am familiar with, the users are not employees, so this doesn't apply. Same goes for BIK.

Non-declaration of the scheme on SA returns would trouble me though.

Yes, I was referring to that PBR statement.

I also take the point about not being an employee and it just being a "random loan" from somebody and not employment related. Certainly there would be no need to disclose that. The problem will be trying to convince HMIT that is is not employment related.

[DonkeyRhubarb]

The problem will be trying to convince HMIT that is is not employment related.

At the end of the day, it's HMRC who would have to do the "convincing". They'd have to convince a court that it's not a lawful arrangement.

It's ironic really. HMRC probably thought that BN66 would put everyone off schemes for good but how wrong they were.

From what I've discovered, there are already more people using the loan schemes than ever used the DTA.

HMRC may not know it yet but they've got a bit of a problem on their hands.