Loans from EBTs and other Trusts

[Emigre]

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.

It does appear that the Rangers FC scheme may have been badly set up but there is no way we will ever find out what aspect of it isn't right.

wrt continued use of benefit trusts, I'm not sure that I would start using one now. However, there are a number of things that make them tough to turnover right now.

1. Recategorisation of a loan as income would be a major game changer. The amount of tax code required to achieve that without adversely affecting people with loans who are not on such an arrangement would be extensive and complex;

2. Recategorisation of employment basis would be equally difficult;

3. The current debate on retrospection.

I'm sure there are more.

The last Government created this mess with IR35. The cost of enforcement of IR35 to the taxpayer has been massive. Somewhere in the range of 2000 cases have been heard at the tax tribunals with HMRC winning just a handful. With fees of say £50k each side, that comes to the £200m that HMT states they are out of pocket over their inadequacies on the DTA schemes. Contractors potentially hit by IR35 moved to more aggressive schemes so instead of collecting maybe 20% tax they now get say 5%. These arrangements were not in sight of contractors until the uncertainty of IR35.

[geoff from contracta IOM]

[QUOTE=Emigre;1526930]It does appear that the Rangers FC scheme may have been badly set up but there is no way we will ever find out what aspect of it isn't right.


The club issued contracts to the players that stated that they would be paid say 10 grand a week, the problem was they then paid them minimum wage and the rest through an EBT. HMRC are rightly arguing that as 10K was stated on the employment contract then 10K is the salary liable to tax and NI.
A schoolboy error to say the least.

[Emigre]

[QUOTE=geoff from contracta IOM;1526938]

It does appear that the Rangers FC scheme may have been badly set up but there is no way we will ever find out what aspect of it isn't right.


The club issued contracts to the players that stated that they would be paid say 10 grand a week, the problem was they then paid them minimum wage and the rest through an EBT. HMRC are rightly arguing that as 10K was stated on the employment contract then 10K is the salary liable to tax and NI.
A schoolboy error to say the least.

A serious error indeed to suggest that a Rangers player is worth 10k a week

[geoff from contracta IOM]

[QUOTE=Emigre;1527276]

A serious error indeed to suggest that a Rangers player is worth 10k a week

Yes it would appear that some of the people running football are as intelligent as those playing the game.





Now look what you've made me say Emigre

[BlasterBates]

[QUOTE=geoff from contracta IOM;1526938]

It does appear that the Rangers FC scheme may have been badly set up but there is no way we will ever find out what aspect of it isn't right.


The club issued contracts to the players that stated that they would be paid say 10 grand a week, the problem was they then paid them minimum wage and the rest through an EBT. HMRC are rightly arguing that as 10K was stated on the employment contract then 10K is the salary liable to tax and NI.
A schoolboy error to say the least.

I see so it's very similar to the schemes run for IT contractors.

[geoff from contracta IOM]

[QUOTE=BlasterBates;1527388]

I see so it's very similar to the schemes run for IT contractors.

You must be aware of something i'm not ?
None of our contractors have supplier agreements binding us to pay any figure other than a monthly retainer on which full tax and NI is paid.

[LisaContractorUmbrella]

[QUOTE=geoff from contracta IOM;1527449]

You must be aware of something i'm not ?
None of our contractors have supplier agreements binding us to pay any figure other than a monthly retainer on which full tax and NI is paid.

But there must be a contract in the loop somewhere which details the contractors'earnings???

[BlasterBates]

[QUOTE=LisaContractorUmbrella;1527811]

But there must be a contract in the loop somewhere which details the contractors'earnings???

From what I understand, he's saying the scheme is different because the contractors are self-employed. They're still employed though aren't they, and they get most of their income from a loan. As you point out there must be a contract somewhere with the daily rate on it.

Fail to see a siginficant difference here from the Ranger's case.

[geoff from contracta IOM]

[QUOTE=BlasterBates;1527820]

From what I understand, he's saying the scheme is different because the contractors are self-employed. They're still employed though aren't they, and they get most of their income from a loan. As you point out there must be a contract somewhere with the daily rate on it.

Fail to see a siginficant difference here from the Ranger's case.

Self employed means they are self employed it's a fairly well recognised employment status. There is a contract between us and the agency but I fail to see what that has to do with the contractor anymore than the contract between the agency and the client has anything to do with them.
If you work for say Cap Gemini and they pay you 400 PD and they have a contract with say Barclays for 600 PD are your taxable earnings 600 PD ?

[geoff from contracta IOM]

[QUOTE=LisaContractorUmbrella;1527811]

But there must be a contract in the loop somewhere which details the contractors'earnings???

No only one which details what we are going to bill the agency to send them a consultant to work at their client site. When you sign contracts with agencies does it state what CU are going to pay the contractor or what the agency are going to pay you ???