Montpelier & Newquay 10% loan repayment demands

[AtW]

The trustees have demanded repayment of 10% of the loans stating that their intention is to return this to people in a tax efficient way.

Can't they ask for 10% then gift it back, then ask for 10% again and repeat until whole of debt is returned back to the recipient, thus effectively removing debt and gifts don't attract UK tax for the recipient?

[Loan Ranger]

Can't they ask for 10% then gift it back, then ask for 10% again and repeat until whole of debt is returned back to the recipient, thus effectively removing debt and gifts don't attract UK tax for the recipient?

Even if that did work, from a tax perspective, we would be reliant on them giving it back to us. Our fear is that, if we repay the 10%, we will never see the money again.

They've already said that we would have to wait at least a year or so to get the money back, so it didn't look suspicious. How dodgy does that sound?

[cojak]

Even if that did work, from a tax perspective, we would be reliant on them giving it back to us. Our fear is that, if we repay the 10%, we will never see the money again.

They've already said that we would have to wait at least a year or so to get the money back, so it didn't look suspicious. How dodgy does that sound?

Not at all...

[Iliketax]

Can't they ask for 10% then gift it back, then ask for 10% again and repeat until whole of debt is returned back to the recipient, thus effectively removing debt and gifts don't attract UK tax for the recipient?

I think that the tax treatment may be a little more complicated than that.

I've got no skin in the game / not from HMRC, etc but for many settling with HMRC will be the best idea from a cash perspective (compared to the April 2019 tax charge). But for it to be a good idea the loans would need to vanish in a puff of smoke at the same time. So unless you can guarantee that they are not enforceable, that can only be done with the cooperation of the the trustee. But just to be clear, that I'm not suggesting just repaying 10% with a vague hope of something in the future.

[Loan Ranger]

Not at all...

LOL

[Incredulous]

Even if that did work, from a tax perspective, we would be reliant on them giving it back to us. Our fear is that, if we repay the 10%, we will never see the money again.

They've already said that we would have to wait at least a year or so to get the money back, so it didn't look suspicious. How dodgy does that sound?

Did they explain why they require so much I read somewhere that 10% amounts to £40k in some cases and why such short notice

Knowing many cant raise the cash in such a short time and some cant raise it all so most will default

Would it not have been equally believable to demand 1% back each year until the loan is paid back?

[Loan Ranger]

Did they explain why they require so much I read somewhere that 10% amounts to £40k in some cases and why such short notice

Knowing many cant raise the cash in such a short time and some cant raise it all so most will default

Would it not have been equally believable to demand 1% back each year until the loan is paid back?

No, they never really explained why it was 10%.

However, consider this...

Suppose 10% worked out at about £20k per user (average loan c. £200k). There were over 1,000 users across the Newquay & Rathowen schemes. If everyone repaid that would give the trustees in the region of £20m to "play with".

Even if only 1 in 10 people repay, they will still bank £2m.

The cost of sending a letter from the Isle of Man to the UK is 45p. 1,000 letters = £450.

Not bad eh.

[Incredulous]

No, they never really explained why it was 10%.

However, consider this...

Suppose 10% worked out at about £20k per user (average loan c. £200k). There were over 1,000 users across the Newquay & Rathowen schemes. If everyone repaid that would give the trustees in the region of £20m to "play with".

Even if only 1 in 10 people repay, they will still bank £2m.

The cost of sending a letter from the Isle of Man to the UK is 45p. 1,000 letters = £450.

Not bad eh.

So clearly paying will simply re-active a debt that is probably unenforceable in the first place for many reasons and their action has nothing to do with tax planning and everything to do with extorting money out of their victims - don't pay I say

[centurian]

So clearly paying will simply re-active a debt that is probably unenforceable in the first place for many reasons and their action has nothing to do with tax planning and everything to do with extorting money out of their victims - don't pay I say

Pretty sure that if a debt has become statue barred (which won't apply to everyone), then it forever remains statue barred, even if you subsequently acknowledge the debt afterwards or make a payment.

Limitation Act 1980, Part II, section 29

Subject to subsection (6) above, a current period of limitation may be repeatedly extended under this section by further acknowledgments or payments, but a right of action, once barred by this Act, shall not be revived by any subsequent acknowledgment or payment.

Of course, that's assuming you can show that there was a 6 year period for which you didn't acknowledge the debt or make a payment.

[Out Of Cash]

Repaying the loan and paying the tax & NI are both bad stiuations, but to have to pay both is crazy!

Not that I mind as most discussions are helpful, but I was wondering if talk around potential strategies like statute barred would be better placed in the private forums such as BG or TAA away from the eyes of HMRC and WG etc?

ooc