Talent Resource Management

[ChimpMaster]

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5) Work and live Abroad for two or three years If you living in a foriegn country you pay tax in that country . You can still declare the loans as earning in the uk . If you declare the loan in 2009 and the loan is 30k If your out of the country from april to april and then declare the loan as earnings in the uk on a tax return that 30k will be classed as earnings for that year and you will be under the 36000 earnings limit therefore liable to 20% tax and NI , OR be away for two or three years and combine this option with writing it off in chunks

This sounds like a great idea, and has the added bonus of leaving this country. I believe however that you will face the problem of HMRC saying that the loan is income in the year it was received, and hence must have full tax paid on it in that year.

I doubt very much that HMRC will view it as a loan - it will be declared as always having been disguised income. And herein lies the problem.

It would be interesting to see how a tax expert would view this.

[ContractorSeven]

But those of us who have left the TRM scheme have stopped paying interest (i.e. no more TRM 5% fee).

Note that the original agreement simply states that the interest will be covered by the management fee. There is nothing that says it won't cover interest after we leave TRM. Those of us who left TRM years ago could argue that it's not our job to cover it, since the agreement was that the management fee covered it and didn't specify any exceptions.

If (and it's a big if) I'm going to be taxed on the full amount of the loan as if it was income, I'm going to try my hardest to get that interest back. After all, if TRM had told me interest was being added at any point after 2005 I would have closed the loan straight away.

I am one of those with a single share in TRM. I don't know if that makes any difference...

[u9k82]

I doubt very much that HMRC will view it as a loan - it will be declared as always having been disguised income. And herein lies the problem.

It would be interesting to see how a tax expert would view this.

Well we did sign a loan agreement with repayment dates on there! we are liable by contract to repay the loans

[TykeMerc]

Well we did sign a loan agreement with repayment dates on there! we are liable by contract to repay the loans

In which case what's to stop TRM from thinking "ok that was fun while we could find new punters, they've dried up now, time to pull in all our loans and feck off to somewhere sunny for life"?

I would be very surprised if, in their situation of holding god knows how many millions of pounds in loans that they effectively never had to finance in the first place, they don't just bankrupt all of their scheme members and call in the lot at some point.
Even if they only managed to get 10% of the "loans" value repaid they're sat on a huge fortune of legal free money and they can pursue you with the usual debt recovery routes too.

If you attempted a legal challenge if they call in the loans you would effectively be admitting in court that it was a huge tax scam and be inviting HMRC to bend you over permanently, refuse to supply any lube then take to your orifice with a prize winning pineapple and a huge hammer.

[ContractorSeven]

If you attempted a legal challenge if they call in the loans you would effectively be admitting in court that it was a huge tax scam and be inviting HMRC to bend you over permanently, refuse to supply any lube then take to your orifice with a prize winning pineapple and a huge hammer.

However morally questionable, if it is *legal* to operate in this way - that is, that the loans would be written-off and tax paid at that point - it would still be worth challenging any payment demand and paying the tax instead. Even if the cost was the same, I'd rather the state got the money than some con-men.

This is all speculative until someone actually asks TRM to write-off their loan. The last email we all received suggested that they would do so if asked...

[u9k82]

In which case what's to stop TRM from thinking "ok that was fun while we could find new punters, they've dried up now, time to pull in all our loans and flip off to somewhere sunny for life"?
.

Exactley!! thats why i will be declaring the loan or part of the loan in April . Redding have stated they will sign off the loan if we write to them.

Big tax bill coming my way , but the loan will be gone , my taxes paid and i can get on with the rest of my life ! can anyone honestly say they would prefer to look over there shoulder for the rest of there lifes!

Were contractors for gods sake earning 400+ per day , just live like a normal person on a modest wage and save, save save !!!

One thing too add! if you are thinking of writing the loan off over a few years in chunks make sure you set up a limited company and pay yourself a modest wage to ensure that as much of your loan , which will be classed as earnings is charged at 20 % (under 36000 mark)

If you pay yourself 20k you could pay your loan off in 16k chunks over X amount of years


LTD Company Example ( based on 20k salary)

48k loan

When you declare the chunks of loan they will be classed as income for that year

declared over 3 years @ 16k Chunks (16k+20k = lower tax) = 4800 per year in tax (@20% + 10% NI )

4800 x 3 years = £14400 tax repaid

Umbrella Example

You utilise all of the 36000 allowance taxable at 20 %

Therefore each 16k Chunk will be taxed at 40 % + 10% NI = 8000

8000 x 3 years = £24000 tax repaid

[ASB]

In which case what's to stop TRM from thinking "ok that was fun while we could find new punters, they've dried up now, time to pull in all our loans and flip off to somewhere sunny for life"?.

Quite a lot actually (probably).

If the loans were made from a trust the trust is confined by it's trust deed. Normally this will be to act in the interests of the beneficiaries. Don't confuse TRM, the current finance company holding the loans, the trustess of any trusts the loans were made under. They will all have certain responsibilities.

Of course, if the loans were just regular loans from the company not via a trust they could be called and the funds used however the directors saw fit.

[catch22]

Quite a lot actually (probably).

If the loans were made from a trust the trust is confined by it's trust deed. Normally this will be to act in the interests of the beneficiaries. Don't confuse TRM, the current finance company holding the loans, the trustess of any trusts the loans were made under. They will all have certain responsibilities.

Of course, if the loans were just regular loans from the company not via a trust they could be called and the funds used however the directors saw fit.

I've seen several references to a "discretionary loan", but nothing referring to a trust. Could the trust be considered implicit?

[ASB]

Have you got an official link confirming this? I have a mate who I think is still getting foreign currency loans.

Sorry can't find it, there is definitely something on the HMRC webstire though.

[TykeMerc]

I've seen several references to a "discretionary loan", but nothing referring to a trust. Could the trust be considered implicit?

Correct me if I'm wrong but a Trust is a very explicit legal entity. If the loans are from a Trust they should be expressly stated as such on all of the paperwork, I would be rather surprised if the Trust (if it existed) wasn't very apparent.