Loans from EBTs and other Trusts

[LisaContractorUmbrella]

Paul Baxendale-Walker who put together the Rangers FC EBT scheme was an expert in law, who wrote books on law with his QC colleague:

Paul Baxendale-Walker - Wikipedia, the free encyclopedia


A fat lot of good that did for Rangers FC.

Good point BB - just goes to show that the law is no weapon against the tax authorities

[DonkeyRhubarb]

Good point BB - just goes to show that the law is no weapon against the tax authorities

Lisa, I'm sure you didn't mean that to sound like HMRC are above the law.

Or did you?

[LisaContractorUmbrella]

Lisa, I'm sure you didn't mean that to sound like HMRC are above the law.

Or did you?

Above it? No, absolutely not. More like a quantum entanglement

[BlasterBates]

The point is if you try to bend the law to clearly what it wasn't intended you might lose, however much of an expert you are.

Lets put it this way, if you ask for a few opinions from QC's I bet you're going to get different replies dependent on their viewpoint. None of them will be able to say it's legal, they will give you varying degrees, ranging from "it's tax evasion" to "it's perfectly legal". Rather in the same way that doctors will give differening opinions on a complex diagnosis.

You declare a loan that is then deemed to be salary could be construed as fraud. I don't know what they decided at court but Rangers FC apparently had to pay penalties which does imply it wasn't simply just a correction on their tax form. You pay penalties either for gross negligence or evasion.

The level of proof required and hence cost for a criminal conviction is higher than for a civil case so HMRC will usually go for back tax plus interest.

[LisaContractorUmbrella]

From HMR&C website:

"‘Avoidance’ is not defined in the Taxation Acts and attempts to define it have not in the past been successful. One definition is ‘a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question’. At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this"

Not sure if it is the case that people are bending existing tax laws or that they don't have a crystal ball

[centurian]

The point is if you try to bend the law to clearly what it wasn't intended you might lose, however much of an expert you are.

WBBS - QC's will very rarely say that a scheme is 100% legal - if it was, you probably wouldn't need to go to a QC in the first place.

The best you are going to get - is that the QC feels that a particular line of argument is likely to suceed in front of a judge, but will be sprinkled with a large number of caveats.

[tonisop]

Information Overload

Guys & Gals firstly what a resource of information, well done... My situation is im a complete newbie and was ready to sign upto a IOM 85% Trust scheme providing me with a loan.. Being a complete newbie i thought i was sorted and was ready to sign upto the loan agreement but after reviewing this tread and doing some more research i think im going to run a mile as it just seems to good to be true and raises too many concerns/risks that may come back to haunt me, which i dont want... This site/info may have just saved me a lot of hassle in the future and i can chalk this down as a well learned lesson..Thanks

NOW what should i do ?? i've never freelanced before so need to get set up asap.. This maybe a short term contract 3 to possible 6 months but wil hopefully lead to a longer term contract.. Following this i may have to go back to FT employee or seek further freelance roles depending on what i can arrange/source (I would prefer and intend to stay freelance if possible)... Some of the work may be in Republic of Ireland with payment in euro... What is the best, quickest way to proceed and have arranged for possible long term use? sole trader? Ltd company? Any pointers or resources on the best way companies to proceed with would be great. I dont mind the hassle factor or time involved i just want to manage my tax affairs as efficently as possible without the exotic offshore loan arrangements... Any advise would be greatly appreciated.

[BlasterBates]

The fact that you will be doing some work in the Republic of Ireland and you will be paid in Euros, means you will probably be tax liable in Ireland.

I would recommend setting up a Ltd for your UK work and taking advice from an Irish accountant for your potential Irish tax liability.

Better to be safe than sorry. If you tax Irish income in Ireland and UK income in the UK you can't get on the wrong side of anyone. If the income isn't taxable then it won't be taxed if you declare it, assuming of course you have a local accountant that ensures everything is correctly dealt with. Better to declare too much and jump for joy at the refund than find out your mistake behind bars in a police cell.

[geoff from contracta IOM]

Guys & Gals firstly what a resource of information, well done... My situation is im a complete newbie and was ready to sign upto a IOM 85% Trust scheme providing me with a loan.. Being a complete newbie i thought i was sorted and was ready to sign upto the loan agreement but after reviewing this tread and doing some more research i think im going to run a mile as it just seems to good to be true and raises too many concerns/risks that may come back to haunt me, which i dont want... This site/info may have just saved me a lot of hassle in the future and i can chalk this down as a well learned lesson..Thanks

NOW what should i do ?? i've never freelanced before so need to get set up asap.. This maybe a short term contract 3 to possible 6 months but wil hopefully lead to a longer term contract.. Following this i may have to go back to FT employee or seek further freelance roles depending on what i can arrange/source (I would prefer and intend to stay freelance if possible)... Some of the work may be in Republic of Ireland with payment in euro... What is the best, quickest way to proceed and have arranged for possible long term use? sole trader? Ltd company? Any pointers or resources on the best way companies to proceed with would be great. I dont mind the hassle factor or time involved i just want to manage my tax affairs as efficently as possible without the exotic offshore loan arrangements... Any advise would be greatly appreciated.

The easiest way is to register as self employed assuming the parties you are transacting with are happy to engage with you on this basis. You don't need to register for tax in ROI until you have been there for 183 days ( basically a 6 month assignment is OK) If you are going to remain contracting then a Ltd. Co. is the second most tax efficent method of being paid but beware of IR35 and its new beefed up version due very soon. Get an accountant as soon as you get the first assignment and they should steer you correctly as to the best times to change how you are working.

[geoff from contracta IOM]

The fact that you will be doing some work in the Republic of Ireland and you will be paid in Euros, means you will probably be tax liable in Ireland.

I would recommend setting up a Ltd for your UK work and taking advice from an Irish accountant for your potential Irish tax liability.

Better to be safe than sorry. If you tax Irish income in Ireland and UK income in the UK you can't get on the wrong side of anyone. If the income isn't taxable then it won't be taxed if you declare it, assuming of course you have a local accountant that ensures everything is correctly dealt with. Better to declare too much and jump for joy at the refund than find out your mistake behind bars in a police cell.

The first sentence above is not correct.

On the second point above look at all your options

On the third point above , I would advocate taking the time to find out your actual position with regard to tax liabilites in each jurisdiction. It would be very hard to reccommend the scatter payment approach to taxation, luckily the authorities have gone to the trouble of enacting laws to help people understand their position. What will happen if you use the above approach is you will pay potentially twice the tax due then spend a considerable amount of money on accountants to claim refunds on tax you should never have paid in the first place. Rest assured tax athourities will always take the money first then expect you to go to the effort to claim it back after.