Talent Resource Management

[ASB]

Point of order - EBTs are illegal now, aren't they?

Nope, they are perfectly legal. I think the word should be ineffective.

I think they are now entirely ineffective from a tax planning point of view. If I recall correctly then tax is due when money is settled into the EBT (or maybe when the EBT makes a loan). This is then credited when repayment is made.

[Lewis]

Point of order - EBTs are illegal now, aren't they?

I thought they were off shore EBTs - not covered by UK law - there is definitely at least one scheme using some form of EBT-like trust as a collegue that sits near me explained his scheme to me.

[Lewis]

If we are able to write-off the loans legally and be safe from TRM and HMRC, then terminating the contract with TRM at the earliest is a good move. This would put an end to all the problems in the future...

You'll need to find out what kind of tax you may have to pay - some serious googling - you might be worse off than if you'd not joined but yes at least then you can forget about it. All depends on whether you can get TRM to write them off though and if they are even allowed to.

[malvolio]

I thought they were off shore EBTs - not covered by UK law

Maybe - but where did you earn the income? And where do you intend spending it? UK tax law is very clear on that isssue - it's about the only thing it is clear about!

[Lewis]

Maybe - but where did you earn the income? And where do you intend spending it? UK tax law is very clear on that isssue - it's about the only thing it is clear about!

I'm not saying they work - it all sounds too risky to me personally - but it was explained to me as follows. UK company invoices agency. Contractor is employee of UK company and gets salary of say £30K. Remainer of income goes to an off shore EBT-like trust - I don't know how it gets there - trust then loans contractor money in a proper fashion and contractor genuinely pays interest on loan. No need to declare on self assessment no BIK to pay. When contractor leaves scheme loans written off and end of story. I don't however understand the mechanics of how loans are written off and have read threads about other schemes where it seems instead the loan is for life and ends on death of contractor.

[malvolio]

Yes, the snag with the scheme AIUI is that Hector might declare the use of the loan to be a benefit and ask for tax as though it were salary. So you can declare it on your SA and risk paying tax on it, or don't declare it on your SA and risk a prosecution for tax evasion if they find out about it.

Most of the loans charge interest, which oddly enough equates to the management fee of the loan provider. So they are covered to that extent - except that if the loan is written off, as opposed to repaid, you are liable for the tax on it. Unless you replace it with another loan of course.

Spot the problem? At some point you stop working. At that point you are theoretically liable for all the back tax on the loan income you've received over the last n years...

As for the morality of earning £100k and paying tax on £20k - sorry, but only Philip Green, Branson and a list of NL donors are allowed to do that.

[abc123abc]

I don't know what to make of it all really. The Redding letter is aggressive and threatening. Even the cheap paper and letter head smells loan shark or suggests a possible future partner of that ilk.

Why on earth would they say they are 'pleased to vary the terms and conditions'... does this mean we should also be pleased or if you read it literally, does it mean it is just THEY that are 'pleased'?

I think working as a group, a team, is the right step forward (as suggested by likes of JonC) in discovering the correct course of action as whether for instance to remain with existing TRM terms and conditions etc, etc.

[cseviour]

I have been with TRM just over a year and was shocked to receive the letter from Redding. I was under the impression that the loan was paid each week/month from the funds received from the agency and we paid interest on the amount loaned that week/month. So surely we don't owe anything?? If we had to pay them back then they would be getting back the money from the agency again and we would end up being payed the basic minimum wage.
Confused does not adequately describe how I am feeling at the moment!!

[caferaca]

Thanks for all the efforts jon. I agree. We have to be very careful how we approach this collectively, as it could have serious ramifications for all of us. I would certainly like to give TSM the opportunatey to allow us to part ways amicably, which is all we really want, as if they don't then the whole thing will turn into a house of cards, with everyone losing out .
Rick

[dezze]

I have been with TRM just over a year and was shocked to receive the letter from Redding. I was under the impression that the loan was paid each week/month from the funds received from the agency and we paid interest on the amount loaned that week/month. So surely we don't owe anything?? If we had to pay them back then they would be getting back the money from the agency again and we would end up being payed the basic minimum wage.
Confused does not adequately describe how I am feeling at the moment!!

Sounds like you have only been paying the interest on the loan, the principal still exists. They should have set this up a commercial loan (hence the interest payments) to ensure it passes HMRC inspection. I'd be more worried if they didn't.
I think JonC is taking the best course of action...let the dust settle and look at the options. Rushing into HMRC arms saying that this isn't a loan could be extremely risky...in my opinion.