Talent Resource Management

[zohan]

Until we dont sign this new agreement with Redding, I hope we don't have to pay any interest on the loan that we have taken from TRM. The original loan letter from TRM states thats the interest for the loan is already included in the management fee that we pay each month.

[BigMac]

Lots of similar schemes

I'm also with TRM and got the Redding Finance letter through a few days ago. A bit of a concern but I have discussed this with a number of colleagues and most of them are on very similar schemes.

I spoke to one of the other schemes and they said that their loan is for life! It does not get written off until you pass otherwise you'll be liable to pay tax on it. When you do pass it doesn't get passed down...

Their system is run as a trust and the loan is provided through this and managed by trustees. They have a separate company doing the PAYE portion and they use the trust to manage the loans. This trust apparently has a life of 145 years but not sure if that would be renewed. The loans are not like corporate loans so will not affect credit ratings. According to their agreement the trustees will never recall the loan but I guess this is the part that is of concern ( its obviously written in a way that suits the HMRC though )

Not sure if this is the same at TRM but I'm guessing that the loans will be for life also.

The problem is if they send a letter saying that the loan is not a real loan then it gives HMRC reason to question it as being income. I do think that TRM need to clarify what they're doing a bit more and its nearly impossible to contact them via phone.

I guess the moral of the story is that this type of scheme is not for the faint hearted !

[malvolio]

I guess the moral of the story is that this type of scheme is not for the faint hearted !

anyone that doesn't want to be accused of tax evasion...

[BigMac]

Tax Minimization

All these "schemes" should have registered with the HMRC as Tax Minimization companies so the tax office is well aware of what they do.

Its a legal loop hole like many in the past ! Its not evasion...its evasion if you don't file your earnings or skip the country without paying what you owe.

Although with the proposed new tax laws coming out next year they are talking about back dating the changes quite a few years which is very wrong. I believe there is an appeal going to court regarding this....How can you change the law and then back date it 7 years ?

The downside of this loop hole is that you have this loan for the rest of your life!

[argoran]

The main point I want to make here is where do we legally stand if TRM or Redding call-in these loans at some point of time in future by asking us to pay it back. The amount would be so big (principal + compounded annual interest 1% above base rate) that I doubt if anybody can really afford it.

Can we at that time legally prove that it was not really a loan or is forgiven/written of? How we can legally push off TRM/Redding guys (or adminstrators if they wind up us a company) if they come knocking on our doors in future demanding their loan payback?

It would be better to pay HMRC their due taxes than living with a sword continuously hanging on our heads. Simply, HMRC will take only a percentage of those earnings whereas TRM/Redding may take 100% + compounded interest from us in future.

Architect, here's what I think - TRM have shot themselves in the foot - I have now received 3 letters, however on reading these letters and speaking with an IR35 Insurance company their point of view is that TRM are not trying to get the loan of us just trying to appear more legally and conform with new legislation.

And if they do turn nasty we all have ( or at lest some of us ) have written statements from TRM stating that they will NEVER force us to re-pay back our loans, these letters and emails are written evidence which any court system would accept , hence the loan stands as is non enforceable.

The problem with going to HRMC is that you immediately fall foul with them, I guarantee that you will be investigated very thoroughly and for the forseeable future not to mention the interest if they want to be nasty.

what I propose is that anyone who has received a letter or email ( anything written ) from TRM saying they won't force us to pay mention it here - if we collect enough of these written docs the moment any of us is hit by a loan repayment ( if it ever comes to that ) we will be able to send the emails and documents straight to TRM.

The emails are very generic so they are not tailored to one person, and their T&C has no statement indicating their right to change their T&Cs without notice...so really they have shot themselves very badly indeed.

Important thing DO NOT SIGN THE LETTERS - AND DON'T GO TO HRMC ( unless you get legal advise first and ensure that you won't be screwed over by them )

[Lewis]

The main point I want to make here is where do we legally stand if TRM or Redding call-in these loans at some point of time in future by asking us to pay it back. The amount would be so big (principal + compounded annual interest 1% above base rate) that I doubt if anybody can really afford it.

Can we at that time legally prove that it was not really a loan or is forgiven/written of? How we can legally push off TRM/Redding guys (or adminstrators if they wind up us a company) if they come knocking on our doors in future demanding their loan payback?

