Argentia, anyone heard of them?

[Vallah]

So am I to understand that anything that might happen to these EBTs won't actually happen until April next year?

I failed to mention that myself and those that I've been talking to about Argentia aren't actually UK Citizens and are here on various levels of working visas.

For myself I will be here for the long term but some contractors (in and outside of IT) that I know are on lower visas, cannot setup Limited Companies and in some cases, will be leaving the UK before April next year.

In such cases, if they took a spin and ran the risk with EBTs and then left the UK permanently before April next year, would they still be at risk of the UK Gvt chasing them around the world looking to apply retrospective taxes and penalties should EBTs be deemed as always having been illegal?

My view is that people should jump on the EBT gravy train while it's still going. The chances of HMRC applying retrospective taxes are remote. If you're only going to be in the UK for a finite amount of time, even more so.

[sal626]

One important point to mention, is that twice HMRC have taken EBT cases to the Special Commissioner and twice they have lost on the point that loans are earnings.

So any legislation put into place, will also have to take this into account. Not sure if they can change the law to say "loans were always earnings" and retrospectively apply it.......when there are two judgements stating the opposite? Not sure if it will be that easy…

[MrGrunge]

Maybe someone can inform me on this point.

I have a tentative proposal to work in another EEC country where EBTS are allowable under certain circumstances.

The question(s) is/are as follows, assuming UK non-residency status is not aquirable (most likely given that we are past april the 5th), when filing UK tax return, what pitfalls are there for a) EBT funds paid while working abroad (where legal), b) EBT funds paid whilst in the UK and c) EBT funds remaining in the fund.

Whch parts of the UK tax return deal with EBTs? - uk source derived and/or foreign source derived.?

Any help/advise/assistance on these points greatly appreciated.

[DonkeyRhubarb]

Loving the use of "whatdotheyknow" DR, they must absolutely love you!

(apologies for veering off topic)

Yes, I haven't exactly made myself Mr Popular.

However, I have some sympathy for their FOI team who must be caught between bit of a rock and a hard place.

On the one hand, their remit is to uphold the Freedom of Information Act. However, they must be under tremendous pressure not to release anything which could prejudice HMRC's case in the Court of Appeal.

The trouble is the more they come up with convoluted arguments for withholding information, the more it gives the impression they've got something to hide.

For example, we know from HM Treasury that HMRC have got at least 5 opinions from external barristers on the scheme, none of which were put forward in the judicial review to support their case. What does that tell you?

And they won't even disclose the dates of these opinions, claiming that the dates are protected by legal and professional privilege.

http://www.whatdotheyknow.com/reques...outgoing-59070

[Vallah]

One important point to mention, is that twice HMRC have taken EBT cases to the Special Commissioner and twice they have lost on the point that loans are earnings.

So any legislation put into place, will also have to take this into account. Not sure if they can change the law to say "loans were always earnings" and retrospectively apply it.......when there are two judgements stating the opposite? Not sure if it will be that easy…

Exactly. When HMRC themselves have stated clearly that loans are not emoluments, even that set of crooks will be hard pushed to retrospectively say that they were if they change the law in April.

[PhilBreeze]

I've spoken to quite a few people in the business and what HMRC really don't like is the use of mass marketed, retail tax avoidance schemes.

I've spoken to quite a few taxpayers and what they really don't like is vague, poorly drafted tax legislation that leaves you unsure of where you stand.

[PhilBreeze]

80% take home sounds fantastic now but will it seem so great when the contractor owes 200% of the tax owed, being the difference between the tax paid on the loan and the tax due for PAYE?

Interesting, your bias against EBT providers, when they are effectively competing with your company. The gap between stealth marketing and advice given in good faith has never been narrower...

[ASB]

My view is that from next April, HMRC will deem loans from EBT's to be income. I'm pretty sure they won't be able to apply that retrospectively though.....

I doubt they would do it that way (but they could). I think it is more likely that what they would do is something akin to changes to S419; this would I believe be trivial. There would be a specific tax charge. I would also expect this to extend to NI. [In most of these issues they are not really about TAX, they are really about NI].

It would be trivial to extend this retrospectively. Indeed they have already reserved the right to backdate to (I think 2004). This is the law and has not yet been challenged in any way. Personally I think they are more likely to do this than introduce specific provisions related to retrospection given what is happening with S58.

There are plenty of other lines of attack HMRC could attempt. I personally believe there is at least a plausible case - given the very woolly nature of the wording of the legislation - to attack loans as relevant payments in terms of IR35. Would a judge take the view that you only became entitled to the discretionary loans as a result of the work undertaken for the end clients. If so you are firmly in potential IR35 land. [I think the risk of this is fairly small, but nevertheless I think it is a small possibility].

Mr HMRC - as PA found out - does have some very interesting weapons in his armoury.

[Vallah]

With most EBT schemes there's a contract of employment in place, so IR35 isn't relevant.

[ASB]

With most EBT schemes there's a contract of employment in place, so IR35 isn't relevant.

The contract of employment does not - of itself - remove potential IR35 issues. Though the IR did have a chance to try this tack a while ago with the collapse of a previous EBT based supplier but I don't believe did.