Loans from EBTs and other Trusts

[Vallah]

if you don't like it then don't use it

Good advice. You don't like offshore schemes, lots of people do.

[LisaContractorUmbrella]

[QUOTE=AtW;1380729]It's a cost of service, if you don't like it then don't use it - in any case they don't shift as massive risks to their clients, they just charge fairly modest amounts for services provided.

That's what you fail to understand - it's not the issue of how much you charge vs umbrellas or any other way, it's the question of risk shifted to clients: the more "take home" you promise the higher the risk is going to be.

And when you use words "offshore" and "scheme" in a totally artificial arrangement then you are just being like Frodo when he put on the ring - you become very visible to the Great Eye.

Well that has my vote for this week's best HMR&C analogy

[AtW]

Good advice. You don't like offshore schemes, lots of people do.

HMRC hates them and it's them who take you to court and ruin your life, not the people who also like those schemes (they are mostly harmless).

I love offshores, but I really can't see how offshore can work for someone being tax resident in UK and doing job here in the UK for UK based companies. Moving to live and work in Isle of Man is probably the only reliable way.

It's just a matter of time before loans will have to be declared and it was said above existing loans might well be deemed by courts as sham and then we'll have another thread full of people claiming retrospection.

Lisa -

P.S. IANAL of course, the above is just my personal view.

[Vallah]

I love offshores, but I really can't see how offshore can work for someone being tax resident in UK and doing job here in the UK for UK based companies. Moving to live and work in Isle of Man is probably the only reliable way.

Well, work they do, and as sorry for the people affected by BN66 as I feel, there are tens of thousands of other people who haven't been affected in such a way.

[LisaContractorUmbrella]

Well, work they do, and as sorry for the people affected by BN66 as I feel, there are tens of thousands of other people who haven't been affected in such a way.

yet

[AtW]

Well, work they do, and as sorry for the people affected by BN66 as I feel, there are tens of thousands of other people who haven't been affected in such a way.

And that raises very obvious question - if the Great Eye took risks of being accused of retrospection for the sake of 2500 people allegedly using schemes covered by BN66, then why would it let tens of thousands get away with essentially the same stuff?

You will only be sure that it worked in 6+ years.

[BlasterBates]

I find it hard to believe that there are tens of thousands of contract who will get away with paying little tax.

There are thousands who've been stuffed by schemes, not just BN66.

My advice steer clear, it'll cost you dearly when it goes wrong.

Example

http://forums.contractoruk.com/accou...an-scheme.html

The answer further down sums up the position of the contractor:

you are stuffed.

Of course the new schemes won't have this specific problem, but make no mistake, they will be riddled with other problems, that get you "stuffed", and the longer you're in the scheme the more stuffed you'll be.

[AtW]

Example

http://forums.contractoruk.com/accou...an-scheme.html

Nevermind word "offshore", I now think word "loan" sounds scarier!!!

[LisaContractorUmbrella]

From the 'Great Eye's' point of view:

In Spotlights HMRC will:

Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which it is likely to investigate.
Identify specific schemes which, in HMRC's view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, they will make a challenge and seek to ensure full payment of the right tax with the right due date.
Set out below are a number of indicators of tax planning to be wary of. The inclusion of one of these features does not necessarily mean that tax avoidance is involved, but the more of these features that are present, the more likely it is that HMRC would see the arrangements as tax avoidance and challenge your Self Assessment. If you have doubts about a scheme then you should check with a reputable tax adviser.

Tax planning to be wary of:
It sounds too good to be true.
Artificial or contrived arrangements are involved.
It seems very complex given what you want to do.
There are guaranteed returns with apparently no risk.
There are secrecy or confidentiality agreements.
Upfront fees are payable or the arrangement is on a no win/no fee basis.
The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.
The scheme is said to be approved by HMRC (it does not follow that this is true).
Taxation of income is delayed or tax deductions accelerated.
Tax benefits are disproportionate to the commercial activity.
Offshore companies or trusts are involved for no sound commercial reason.
A tax haven or banking secrecy country is involved without any sound commercial reason.
Tax exempt entities, such as pension funds, are involved inappropriately.
It contains exit arrangements designed to sidestep tax consequences.
It involves money going in a circle back to where it started.
Low risk loans to be paid off by future earnings are involved.
The scheme promoter lends the funding needed.
There is a requirement to take out insurance against the failure of the tax planning to deliver the tax benefits.

[Churchill]

From the 'Great Eye's' point of view:

In Spotlights HMRC will:

Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which it is likely to investigate.
Identify specific schemes which, in HMRC's view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, they will make a challenge and seek to ensure full payment of the right tax with the right due date.
Set out below are a number of indicators of tax planning to be wary of. The inclusion of one of these features does not necessarily mean that tax avoidance is involved, but the more of these features that are present, the more likely it is that HMRC would see the arrangements as tax avoidance and challenge your Self Assessment. If you have doubts about a scheme then you should check with a reputable tax adviser.

Tax planning to be wary of:
It sounds too good to be true.
Artificial or contrived arrangements are involved.
It seems very complex given what you want to do.
There are guaranteed returns with apparently no risk.
There are secrecy or confidentiality agreements.
Upfront fees are payable or the arrangement is on a no win/no fee basis.
The scheme is said to be vetted by a top lawyer or accountant but no details of their opinion are provided.
The scheme is said to be approved by HMRC (it does not follow that this is true).
Taxation of income is delayed or tax deductions accelerated.
Tax benefits are disproportionate to the commercial activity.
Offshore companies or trusts are involved for no sound commercial reason.
A tax haven or banking secrecy country is involved without any sound commercial reason.
Tax exempt entities, such as pension funds, are involved inappropriately.
It contains exit arrangements designed to sidestep tax consequences.
It involves money going in a circle back to where it started.
Low risk loans to be paid off by future earnings are involved.
The scheme promoter lends the funding needed.
There is a requirement to take out insurance against the failure of the tax planning to deliver the tax benefits.

Erm, I thought Tax Avoidance was legal and Tax evasion was the naughty one.

Is this HMRC deliberately muddying the waters?