It would be better to pay HMRC their due taxes than living with a sword continuously hanging on our heads. Simply, HMRC will take only a percentage of those earnings whereas TRM/Redding may take 100% + compounded interest from us in future. That said ... the other schemes lend money from off-shore trusts not companies, you should confirm this is the case with your scheme.

The reality is that for your work you were paid a salary, that is all you are legally entitled to. Any profit belongs to TRM in the same way it does for EDS, Anderson etc.. TRM lent you some money and legally until they write the loans off you owe them the money. I just can't understand how you all missed this. Did they not explain any of this to you?

It is a catch-22, if you prove the loan was not really a loan but instead a sham then you are proving you committed tax evasion! Who would you prove it to anyway, the courts aren't going to accept tax evasion as a defence!!

Edit - I am not trying to rub your noses in it. I am saying I think you have only one way out. To trust the scheme is working, otherwise you are doomed! I've said it before but I don't think this scheme is diffferent from others like the recent poster said. They are based on trust.

P.S. I am nothing to do with TRM and for all I know they could be scam artists. Just trying to reassure from what colleagues on other schemes tell me.

[ContractorSeven]

Hello. I'm another person with scary letters. I worked with TRM for 1.5 years in 2004/2005 and apparently owe them 120k.

As I see it, the only 'clean' way to get out of this without being accused of tax dodging and without having a huge loan hanging over us is to 'admit' that the loan is real, and ask TRM to write it off now. At that point tax will be due, but assuming that can be paid, no harm is done - there will be no huge loan hanging around, and the tax man is happy. With any luck TRM would be willing to do the write-off in manageable chunks, depending on the amount of tax due. Not an ideal situation (and expensive!), but it would clear it.

The other option is to believe TRM, sign the letter, and just hope it all goes away. The trouble with this approach is that you're effectively agreeing that it's a loan and you owe them the money. However, owing them money is better than owing the tax man in some ways, since if we're ever asked for the money they'll have to fight to get it, plus we can declare bankruptcy if necessary to wipe the slate clean with them. This is better than prison for not being able to pay tax, and I'm pretty sure bankruptcy doesn't wipe any money owed to HMRC.

I'm still not sure which is the best plan. I'm really annoyed that we're finding out about it now - why couldn't TRM have been straight with me when I got my P45 from them in 2005? If I'd known I'd be paying 5% interest for four years before knowing the loan was still there then I'd have done something about it. I'd much rather it had been written-off then, even if tax would have to be paid.

I suppose one approach would be to sign the letter and live life in a way that plans for bankruptcy, should they ever ask for the money back. I guess that's possible. Pain in the arse though.

[Lon_CTR]

Other schemes

Some interesting points...

I have a colleague of mine who uses Kinsella, fundamentally the same process as there is a loan element. However, a key difference from TRM is that they make you do a self assessment tax return whereby you pay tax on the loan element.

This means that you are decalring it and paying the tax. Quite different from TRM whereby it is not declared and therefore falls in the realm of 'avoidance' or 'evasion'.

The fundamental issue is still how do you get out. Even with these guys its unclear. It's either the loan is active forever basing it on trust that they won't call back or they write off the loan and you could get taxed further.

Thats the part I really didn't think through before joining.

[ASB]

anyone that doesn't want to be accused of tax evasion...

I think that's over egging the pudding. I do see quite a lot of potentially failed avoidance though.

Provided (and it might be a big but) an individual has declared on their tax return the income (min wage) paid to them, the fact that the scheme has been used and its number, and entered details of the "loan" etc. in the relevant bit of their tax return then they have fulfilled their obligations and there is no evasion.

Of course this doesn't mean they are out of the woods, merely the difference between a potential criminal case and a civil one. The revenue tend to be reluctant to embark on the former in any event, since the barrier of "beyond reasonable doubt" is much higher than balance of probability.

[NotAllThere]

... However, a key difference from TRM is that they make you do a self assessment tax return whereby you pay tax on the loan element....

If it's a loan, you only pay tax on the benefit of the loan - i.e. any interest you are not paying. With TRM they are paying interest at 5% on the loan, so there is no tax to pay on the loan. Presumably with Kinsella, they are not paying interest on the loans, and so are paying tax. The difference is not key. Either way, the avoidance-bordering-on-or-over-evasion is having a sham loan, and not declaring it. Sorry, a REAL loan, that by an amazing stroke of luck, will never have to be paid back.