Loans from EBTs and other Trusts

[porrker]

My understanding is that anybody using EBTs now would be taxed. HMRC closed this loop hole in December 2010.

my main concern is i believe in terms of law the loans are meant to be discretionary - they arent really! we all know this to be a sham and so it shouldnt take hmrc long to see this as well.
EBT does have a legitimate place - however the way current providers arrange things (say one thing but write another) I think you'd be mad to use them going forward - particularly as the govt is intent on getting as much cash from these schemes as possible :-(

[slogger]

My understanding is that anybody using EBTs now would be taxed. HMRC closed this loop hole in December 2010.

there are still some firms flogging this - they moved their clients from employees to go via self employed I believe just around xmas when legislation came in.

[porrker]

My scheme provider stopped using the EBTs immediately. Quite a painful process for a month...

How does being self employed get arount the December 2010 HMRC note?

there are still some firms flogging this - they moved their clients from employees to go via self employed I believe just around xmas when legislation came in.

[slogger]

My scheme provider stopped using the EBTs immediately. Quite a painful process for a month...

How does being self employed get arount the December 2010 HMRC note?

i think the legislation refers to employees - however ianal so get it checked out yourself - but to be honest i wouldnt touch them with a bargepole..

[geoff from contracta IOM]

i think the legislation refers to employees - however ianal so get it checked out yourself - but to be honest i wouldnt touch them with a bargepole..

If you read my earlier post above you'll see that the Disguised Remuneration announced on Dec 9th 2010 dealt specifically with the relationship between employer , employees and third parties. For those using an SEBT HMRC would have to argue that an employee also means a self employed person, which would be a bit of a stretch.

[slogger]

If you read my earlier post above you'll see that the Disguised Remuneration announced on Dec 9th 2010 dealt specifically with the relationship between employer , employees and third parties. For those using an SEBT HMRC would have to argue that an employee also means a self employed person, which would be a bit of a stretch.

Hi Geoff,
If you'd read my post earlier you'll see that I'm saying its irrelevant anyway .. these arrangements are a pure sham - do you guarantee (via your company or insurance scheme) that people wont get a nasty surprise from hmrc down the line..?

[geoff from contracta IOM]

Hi Geoff,
If you'd read my post earlier you'll see that I'm saying its irrelevant anyway .. these arrangements are a pure sham - do you guarantee (via your company or insurance scheme) that people wont get a nasty surprise from hmrc down the line..?

I can't guarantee anything nor do I claim to, I just present the facts and let people form their own opinions or they can consult a chartered tax adviser for an independent opinion.
I can't speak for other providers though only my company and as in all industries there are those who will be disengenious when there is money to be made.

[porrker]

I can't guarantee anything nor do I claim to, I just present the facts and let people form their own opinions or they can consult a chartered tax adviser for an independent opinion.
I can't speak for other providers though only my company and as in all industries there are those who will be disengenious when there is money to be made.

Surely hmrc will have a good case to argue that anyone who has been member of these schemes for 18-24 months is infact a disguised employee and retrospectively tax?

[Emigre]

Surely hmrc will have a good case to argue that anyone who has been member of these schemes for 18-24 months is infact a disguised employee and retrospectively tax?

As nearly all elements of tax, it is not as simple as that. What you have suggested would effectively require the retrospective application of a tax law similar to IR35. There would be a high risk of unintended consequences followed by legal proceedings not to mention the public outcry and certain damage to inward investment into UK plc that all retrospective tax law causes. You only have to look at the recent Vodafone debacle to appreciate that - an inverse but nevertheless applicable - the Indian Government quoting section 58 of the Finance Act 2008 as a reason why it is ok for them to apply retrospection on uk companies. It made Osborne look like a muppet.

In addition, when you became self-employed you will have advised HMRC of that fact within 3 months. Have HMRC advised you that you are not self-employed? They have had 4 years to do so.

AS has been said, the HMRC angle has been to attack the reliefs claimed by the business making the payments into the trusts. This conveniently puts the pressure on the promoters. If they are satisfied that their arrangements are HMRC-proof then they will continue to promote. If not, they will stop. The difference is that as things stand they are the ones that may end up with the tax bill, not us.

[porrker]

As nearly all elements of tax, it is not as simple as that. What you have suggested would effectively require the retrospective application of a tax law similar to IR35. There would be a high risk of unintended consequences followed by legal proceedings not to mention the public outcry and certain damage to inward investment into UK plc that all retrospective tax law causes. You only have to look at the recent Vodafone debacle to appreciate that - an inverse but nevertheless applicable - the Indian Government quoting section 58 of the Finance Act 2008 as a reason why it is ok for them to apply retrospection on uk companies. It made Osborne look like a muppet.

In addition, when you became self-employed you will have advised HMRC of that fact within 3 months. Have HMRC advised you that you are not self-employed? They have had 4 years to do so.

AS has been said, the HMRC angle has been to attack the reliefs claimed by the business making the payments into the trusts. This conveniently puts the pressure on the promoters. If they are satisfied that their arrangements are HMRC-proof then they will continue to promote. If not, they will stop. The difference is that as things stand they are the ones that may end up with the tax bill, not us.

I thought the EBT's that had been badly setup were being attacked by HMRC sucgh as Rangers FC.

As regards your last comment I agree if you stopped using Benefit Trusts pre December 2010 however I think it one heck of a risk to still be using Benefit Trusts today - Just my opinion.