Contractor Loan Scheme - Repayment Request Post/Durinh Settlement

[AL1990]

Hi

First time post.

I used a contractor loan scheme between 2014-2017 before decising to stop and settle with HMRC. I am currently in the process of settling with HMRC but the provider has requested repayment on the loan which has me very worried.

Legally speaking, what grounds do they have to actually seek "repayment" for these "loans"? Surely post HMRC investigation if these are deemed to have not been loans, and the loan is not regulated by any official body, they cant keep coming back looking for payment.

I ask because while im not bothered about what i owe HMRC, paying back the loan (which is actually not a loan) would financially cripple me.

Does anyone have any advice?

[Finalwhistle]

Hi

First time post.

I used a contractor loan scheme between 2014-2017 before decising to stop and settle with HMRC. I am currently in the process of settling with HMRC but the provider has requested repayment on the loan which has me very worried.

Legally speaking, what grounds do they have to actually seek "repayment" for these "loans"? Surely post HMRC investigation if these are deemed to have not been loans, and the loan is not regulated by any official body, they cant keep coming back looking for payment.

I ask because while im not bothered about what i owe HMRC, paying back the loan (which is actually not a loan) would financially cripple me.

Does anyone have any advice?

In what country is the lending company based? I only ask as I have heard of outside the UK they don’t have much right to force you into paying the loans back. Have you tried speaking with the lenders/ promoters?

[burnside]

So the money that you earn goes into their bank account, they loan you a percentage back (minus their admin fee) you then have to pay HMRC tax and interest and then the trust demands you pay the loan back to them....even though it was your money in the 1st place.

Man, just how did so many of us fall into this giant con?

[AL1990]

To be clear, at the moment they are only "suggesting" payment so that i can prove to HMRC that it was a loan. Given ive chosen to settle im obviously not interested in the charade, however HMRC arent exactly being helpful when it comes to suggesting how i should act if/when they look for full repayment.

Im 75% sure they wont have a leg to stand on but its giving me sleepless nights nonetheless. Ive "handed myself over" to HMRC but im still being treated like some sort of criminal mastermind

[Loan Ranger]

...the provider has requested repayment on the loan which has me very worried.

Do they give any reason/motivation for the repayment eg. the 2019 loan charge?

[WalterWhite]

So the money that you earn goes into their bank account, they loan you a percentage back (minus their admin fee) you then have to pay HMRC tax and interest and then the trust demands you pay the loan back to them....even though it was your money in the 1st place.

Man, just how did so many of us fall into this giant con?

Have any trust schemes actually asked for the loan to be repaid?

I have read on here that the Montpelier guys (previous to the schemes we used) were asked to pay small amounts back in order for them to provide legal cover, but I haven't seen anything else on here regards that, other than hearsay.

I wonder if Phil or Webberg can shed any light on this?

[burnside]

The OP stated that his had, although he doesn’t say if this was a trust

[WalterWhite]

The OP stated that his had, although he doesn’t say if this was a trust

That is why I am asking.

First time poster comes along and says he has been asked to repay his loan, doesn't give the name of the provider, and nobody else on any other thread seems to have had the same.

Just seems a little fishy to me.

*Apologies to the OP if this is genuine.

[webberg]

Hi

First time post.

I used a contractor loan scheme between 2014-2017 before decising to stop and settle with HMRC. I am currently in the process of settling with HMRC but the provider has requested repayment on the loan which has me very worried.

Legally speaking, what grounds do they have to actually seek "repayment" for these "loans"? Surely post HMRC investigation if these are deemed to have not been loans, and the loan is not regulated by any official body, they cant keep coming back looking for payment.

I ask because while im not bothered about what i owe HMRC, paying back the loan (which is actually not a loan) would financially cripple me.

Does anyone have any advice?

Taking this post at face value for the moment, why do you think that there is any connection between settling the tax and repaying the loan?

You pay tax in accordance with tax law.

Loans are determined by contract law.

HMRC is not a party to your loan and therefore has absolutely no power to influence the lender or the lender's actions.

I accept that HMRC like to give the impression that they can exert such influence, see promises of being able to "exit" you from a scheme, but the reality is that this is just a "nudge" to encourage you to settle. It's a false and misleading position to give, but I suspect that we are not the only ones to fail to have HMRC withdraw statements that would open commercial firms to negligence claims.

You are also incorrect in assuming that HMRC say the payment is not a loan.

the argument they use is that the money - legally if not actually - goes.

1. End client - intermediary
2. Intermediary - scheme promoter
3. Scheme promoter - you
4. You - lender
5. Lender - you

Tax arises on you at step 3.

Tax may also arise at step 4 (IHT perhaps)

Tax may arise at step 5 (Part 7A ITEPA 2003)

Tax may also arise if the loan is not repaid (DR charge in 2019 although if you have settled, probably not).

So, if you have signed a loan agreement, then it is a loan. you will need legal advice on whether the loan can be repayable and what rights and obligations you and the lender have.

[webberg]

Have any trust schemes actually asked for the loan to be repaid?

I have read on here that the Montpelier guys (previous to the schemes we used) were asked to pay small amounts back in order for them to provide legal cover, but I haven't seen anything else on here regards that, other than hearsay.

I wonder if Phil or Webberg can shed any light on this?

Aside from the incident mentioned, we have not be made aware of any formal requests for loan repayment.

We have had discussions with lenders who mention that repayment is an option, but none of these has manifest as a real demand.

We have seen proposals from some promoters and their connections that a repayment followed by a subsequent arrangement will result in the DR charge 2019 being avoided. Not a course we recommend.