Repaying back loans

[webberg]

Scheme promotors cannot do that unless they are in bed with HMRC and do retrospective legislation.

Scheme promoters who control the trust/lender and who can make unilateral changes to loan documents can do EXACTLY that and it has absolutely NOTHING to do with HMRC or tax legislation.

If the loans are real, then the terms of the agreements are real. If those terms allow for an accelerated payment and that is in the best interests of the beneficiary (and subject to several other safeguards) then repayment can be demanded.

Whether it's wise to agree to that demand is a different story.

HMRC and tax legislators have NO POWER to interfere with that process.

[BattleCry]

I note a feeling of despondency in many posts. To me, HMRC latest offering in the budget smacks of desperation. My reading, and I'm no expert, is that they won't have a free ride through the judicial process. They will, for example, need to prove that a loan is "disguised remuneration". Their track record here isn't great and the fat lady hasn't sung yet in the Rangers case. I do feel for those in DOTAS schemes who have been hit by APNs. One also hopes that retrospective legislation will have a tough time in the courts. If the 2019 deal is taken all the way to the Supreme Court it could be 2025 before this is all settled and by then one has to think that the trustees and promoters will have come up with something to frustrate HMRC.

I agree - the law systems and those working within try to uphold fairness in accordance with the law. Retrospective fudges and steps to sidestep the legal process may be seen by some in legal circles as being in contempt of the law and the courts.

[ASB]

Scheme promoters who control the trust/lender and who can make unilateral changes to loan documents can do EXACTLY that and it has absolutely NOTHING to do with HMRC or tax legislation.

If the loans are real, then the terms of the agreements are real. If those terms allow for an accelerated payment and that is in the best interests of the beneficiary (and subject to several other safeguards) then repayment can be demanded.

Whether it's wise to agree to that demand is a different story.

HMRC and tax legislators have NO POWER to interfere with that process.

I ASSUME that loan agreements would always allow for some form of loan repayment to cover trust expenses.

I would also assume there is some sort of "repayable on demand" clause in them. But if a user refused that would need testing in court as to whether it was fair; in any event everything the trust is doing has to be in the best interests of the beneficiary.

Is it the case that these best interests can be unilaterally decided by the trust ?

[webberg]

I ASSUME that loan agreements would always allow for some form of loan repayment to cover trust expenses.

I would also assume there is some sort of "repayable on demand" clause in them. But if a user refused that would need testing in court as to whether it was fair; in any event everything the trust is doing has to be in the best interests of the beneficiary.

Is it the case that these best interests can be unilaterally decided by the trust ?

Some good questions there and in the circumstances perhaps not best discussed openly?

In general though I would have thought that a link between trust expenses and loan repayment is unlikely. If the trust has expenses, that should be a separate fee on the trust assets. More likely is the trustee would have agreed at the outset to a fee basis and those would have been met by transfers from the provider? If the provider now has no cash flow and fees are unpaid, there is an "interesting" situation.

Repayable on demand? Perhaps but the principles of equity in contracts would mitigate that. It may also be the case that you have a letter/email etc in the past that says "the loan will never be repayable"? (I've seen such declarations). Is that enough to have changed the terms of the loan agreement making a demand unfeasible now?

It's going to come down to individual details.

[webberg]

Thin end of a very BIG wedge?

I don't have the numbers but I suggest that a very high percentage of loans are with IOM lenders.

If there is now one such lender (or company claiming to represent the lender) asking for repayment, how long before the others spot that bandwagon rolling down the hill?

A lot of people are going to find themselves between a cash strapped lender/provider and a tax charge in 2019.

That's not going to be pretty.

Organise - NOW.

[Iliketax]

Is it the case that these best interests can be unilaterally decided by the trust ?

Depends on the trust deed. Normally, it is just the trustee but there can be a 'protector' who has a say in things. After that, it's the courts but that is a very tough ask if the trustee had thought about things properly. See for example Roadchef where a director of the trustee didn't do things properly: Final pay out in sight for Roadchef shareholders

[Badger1]

HMRC help with extracting you from scheme...?

I don't have the numbers but I suggest that a very high percentage of loans are with IOM lenders.

If there is now one such lender (or company claiming to represent the lender) asking for repayment, how long before the others spot that bandwagon rolling down the hill?

A lot of people are going to find themselves between a cash strapped lender/provider and a tax charge in 2019.

That's not going to be pretty.

Organise - NOW.

I would think some may feel quite trapped by such loan repayment demands...

Looking at Chapter 1 point number 7 of this:
seems like quite a tempting way out...

...are the HMRC really likely to aid and help you through the process to "extract" you? Or just grab your details and take what's owed and leave you with the ever-lasting debt?

[TAF4]

Looking at Chapter 1 point number 7 of this:
seems like quite a tempting way out...

...are the HMRC really likely to aid and help you through the process to "extract" you? Or just grab your details and take what's owed and leave you with the ever-lasting debt?

That's a rhetorical question right?

[webberg]

I would think some may feel quite trapped by such loan repayment demands...

Looking at Chapter 1 point number 7 of this:
seems like quite a tempting way out...

...are the HMRC really likely to aid and help you through the process to "extract" you? Or just grab your details and take what's owed and leave you with the ever-lasting debt?

I'm going to suggest that this is a piece of over enthusiastic drafting by somebody who understands neither tax nor contracting.

As I've noted above, HMRC is not party to any agreement and cannot therefore influence them.

What would be interesting is if HMRC promised to refund the 5/4/19 charge in the event that the loans are repaid AFTER that date?

[AngryMan]

I'm going to suggest that this is a piece of over enthusiastic drafting by somebody who understands neither tax nor contracting.

As I've noted above, HMRC is not party to any agreement and cannot therefore influence them.

What would be interesting is if HMRC promised to refund the 5/4/19 charge in the event that the loans are repaid AFTER that date?

Isnt paying back the loan a lot more expensive than paying tax on it?

Why would we want to that?

Unless we somehow could arrange for it to be paid back on death bed and then (hopefully) 40 years on inflation would reduce its true cost.