Loans from EBTs and other Trusts

[Fred Bloggs]

Just had a look at their website. They really couldn't say less about how it works if they tried. It appears that the contractor is employed, presumably on NMW. There is no description of how you get anything else or which part of HMRC they are upsetting.

But then QC4 is a blend of the previous 3 QCs! I didn't realise the legal profession had started moving so keenly towards compromise.

I also looked at it. There is absolutely nothing that hints at the risks the contractor runs by signing up to the scheme. I can understand people being taken in by it. Looking at the website you'd think there was no difference between using them and a proper, 100% tax compliant brolly outfit. Maybe I'm naive, but I'm quite shocked by the website actually.

[Old Greg]

I also looked at it. There is absolutely nothing that hints at the risks the contractor runs by signing up to the scheme. I can understand people being taken in by it. Looking at the website you'd think there was no difference between using them and a proper, 100% tax compliant brolly outfit. Maybe I'm naive, but I'm quite shocked by the website actually.

You're not so naive that you signed up...

[LisaContractorUmbrella]

Unfortunately this type of approach is very common; this sort of site is, IMHO, geared to newbie contractors who are blissfully unaware that a life contracting could put them under HMR&C's spotlight (or do I mean searchlight?).

The other common claim is that they have been 'approved' by HMR&C - always ask to see their written evidence for the claim - I would bet that it is nothing other than a dispensation.

[Emigre]

The other common claim is that they have been 'approved' by HMR&C - always ask to see their written evidence for the claim - I would bet that it is nothing other than a dispensation.

Hey, I've been approved by HMRC, they sent me an NI number and a tax reference number. They write to me, mostly at Christmas, they appear to even like me me when I send them some money.

Do they approve of me? I think probably not..

[LisaContractorUmbrella]

Hey, I've been approved by HMRC, they sent me an NI number and a tax reference number. They write to me, mostly at Christmas, they appear to even like me me when I send them some money.

Do they approve of me? I think probably not..

Sounds like you're one of their special favourites Emigre

[Fred Bloggs]

You're not so naive that you signed up...

Correct, but I can easily understand why people do so reading that website.

[meanttobeworking]

I think what some people on here forget is that we're not all "professional contractors" - we're "professional developers", "professional dba's", "professional project managers", etc. When you start out, you're focusing on your CV, on your roles, and on building a network. Invoicing, getting paid, and all the admin are towards the back of your mind, and you don't always do the research you should do on the basis that it's just admin that everyone does so it must be well documented. With so many companies out there offering what seem to be well established schemes (be it umbrella, EBT, or anything else) it's natural and human to trust what they say, especially if they have been established for some time.

Over many years, you become more versed in accounting and legal matters (as can be seen by the comments of some of the more... mature... posters on here - I won't name them but you'll be able to see their names when they flame me in a bit ), at which point, it's easy to critizise (which they do!). It makes me smile to read posts from various ones on here berating EBT scheme members, only to promote the use of Ltd companies to reduce their tax liability. It puts me in mind of the type of driver that thinks everyone that goes faster than them is a maniac, and everyone that goes slower than them is a doddery old fool. They're in ltd companies because they want to pay less tax. Yes, EBTs have turned out to be a little too risky, but if wanting to pay as little tax as legally possible is wrong, why are these people paying low wages and taking dividends?

[Tax_shouldnt_be_taxing]

Who is the aggressor?

There was a time when there was the written law and loopholes existed, people used them, HMRC changed the law and we all moved forward. The reality is that where there was once law, Rees-Rules, Adam Smith and the like, there is now simply unacceptable, aggressive and abusive. It sounds more like a criminal offense. Indeed maybe that is what HMRC and HMT would like people to think. When you add Public Policy into the definitions database you end up with "the tax laws are so problematic to follow and apply that we'll use subjective terms instead". As has been mentioned, until the application of these terms have been challenged in the Courts, then HMRC will continue to use them as though they are an actual legal status. When you then consider that avoidance and evasion are spoken in the same sentence by these folks, then the notion of something actually being legal simply has little significance. The notion that we should all pay our fair share is also rubbish. One, it's not defined anywhere. Two, there is no such thing as fair in life unless you adopt Labours Social Engineering program of bringing us all down to the lowest common demoninator. Remember competitive sports, everyone should be able to go to Uni and the like. Sorry, but a fat kid won't win the 100m sprint and why should he? A dim wit who eats deep fried Mars Bars should not be afforded the chance to go to Uni and study Media at the tax payers expense only to end up serving fries. Fair is not the word. Pragmatic would be more apt. Until all this tree-hugging soft shoe BS gets kicked in the balls then anything other than PAYE will end up being defined with the criminal overtones.

And all this in the country that invented democracy.

[Old Greg]

There was a time when there was the written law and loopholes existed, people used them, HMRC changed the law and we all moved forward. The reality is that where there was once law, Rees-Rules, Adam Smith and the like, there is now simply unacceptable, aggressive and abusive. It sounds more like a criminal offense. Indeed maybe that is what HMRC and HMT would like people to think. When you add Public Policy into the definitions database you end up with "the tax laws are so problematic to follow and apply that we'll use subjective terms instead". As has been mentioned, until the application of these terms have been challenged in the Courts, then HMRC will continue to use them as though they are an actual legal status. When you then consider that avoidance and evasion are spoken in the same sentence by these folks, then the notion of something actually being legal simply has little significance. The notion that we should all pay our fair share is also rubbish. One, it's not defined anywhere. Two, there is no such thing as fair in life unless you adopt Labours Social Engineering program of bringing us all down to the lowest common demoninator. Remember competitive sports, everyone should be able to go to Uni and the like. Sorry, but a fat kid won't win the 100m sprint and why should he? A dim wit who eats deep fried Mars Bars should not be afforded the chance to go to Uni and study Media at the tax payers expense only to end up serving fries. Fair is not the word. Pragmatic would be more apt. Until all this tree-hugging soft shoe BS gets kicked in the balls then anything other than PAYE will end up being defined with the criminal overtones.

And all this in the country that invented democracy.

It's health and safety gone mad.

[malvolio]

It makes me smile to read posts from various ones on here berating EBT scheme members, only to promote the use of Ltd companies to reduce their tax liability.

Point of order - I use a limited company becuase S44-47 ITEPA 2003 requires that I have one, or work though an umbrella (shudder...) or else I wouldn't get any work from agencies. The lsat PCG member survey showed that well over 90% didn't even consider taxation to be a reason for using a limited company. So taxation mitigation is not why they are used. Sorry...

And I, like all of us, am a professional contractor. That means we're supposed to know the rules as best we can; being a director carries legal responsibilities we should all be aware of.

HTH