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BN66 and full empoyment status

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    BN66 and full empoyment status

    Hi Everyone, first time post here.

    I picked up on the news reports yesterday surropund the Montpellier case. I use a similar scheme through company called The Fleming Laing Trust. Off shore trust based scheme but I am a full time employee of The Fleming Laing Trust.

    When I phoned my agent to query the status of BN66 they assured me this is not applicable because of emplyment status and the schemes they are operating are all tax compliant.

    I only have their word for it and was wondering if anybody here had any advice of knowledge of why I don't fall under the N66 legislation?

    Thanks

    Worried Contrator

    #2
    Originally posted by Melver View Post
    Hi Everyone, first time post here.

    I picked up on the news reports yesterday surropund the Montpellier case. I use a similar scheme through company called The Fleming Laing Trust. Off shore trust based scheme but I am a full time employee of The Fleming Laing Trust.

    When I phoned my agent to query the status of BN66 they assured me this is not applicable because of emplyment status and the schemes they are operating are all tax compliant.

    I only have their word for it and was wondering if anybody here had any advice of knowledge of why I don't fall under the N66 legislation?

    Thanks

    Worried Contrator
    Well

    you would need to elaborate a little more on how your setup worked, was there a partnership involved, is there a DTA between Lux* and here (I presume so but could be wrong?), did you disclose your trust income on your tax return and claim relief under DTA etc etc

    not sure you want to be openly detailing this info openly on a forum if you are currently under the radar, but thats your choice. maybe pm one of the key 66'ers on the BN66 and explain how\what why, or maybe detail what your provider said meant you werent affected.

    or give us a hyperthetical situation that might or might not describe yours, obviously changing names to protect the innocent

    Disclaimer: please note I am not an accountant or a tax specialist

    ps: whatever you do stay away from Alan Jones
    * yes I googled it
    Last edited by RockTheBoat; 29 January 2010, 17:05. Reason: googling alert (the company not Lux)

    Comment


      #3
      Originally posted by Melver View Post
      Hi Everyone, first time post here.

      I picked up on the news reports yesterday surropund the Montpellier case. I use a similar scheme through company called The Fleming Laing Trust. Off shore trust based scheme but I am a full time employee of The Fleming Laing Trust.

      When I phoned my agent to query the status of BN66 they assured me this is not applicable because of emplyment status and the schemes they are operating are all tax compliant.

      I only have their word for it and was wondering if anybody here had any advice of knowledge of why I don't fall under the N66 legislation?

      Thanks

      Worried Contrator
      Its difficult to add much. Except to say that don't depend on what your advisors say. The bottom line is really if HMRC think you have done something they don't like, all they need to do now is tell you to pay up, irrespective of the law. They have been given the go-ahead that that is sufficient. They can wait for many years, and then simply create a retrospective law. One thing that did become clear in our case was that even though they had gone to some length to try to twist the law, it was pretty much accepted by all that we were actually entirely legal all along. So they don't need to clarify anymore, they can just add on additional paragraphs, or possibly create a brand new law and backdate it. The important thing is that your clock may already be ticking. It doesn't start when they ask, it starts at the date the law is made retrospective to. If you have savings, keep them, hope we win the appeal, and above all else stay low and off the radar.

      I'm sorry, this probably don't seem like much comfort.

      Good luck.

      Comment


        #4
        Replies

        Thanks for the postings:

        As it stands I am full time employee but have only used them for about 9 months now so have not filled in any returns or had any contact with HMRC. According to my 'advisors' I am paying paye and ni as a full time employee does.

        I suppose this is my problem, they were recommended to me by a friend and I knew a couple of other contractors were using similar schemes so I figured they had done their homework and I didn't bother, I just signed up.

        I think I am going to paly it safe and go back to Ltd.

        One more questions, I have sigend a contract for 6 months with theis group, how easy is it to change the contract from them to a new ltd company I set up?

        Thanks again

        Comment


          #5
          The company say very little about the way that they scheme works but they are promising an 80% return on earnings which is extremely high and impossible for an umbrella company to deliver unless your expenses are about half of your total income.

          If you are an employee then the company should provide you with a payslip which will detail all the deductions that are being made. If these do not include UK tax and NI then I think you are right to be worried. The judge in the BN66 case made it quite clear that HMR&C's opinion is, quite simply, that if you live and work in the UK you must pay UK tax.
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          Comment


            #6
            If he really is a full time employee, wouldn't any tax shortfall be the employer's responsibility?

            PS For any penalties and interest anyway.
            Last edited by xoggoth; 1 February 2010, 13:02.
            bloggoth

            If everything isn't black and white, I say, 'Why the hell not?'
            John Wayne (My guru, not to be confused with my beloved prophet Jeremy Clarkson)

            Comment


              #7
              Originally posted by xoggoth View Post
              If he really is a full time employee, wouldn't any tax shortfall be the employer's responsibility?

              PS For any penalties and interest anyway.
              If the deduction was made from the individual and not paid to HMR&C then yes but if the calculation itself was incorrect no.
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                #8
                Hypothectical Example

                Hi All,

                To follow up with examples.

                A man is in full time employment by an offshore company using a trust scheme. He is paid part of his salary and pays PAYE and NI on that. The rest of the salary is made of loans via a trust to him which are owed at a future date.

                Can somebody help with the pros and cons of this method? Can the tax man use BN66 and previos legislation against him?

                Again, help and advice appreciated.

                Comment


                  #9
                  Originally posted by Melver View Post
                  Hi All,

                  To follow up with examples.

                  A man is in full time employment by an offshore company using a trust scheme. He is paid part of his salary and pays PAYE and NI on that. The rest of the salary is made of loans via a trust to him which are owed at a future date.

                  Can somebody help with the pros and cons of this method? Can the tax man use BN66 and previos legislation against him?

                  Again, help and advice appreciated.
                  no that tax man cannot use BN66 as this specifically applies to the use of double tax treaties etc between the Uk and other regions. it does not cover loan schemes

                  as far as previous legislation goes, I believe there is none preventing you getting a loan from a trust that you will be paying back at a later date. so in this case they cannot retrospectively "clarify" a previous law. from what I know there have been two cases recently where HMRC actually lost trying to argue that the loans were anything but that. so for now they are "safe", so long as you have the paperwork in place and your I's dotted and t's crossed (having a formalised loan agreement, )

                  Comment


                    #10
                    Originally posted by RockTheBoat View Post
                    from what I know there have been two cases recently where HMRC actually lost trying to argue that the loans were anything but that. so for now they are "safe", so long as you have the paperwork in place and your I's dotted and t's crossed (having a formalised loan agreement, )
                    If the loans are "safe" doesn't that mean that one sunny day your 'employer' can demand that you repay the loan?

                    Just a thought...
                    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
                    - Voltaire/Benjamin Franklin/Anne Frank...

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