EBT & other loan schemes

[DaveB]

Taken from the Legal Surgery thread

I have been working under an EBT payroll company since May 2010. Due to poor service, I have informed them that I need to terminate their services. Now they are saying when I terminate I have two options 1) Pay 350 pounds a year for the rest of my life so as to be on the trust or 2) Repay tax and NI on all "loan" payments that I have received. Bearing in mind that they did not make any of these conditions clear when I joined, does this demand have a legal basis?

I paid them a huge commission based on the promise that they would save me on tax, but now it seems that if I leave I will lose all the tax benefit I received. Is it therefore a breach on their part that I paid for what I will not have received?

Which sheds a little more light on how things work. If you leave the scheme and cease to be a trust member the loan ceases to be a loan and you end up paying back the tax and NI or forking out a "membership fee" for the rest of your life.

[LisaContractorUmbrella]

Taken from the Legal Surgery thread



Which sheds a little more light on how things work. If you leave the scheme and cease to be a trust member the loan ceases to be a loan and you end up paying back the tax and NI or forking out a "membership fee" for the rest of your life.

Makes perfect sense - perhaps Vallah would like to comment? Maurisso13 - were you given anything to sign when you joined the scheme?

[DaveB]

Makes perfect sense - perhaps Vallah would like to comment? Maurisso13 - were you given anything to sign when you joined the scheme?

Not sure he's seen this thread, but apparently so.

Yes, I do have a contract

[Vallah]

I can't comment on how other people run their schemes, but anybody using our service is free to leave whenever they like, and there is no fee, either one-off or ongoing, to do so.

[DaveB]

I can't comment on how other people run their schemes, but anybody using our service is free to leave whenever they like, and there is no fee, either one-off or ongoing, to do so.

He's not being charged a fee to leave, he's been told that unless he remains a member and pays that fee his loan ceases to be a loan and he becomes liable for Income Tax and NI on it.

What happens to the loan when someone leaves your scheme? Or is that something else you are not at liberty to disclose?

[LisaContractorUmbrella]

What happens to the loan when someone leaves is the one question we probably won't get an answer to because that's where the risk with these schemes lies but you never know DaveB, maybe Vallah will enlighten us

[Alan Jones]

Loan Frequency

It would be interesting to know the frequency of loans paid by EBT Trustees. I understand some pay monthly. If so then i think this could - depending on other circumstances - result in HMRC challenging the loans as "disguised" salary.
They have tried this once and lost. BUT if the facts are in their favour they will try again.

[Alan Jones]

It would be interesting to know the frequency of loans paid by EBT Trustees. I understand some pay monthly. If so then i think this could - depending on other circumstances - result in HMRC challenging the loans as "disguised" salary.
They have tried this once and lost. BUT if the facts are in their favour they will try again.

The silence is deafening . Obviously hit a raw nerve!!

[RockTheBoat]

The silence is deafening . Obviously hit a raw nerve!!

not really, most of us have implemented a "Alan Jones Ignore Filter"

but to humour you, can you point us to any legislation that says you cannot receive a loan on say a monthly basis?

[Alan Jones]

EBT's stopped as from today

Draft legislation published today that effectively kills EBT schemes from today. See http://www.hmrc.gov.uk/budget-update...tax/wms-aa.pdf AND http://www.hmrc.gov.uk/budget-update...plan-notes.pdf at page 443 tp 489.