Talent Resource Management

[SteveO]

Trm

Did you all declare the beneficial value of these loans in your Tax Returns?

Is this an "employee loan"?

Was the loan paid directly from TRM or from a discretionary trust?

Its paid by an Employee Trust Fund. Precident has been set on this type of scheme by the Dextra/Phones4U case.

[brazzer]

Loan

Hi,

I used TRM for 10 months, finished jun 08. Got the letter from redding yesterday. Maybe they are re-arranging things to protect the scheme due to IRD pressures, but they are freaking everyone out by their methods.

JonC, add me to the list please

cheers

[kiwioi]

Is it really a bad thing?

I have recently finished with TRM.
Was relying on them forgiving the loans, which they can still do, but due to recent legislation changes (no idea what they are) it would be a writeoff and I would take the tax hit. Which would be expensive.
Its not a huge surprise - did any of us ever confirm that forgiving a loan was ever possible - I doubt it. I googled the hell out of it and found nothing but still chanced my arm with the scheme as it seemed established.

Or (as I have received the redding letter) I can just sign what appears to be a very similar loan agreement to my previous one with TRM. And assume that TRM are managing our interests by restructuring the scheme to ensure it is defensible against the taxman. And that I will never be asked to pay back the loans, and they will not be written off for at least 7 years.

I dont really see whats changed in the scheme (or the risk that has always been associated of this scheme being successfully challenged by the taxman) apart from a new company being setup to manage the loan side.

So am leaning towards signing. Though from the sounds of it the redding co may end up just administering my loans

[DS23]

...So am leaning towards signing....

[architect]

Some useful links:

Employment Related Loans — Employee Reward Structures

http://www.taxationweb.co.uk/article...cle.php?id=432

Expert analysis: Isle of Man IR35 avoidance strategy flawed

http://www.shout99.com/contractors/s...id=12986&n=300


Offshore Umbrellas use non-repayable loans => 20% tax

http://www.pistonheads.com/gassing/t...p?h=0&t=487165

Norla EBT Loan Scheme

http://forums.contractoruk.com/accou...an-scheme.html

[Lewis]

As far as I'm aware from corridor coffee chats with colleagues on loan schemes they all have formal loan agreements. Otherwise the scheme would be a scam. They usually involve loans made from off-shore trusts (e.g. EBTs) in tax havens like the Isle of Man. The argument given that the loan would never be called in, is that the trust must act in the interests of the employees it was setup for. Plus nobody else can benefit from the trust so there is nobody who could/would need to call in the loans anyway. A commercial rate of interest must be applied to the loan so that it is not a taxable benefit.

In some schemes the loans are cleared over time by a depreciating currency, e.g. you are lent 10,000 ZWD which is easy to repay a few months later as the currency has moved so fast! So the loan very quickly disappears. Others involve writing off the loan when you leave the company however I personally have never been convinced that this works and colleagues that have challenged their scheme providers usually get wishy-washy replies as to how they can just write off the loan without it being a benefit. Maybe it can be done I am not sure.

But as far as I can see, if you say this money you have been given is not a loan then what is it? You should have declared the income on your tax return so you are open to trouble with HMRC. Also if you say that it was agreed from the start that you would never have to repay the loan then the scheme is clearly a scam (you can't just be given money tax free) and you are again in trouble with HMRC. Remember that HMRC can apply interest and penalties, you may be worse off with them than repaying the loans!

I think that in order for your scheme to work you must formally accept these are loans. Now of course this leaves you open to the loans being called in but you just have to trust that they won't. That was the risk that was being taken when you joined. It sounds like the loans will now be with a company though rather than a trust, I have not heard of this before and would also be worried.

To me, I can only see one way out for you guys. You accept the loan agreement, trust the scheme is just restructuring and not going t^ts up and hope HMRC don't catch up with you. Otherwise you have to find your way out of being given large sums of money which has not been taxed or declared, i.e. your going to have to come clean to tax evasion.

Presumably if you all refuse to sign, the scheme has no chance of succeeding and it sounds like HMRC are already looking at it. There is nothing in what I have read that sounds like the scheme is trying to call in the loans, you are maybe getting worried over nothing and potentially opening up a real can of HMRC worms by not signing.

Just my 2p worth.

[anejnz]

Hi JonC,

I have also received the Loan letter from Redding and would be interested in joining your group. I cannot e-mail or PM you at the moment as i'm a new member.

Cheers

I also received the Loan letter from Redding and would be interested in joining your group.

[ChimpMaster]

I agree with Lewis - some very good points made.

Seeing as no one answered my previous questions, I would take it that the participants of the scheme know very little about their own situation.

Good luck then.

[Kiwi]

TRM Mess

Hi,

John please can you add me to the list. It was my first contract and took advise. I am working away from home at them moment through a Recruitment agency who do not recognise Talenet Resource Mangement, I received my P45 from them a month ago, but I do know there is a letter waiting for me.

I have tred to PM you but I do not have the permissions just yet.

Thanks - Kiwi

[Ardesco]

Am I right in assuming that people have not declared these on their tax returns? If so there could also be potential penalties for not declaring income. Loan schemes such as these are considered by the Inland Revenue as tax avoidance schemes and frowned upon. I would suggest that anyone within one of these schemes seeks advice asap.

Slightly off topic, but I thought it would be worth highlighting this

HMRC may frown upon it, however tax avoidance schemes are legal and both a valid and legitimate way to reduce your tax bill. It is tax evasion that is illegal and should be avoided at all costs.

As an accountant I would expect you to be finding legal ways to avoid paying tax for your clients, that is what I pay my accountant to do.

The issue here is not with HMRC, it is with the company that is now trying to call back loans that were supposed to have been written off, but evidently have not been.