Loans from EBTs and other Trusts

[LisaContractorUmbrella]

From HMR&C website:

Whether someone who works for you should be treated as employed or as self-employed depends on the terms of your working relationship. The fact that the employee would prefer to be treated as self-employed or you would prefer to treat them as such carries almost no weight.

HMR&C are relying more and more on employment law to support their arguments and I think any users of these new 'schemes' should probably have cause for concern on more than one front.

[DonkeyRhubarb]

From HMR&C website:

Whether someone who works for you should be treated as employed or as self-employed depends on the terms of your working relationship. The fact that the employee would prefer to be treated as self-employed or you would prefer to treat them as such carries almost no weight.

HMR&C are relying more and more on employment law to support their arguments and I think any users of these new 'schemes' should probably have cause for concern on more than one front.

Lisa,

HMRC could go down this route BUT there is a practical reason why they almost certainly won't.

They will be looking for a way to attack the scheme as a whole. The last thing they will want to do is start investigating several thousand individuals, on a case by case basis, based on their specific working practices. This would be hugely resource intensive, and potentially every case would have to go to Tribunal which would clog up the system for years.

Given the already widespread use of these scheme (probably at least 5000 people), HMRC will not be able to prevaricate for long. My guess is that they'll be forced to legislate.

DR

[LisaContractorUmbrella]

Lisa,

HMRC could go down this route BUT there is a practical reason why they almost certainly won't.

They will be looking for a way to attack the scheme as a whole. The last thing they will want to do is start investigating several thousand individuals, on a case by case basis, based on their specific working practices. This would be hugely resource intensive, and potentially every case would have to go to Tribunal which would clog up the system for years.

Given the already widespread use of these scheme (probably at least 5000 people), HMRC will not be able to prevaricate for long. My guess is that they'll be forced to legislate.

DR

Yep see your point DR - so you think they may have learned their lesson after IR35? Be interesting to see what the budget brings later today

[Vallah]

From HMR&C website:

Whether someone who works for you should be treated as employed or as self-employed depends on the terms of your working relationship. The fact that the employee would prefer to be treated as self-employed or you would prefer to treat them as such carries almost no weight.

HMR&C are relying more and more on employment law to support their arguments and I think any users of these new 'schemes' should probably have cause for concern on more than one front.

There are IR35 concerns with some contractors, and where the reality of their working situation is that they'd be caught by IR35, we don't sign them up, and suggest that they look for alternative solutions.

I've just clicked on an advert on the right for an offshore solution and they "make loans in a foreign currency likely to devalue." How does that work then?

[Freelancer1]

For info and on suggestions received I am posting this on this topic as well as from the BN66 thread...

The records for Contracta Solutions Ltd at the Co's Registry in the IOM show that:-
the Co was incorporated just last month on 24 February,
the two directors who have signed the Statutory form consenting to act are:-

1) Mr Jesse Grant HESTER of Po Box 244, Sunbeach Villa, Royal Road, Grande Baie, Mauritius, a British Consultant and

2) Ms Cis Lieve Lisa OVERSTEYNS a Belgian Consultant of P O Box 500462, Al Nakheel 3B, Apt G02, Street3, The Greens, Dubai, UAE

The Co Secretary is given as Arc Forrest Limited, Unit10, Springates East, Government Road, Charlestown, Nevis, West Indies.

The sole subscriber shareholder is:- Peruvious Limited, Trident Chambers, Road Town, Tortola, BVI

The Registered Office is located at P O Box 227, Clinch's House, Lord Street, Douglas, IM99 1RZ, Isle of Man

The Company has specified "the control and management of the business of the Company shall be in and from the Isle of Man or such other place as the Directors may determine from time to time"

With regards to Accounts "The company elects to exempt itself from the requirement to lay accounts before the company in general meeting, pursuant to Section 2A of the Companies Act 1982"

With regards to Appointment of Auditors:- "The Company may elect to dispense with the audit of its accounts to the extent permitted by Regulations and Companies Acts as shall apply".

Note - the Reg Office is located at the offices of SMP Partners:-
Contact Us : SMP Partners

I leave it to you all to Google and read info on Mr Hester - interesting
Also:-
you can find Jesse Hester on LinkedIn as Owner at Atlas Corporate Services Limited and Atlas at Atlas Corporate Services | Offshore Company Formation - note the contact phone number (Dubai) and the address there is:-
Dubai Media City, PO Box 500462
Office 407
Loft Office 2, Entrance C
Dubai, UAE

I would be wondering who is really 'calling the shots' on this Company?? Surely not Jesse Hester or his identified co-director..probably some shadow director who is the true beneficial owner??

Also of maybe just co-incidental interest - there is another IOM company called just "Contracta Limited" but registered with the same Reg Office address and which was incorporated 26/08/2009 and which had a change of officers on 31/12/2010.

Look back at what DR suggests on the BN66 thread - what's your choice?? Hopefully something that allows you to sleep easily...

