Talent Resource Management

[Lewis]

I don't understand why any NI or penalties would ever apply if the loan is forgiven. Let's say I take a loan out with any high street bank and for one reason or another they forgive it a few years later. I can see why I may need to pay income tax on this, but how on Earth would they say NI was due, or any penalties? The tax isn't 'late' if it is simply charged when the loan is written off!

For my outstanding 'loan' of 120k I can see how I would need to pay tax on that at 40% if the loan was written-off tomorrow. Personally I would be unhappy with this, especially since I've not heard from TRM since 2005, but that's the *most* I can see myself owing in tax. Can anyone even suggest why this would not be the case?

The *most* would be if HMRC decided the loans were not real loans and so tax it as income as ASB said. Then you are looking at ASBs figures which is worst case PAYE+NI+interest+penalties.

[ASB]

I don't understand why any NI or penalties would ever apply if the loan is forgiven. Let's say I take a loan out with any high street bank and for one reason or another they forgive it a few years later. I can see why I may need to pay income tax on this, but how on Earth would they say NI was due, or any penalties? The tax isn't 'late' if it is simply charged when the loan is written off!

It depends on if the loan was a loan or not. Looking at the overall arrangements:-

You take a job with an employer. They pay you minimum wage. They give you a series of loans which are magically the difference between the fees you generate for the employer and the amount you have been paid. You leave the employer, the loans get forgiven.

HMRC may decide to take the view that the loans were never loans. They were actually salary. Whether they will win or not remains to be seen.

Let's assume that the scheme is rock solid - why does every employer not do it?

Certainly a lot of employers have been creative in how they remunerate staff - the revenue are equally creative in stamping down on what they consider (rightly or wrongly) abuse. One example was paying staff physically in sovereigns when they were legal tender - so you were only being paid and taxed on a tenner a week. Curiously the revenue jumped on this. Then there was wine, commodities, all sorts of thing. All jumped on.

[ContractorSeven]

It depends on if the loan was a loan or not. Looking at the overall arrangements:-

You take a job with an employer. They pay you minimum wage. They give you a series of loans which are magically the difference between the fees you generate for the employer and the amount you have been paid. You leave the employer, the loans get forgiven.

HMRC may decide to take the view that the loans were never loans. They were actually salary. Whether they will win or not remains to be seen.

From my perspective, I used TRM in good faith - I never expected not to pay tax, but was told that it was a fully legal way to pay less (since there's no NI, just income tax when the loan is forgiven). However, it's still *more* tax than I'd have paid through submitting expenses and so on through my own limited company and fiddling milage/subsistence/etc like everyone seems to, so it's not like I'm trying to screw HMRC out of every penny. Even if they decide that the loans aren't 'real', hopefully they would be sympathetic.

I still can't see how my original agreement says the interest is covered by the management fees, then TRM write to me three years later and say 'by the way, we've been charging interest for three years on this loan you still have'. That can't be legal, whatever the status of the loans. If I have to pay tax on a written-off loan, paying tax on interest I never knew about seems a bit unfair. I know ex-TRM users probably don't get much sympathy, but I never signed-up for evading tax, just having a simpler life - I always wanted to stay within the law...

[u9k82]

Further Investigation

I managed to get hold of Jill smart's number at the fort group , I fielded several questions at Jill to which she implored that she did not have the answers , she was simply collating feedback and would be forwarding question for a response.

I assumed these responses would come from impact marketing
I managed to get a number for impact marketing from an e-mail i recieved from charlie (the contracts administrator)

I replaced the last two digits of her number (her extension) with 00 , and guess where i got through too - KINGS HOUSE

The same kings house as in batchworth! so i request to speak to impact marketing and i get put through to a lady called louise who also says she doesn't know anything and is confused why Jill would fob me off as she is the lady who is answering all the questions ?!

what is the relationship between

Batchworth , The Fort Group , Talent Resource Management and Redding finance

My guess is that Batchworth (Simon Moss MD) is the head company the loans are actually administered through the fort group. TRM used to be the loan provider and now its redding . I think TRM and Redding were both set up by batchworth in guernsey , with the help of the fort group who specialise in this area

http://www.thefortgroup.com/

The Fort Group specialises in the formation, management and administration of offshore companies for clients worldwide. We offer a comprehensive range of services to handle all aspects of corporate administration.

I think Batchworth will fold the "flimsy" TRM and replace it with a more "robust" Redding finance , both set up by batchworth with the help of the fort goup (jill smart).

I assume the "tax specialists" who assist batchworth are actually the fort group with 25 years experience in this area in all sorts of tax avoidence though off shore trusts.

Just My thoughts

[TykeMerc]

Certainly a lot of employers have been creative in how they remunerate staff - the revenue are equally creative in stamping down on what they consider (rightly or wrongly) abuse. One example was paying staff physically in sovereigns when they were legal tender - so you were only being paid and taxed on a tenner a week.

I remember that case, I thought at the time it was rather clever as the employees (all permies) didn't get shafted by the tax man and the company saved a fair bit too. Shame the Inland Revenue and the Treasury stamped that out.

To my mind these loan schemes are all begging to get shot down one way or another, I'm amazed that Tax Counsels have ever approved. As another poster pointed out they must backfire with either HMRC catching the disguised taxable income or the "loans" being repaid at some point.

[ASB]

I'm amazed that Tax Counsels have ever approved.

Counsel won't have "approved". They will only have offered an opinion. The validity of that is gernerally highly related to the exact questions asked.

Mind you, the revenue have had significant failures. One "scheme" that still works (it's only any use to you if you are a teach at a public school) is provision of free (or nearly free) places for you children.

The revenue argued that the benefit was the value of the place - i.e. the fees. The school argued that the benefit was only the marginal cost of the place - basically pretty close to nil. The revenue lost. Can't be bothered to look up the case though.

Anyway, this is filtering down in some respects to provision of certain benefits that employees may want in certain sectors - e.g. hotels, airlines this sort of thing.

[FreakedOut]

...

[ASB]

What are CTDs?

Certificate of tax deposit. Basically you can pay an amount to the treasury to deposit against a future tax bill. In the event that you lose an investigation then you can use these to pay the liability. No interest is charged from the date of the CTD on that amount. You can withdraw them at any time. However they only pay a derisory rate of interest.

Their real use is if you believe you are likely to be receiving a bill you cannot successfully contest. Bearing in mind these cases can (and usually will) drag on for a number of years before they are settled then it can be a useful strategy.

Another way is to make a payment on account. However the problem here is that the IR know about it and you will not get any money back until you have actually won (although in this case you do get a better rate of interest).

As I said, it's all on HMRC website.

[Lewis]

What are CTDs?

See here http://forums.contractoruk.com/605330-post1402.html

[FreakedOut]

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