Repaying back loans

[stonehenge]

Thanks Iliketax.

The problem with our trust is one man has control of everything. He's both the scheme operator and trustee. And rumours are his company is in financial trouble.

Put two and two together and it starts to smell a bit off.

[elpinar]

does the CCA apply in the IOM ?

Q
Are the laws affecting the consumer different in the Isle of Man than the UK?

A

In general laws on the IoM mirror those in the UK but there are significant differences in certain items of legislation.

For specific details of legislation that may affect you in your business or leisure on the IoM please contact our office by letter, telephone, fax or email with your enquiry and we will advise you appropriately.

[Iliketax]

Q
Are the laws affecting the consumer different in the Isle of Man than the UK?

A

In general laws on the IoM mirror those in the UK but there are significant differences in certain items of legislation.

For specific details of legislation that may affect you in your business or leisure on the IoM please contact our office by letter, telephone, fax or email with your enquiry and we will advise you appropriately.

I'm far from an expert on the CCA but had assumed that if you, the borrower, were resident in the UK then the UK CCA would apply even if the lender is offshore. But that is just an assumption. And there would be lots of hoops to go through that may be insurmountable (does the company that acts as trustee have a credit business? Perhaps not in its capacity as trustee? But if it makes lots of these loans as an important part of its overall business?). I just don't know. But I would guess that this is the bit a lender in the IoM would have focused least on. They would have done their best to make sure that the repayment terms in the loan agreement was watertight as that is important for the tax. But the CCA is frequently ignored. Who knows.

[stonehenge]

There's no mention of CCA in the loan agreement.

It's only a couple of pages long and looks nothing like any other loan agreement I've signed. Usually there's reams of small print.

Btw, the loans were unsecured and interest free.

[Loan Ranger]

Cross post.

http://forums.contractoruk.com/hmrc-...ml#post2241356

[Krieger]

However, in the context of the argument advanced for full/partial loan repayment, i.e. "it shows that the loans were real and reduces the HMRC argument", a write off is just as effective. A write off shows that the loan terms are real and have legal effect. That is the key argument.

Has anyone approached any of the trustees requesting a write-off of the loan?

I assume that any write-off would immediately be liable for income tax but, assuming the employee is happy with that and the income tax is paid, would that be the end of it? (i.e. no loan and no further tax liability)?

[TAF4]

Has anyone approached any of the trustees requesting a write-off of the loan?

I assume that any write-off would immediately be liable for income tax but, assuming the employee is happy with that and the income tax is paid, would that be the end of it? (i.e. no loan and no further tax liability)?

I don't see how the write-off of a loan is anything more than the removal of a liability (or debt). How could that possibly attract a tax charge?

[Krieger]

I don't see how the write-off of a loan is anything more than the removal of a liability (or debt). How could that possibly attract a tax charge?

Well the money has no longer been lent to you, but has been given to you. I would suspect that it would then be immediately treated as income, and therefore taxable. No?

If it were that easy then the providers/promoters would surely have lent the money and then, shortly afterwards, written it off.

[TAF4]

Well the money has no longer been lent to you, but has been given to you. I would suspect that it would then be immediately treated as income, and therefore taxable. No?

You may be correct. However if my Granny had lent me a sum and then decided later that repayment wasn't necessary then it would be a gift not income. I can understand a 'Gift' of enormous value causing Hector to salivate so maybe a partial write off each FY would be the way to go.

The real difficulty (in addition to Hector's interest) is that the loan provider might see the the loan book as an asset to be leveraged or sold.

[DonkeyRhubarb]

Well the money has no longer been lent to you, but has been given to you. I would suspect that it would then be immediately treated as income, and therefore taxable. No?

If it were that easy then the providers/promoters would surely have lent the money and then, shortly afterwards, written it off.

Unless you are a tax advisor, or better still tax counsel, it is unwise to speculate.

The answer may vary according to the specifics of a scheme.