[DonkeyRhubarb]

I've just clicked on an advert on the right for an offshore solution and they "make loans in a foreign currency likely to devalue." How does that work then?

I'm guessing something like this.

They loan you 1000 mickey mouse dollars (MSD), and let's say the current exchange rate is 1MSD = £1.

You immediately convert it to sterling ie. £1000.

Let's say MSD collapses to 100MSD = £1.

You buy 1000MSD (for £10) and repay the loan. You are left with £990.

[Vallah]

I'm guessing something like this.

They loan you 1000 mickey mouse dollars (MSD), and let's say the current exchange rate is 1MSD = £1.

You immediately convert it to sterling ie. £1000.

Let's say MSD collapses to 100MSD = £1.

You buy 1000MSD (for £10) and repay the loan. You are left with £990.

Blimey. That sounds, erm, unpredictable.

[Emigre]

Blimey. That sounds, erm, unpredictable.

But being less predictable and having an element of risk could deem it to have more commercial purpose. Obviously though, outlawing ANY loans to any form of employed individual would invalidate the FX arrangement also.

There's always a currency in the world with rampant inflation and a rapidly depreciating currency. Historically, Latin America, Turkey, Africa. Problem is that most of them end up with such a large spread that I suspect the FX deals are never really done. eg Trust agrees to buy MSD for GBP. Agrees to lend MSD. Contractor who does not have an MSD account at a recognised bank agrees to sell MSD to lets say the Trust administrators who then square the circle. No funds ever move... Now I might be wrong, and maybe, just maybe people set up real MSD bank accounts and genuinely move the funds around. The cost of buying MSD once and selling it again would cost the entire fee.

Perhaps we should forget the idea of increased commercial purpose!

[Emigre]

For info and on suggestions received I am posting this on this topic as well as from the BN66 thread...

The records for Contracta Solutions Ltd at the Co's Registry in the IOM show that:-
the Co was incorporated just last month on 24 February,
the two directors who have signed the Statutory form consenting to act are:-

1) Mr Jesse Grant HESTER of Po Box 244, Sunbeach Villa, Royal Road, Grande Baie, Mauritius, a British Consultant and

2) Ms Cis Lieve Lisa OVERSTEYNS a Belgian Consultant of P O Box 500462, Al Nakheel 3B, Apt G02, Street3, The Greens, Dubai, UAE

The Co Secretary is given as Arc Forrest Limited, Unit10, Springates East, Government Road, Charlestown, Nevis, West Indies.

The sole subscriber shareholder is:- Peruvious Limited, Trident Chambers, Road Town, Tortola, BVI

The Registered Office is located at P O Box 227, Clinch's House, Lord Street, Douglas, IM99 1RZ, Isle of Man

The Company has specified "the control and management of the business of the Company shall be in and from the Isle of Man or such other place as the Directors may determine from time to time"

With regards to Accounts "The company elects to exempt itself from the requirement to lay accounts before the company in general meeting, pursuant to Section 2A of the Companies Act 1982"

With regards to Appointment of Auditors:- "The Company may elect to dispense with the audit of its accounts to the extent permitted by Regulations and Companies Acts as shall apply".

Note - the Reg Office is located at the offices of SMP Partners:-
Contact Us : SMP Partners

I leave it to you all to Google and read info on Mr Hester - interesting
Also:-
you can find Jesse Hester on LinkedIn as Owner at Atlas Corporate Services Limited and Atlas at Atlas Corporate Services | Offshore Company Formation - note the contact phone number (Dubai) and the address there is:-
Dubai Media City, PO Box 500462
Office 407
Loft Office 2, Entrance C
Dubai, UAE

I would be wondering who is really 'calling the shots' on this Company?? Surely not Jesse Hester or his identified co-director..probably some shadow director who is the true beneficial owner??

Also of maybe just co-incidental interest - there is another IOM company called just "Contracta Limited" but registered with the same Reg Office address and which was incorporated 26/08/2009 and which had a change of officers on 31/12/2010.

Look back at what DR suggests on the BN66 thread - what's your choice?? Hopefully something that allows you to sleep easily...

The registration jurisdictions of this business runs like a who's who of offshore centres. And as Freelancer 1 has suggested, just run a Google search on Jesse Grant Hester, certainly a colourful past. i particularly like his apparent involvement in the oil for food scandal - nice guy

[DonkeyRhubarb]

Problem is that most of them end up with such a large spread that I suspect the FX deals are never really done. eg Trust agrees to buy MSD for GBP. Agrees to lend MSD. Contractor who does not have an MSD account at a recognised bank agrees to sell MSD to lets say the Trust administrators who then square the circle. No funds ever move... Now I might be wrong, and maybe, just maybe people set up real MSD bank accounts and genuinely move the funds around. The cost of buying MSD once and selling it again would cost the entire fee.

I think you're right, and the currency transactions are "virtual".

Also, if one currency fails to plummet then the loan can always be paid off and reissued in a different "basket case".

One advantage of this arrangement is that eventually there will be no outstanding loans.