EBT & other loan schemes
The reference to loan schemes is interesting because there are a number of IR35 loan schemes particularly using Offshore Employee Benefit Trusts often referred to as EBT’s. If these schemes are operated as set out in the Opinion provided by (normally) a Tax Barrister then – if the Tax Barrister says the scheme is OK, it should be OK. Please note this does not stop HMRC/Treasury changing the law to close down these schemes – in fact a Budget Notice issued this year stated that EBT loan schemes would be closed down from April 2011.
BUT and this is a big BUT - if in order to obtain a “sale” the promoter (or its Agent) makes a promise that the loan is never repayable then this changes things. ARE we now in the realms of “fraudulent avoidance” and if so what are the consequences.
BEWARE
A/ If you have an email or any other written “side” document (even a copy of a presentation slide) with some kind of promise that the loan is NOT repayable then you should seriously consider your position and take advice. (further beware – having read this posting you could delete the email BUT what if unbeknown to you a copy ends up on HMRC desk e.g. they decide to raid the promoter's premises).
B/ If you have been told verbally that the loan is never repayable WHAT will you do/say if you are questioned “under caution” by HMRC (and not knowing what information HMRC have gathered from the promoter. (NB this situation is very different in law from initially being told/promoter confirming the loan is repayable BUT it actually gets written off in the future - this is (in my opinion) NOT “fraud” BUT there will be tax consequences resulting from the write-off which will depend on your personal circumstances/situation at the time of write-off)
FINALLY - In the “world of Tax” there are very few fraud/criminal cases taken by HMRC BUT the taxpayer and/or promoter usually end up in prison if found guilty. YES “fraudulent avoidance” = criminal = maybe PRISON. Normally the only way to obtain a “dont' go to prison card” is to make the first move i.e. you hand yourself in before they catch you.
Originally posted by BlasterBates
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BUT and this is a big BUT - if in order to obtain a “sale” the promoter (or its Agent) makes a promise that the loan is never repayable then this changes things. ARE we now in the realms of “fraudulent avoidance” and if so what are the consequences.
BEWARE
A/ If you have an email or any other written “side” document (even a copy of a presentation slide) with some kind of promise that the loan is NOT repayable then you should seriously consider your position and take advice. (further beware – having read this posting you could delete the email BUT what if unbeknown to you a copy ends up on HMRC desk e.g. they decide to raid the promoter's premises).
B/ If you have been told verbally that the loan is never repayable WHAT will you do/say if you are questioned “under caution” by HMRC (and not knowing what information HMRC have gathered from the promoter. (NB this situation is very different in law from initially being told/promoter confirming the loan is repayable BUT it actually gets written off in the future - this is (in my opinion) NOT “fraud” BUT there will be tax consequences resulting from the write-off which will depend on your personal circumstances/situation at the time of write-off)
FINALLY - In the “world of Tax” there are very few fraud/criminal cases taken by HMRC BUT the taxpayer and/or promoter usually end up in prison if found guilty. YES “fraudulent avoidance” = criminal = maybe PRISON. Normally the only way to obtain a “dont' go to prison card” is to make the first move i.e. you hand yourself in before they catch you.
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