Loans from EBTs and other Trusts

[cojak]

Hello

I've been using a EBT from an isle of man company and as you all know the EBT is no more. I have been offered to be moved to a new Loyalty Benefit Fund structure.

Has anyone else been offered this structure? The salesman was pretty sure that if the new scheme was challenged it would be shut down as the EBT's were and not go through the BN66 route (court case)

Does anyone have any advice or views on this?

Thanks in advance

Yes, you can always rely on salesmen for their unbiased tax advice, can't you?

[dazedandconfoozed]

Of course I have my doubts but was wondering if anyone had any useful information, that we could all benefit from?

[LisaContractorUmbrella]

From what little I have seen it appears to be an offshore investment scheme which allows penalty free withdrawls but seems to be pretty expensive to administer. A minimum investment is required and a certain value of the fund would have to stay in situ for a minimum of 5 years. Again it will all come down to the same old thing - if this fund is generated from income which you have earned in the UK and you live in the UK and are tax registered in the UK it is liable to UK taxes; I cannot see that HMR&C will allow it to continue for long. You would also have to consider whether HMR&C would see the scheme as a bit of a p*** take following on from the closure of EBT's and decide to penalise users retrospectively.

[dazedandconfoozed]

Thanks Lisa

So its generally and wait and see grey area :-|

As far as taxing retrospectively, why didn't they do this with the EBT's?

[meanttobeworking]

As an ex-EBT'er myself, just go ltd and avoid the hassle/worry. EBTs and their like have had their day. Find something new to worry about (like IR35 )

[LisaContractorUmbrella]

Thanks Lisa

So its generally and wait and see grey area :-|

As far as taxing retrospectively, why didn't they do this with the EBT's?

I would say it is definitely not a grey area if you are tax resident and working and living in the UK - it is then totally black and white IMHO. In answer to your other question, I have no idea - not many people have successfully got into the minds of HMR&C and lived to tell the tale

[prozak]

You would also have to consider whether HMR&C would see the scheme as a bit of a p*** take following on from the closure of EBT's and decide to penalise users retrospectively.

Yep.

Jumping from one scheme straight to another in my opinion, paints a nice big target on your @rse.

It is very simple for HMRC to run some analysis on their little DW box (i think they have at least one Teradata, although any RDBMS would do) to see who used to be involved with a EBT scheme and what they do now and find those that are not working for an umbrella or their own LTD co.

If HMRC have any sense about them these are top of the list for their next investigations.


If you desperately wanted to get back on one of these schemes, at least wait until after april to see what has been legislated.

[prozak]

As far as taxing retrospectively, why didn't they do this with the EBT's?

because they have not legislated against it before

I gotta check the facts.... but i thought the point of BN66 was that they thought they had closed the hole... realised they hadn't.... decided to retrospectively close it properly "this time" ?

[pastalista]

because they have not legislated against it before

I gotta check the facts.... but i thought the point of BN66 was that they thought they had closed the hole... realised they hadn't.... decided to retrospectively close it properly "this time" ?

I think the thing is that they may say "but it was clear from the "you're in the UK, living in the UK, earning in the UK that tax is due in the UK" that the schemes used weren't fully legit. I'm not sure if they could make this stick but I think it would broaden any investigation from maybe 1 or 2 years to possibly 20. Could get uncomfortable.

Pastalista

[sal626]

because they have not legislated against it before

I gotta check the facts.... but i thought the point of BN66 was that they thought they had closed the hole... realised they hadn't.... decided to retrospectively close it properly "this time" ?

As I understood it, although BN66 IS retrospective, hector always (wrongly) protrays it as “clarification”?
I’m sure BN66 thread has a more detailed background/explanation