Views of deed of release - confused

[webberg]

Just when i thought it was relatively safe to dismiss getting a DOR - the plot thickens! And now I'm no longer sure.

Why?

A loan write off might avoid an anniversary charge of between 6% and 10% of the loan, but WILL trigger an income tax charge (section 554C ITEPA).

A write off pre 5th April 2019 will reduce the value of the loan charge, but the practical effect is still an addition to income in 2018/19.

However paying the write off charge is not the end of the matter (nor is paying the loan charge).

HMRC will continue to investigate the years in which loans were received, where they have already opened enquiries.

Once those are complete, it is to be hoped that the tax paid under the write off or loan charge, will be a credit against tax due in earlier years.

Every indication from HMRC is that this is the case but for me there remains some worrying gaps in the legislation. It is to be hoped that HMRC will show some common sense but given that the agency has appeared hell bent on destroying its own credibility in recent years, what do they have to lose from following a legislative path that see tax being paid twice?

If you have settled, then in my view, a loan write off is sensible but only you can judge whether the price being charged is reasonable.

If you have not settled, a loan write off is not sensible.

[Iter]

Views of deed of release - confused

So if you did settle are you saying the 554C doesn’t apply if /when loan is written off.
(I assume if wrote off means getting back funds from trust only if not settled)
Sorry bit confused by this.

[webberg]

So if you did settle are you saying the 554C doesn’t apply if /when loan is written off.

Depends.

If you settle and check the box that the loan is to be written off - and it is written off (remember that YOU have to arrange that as HMRC cannot) - then no 554C charge.

(In technical reality the contract says that the settlement meets the payment condition in section 554Z(4)(b)(i) which deal with situations in which one charge "overlaps" with another.)

If you settle and check the box that the loan is to written off - but that does not happen - then a write off outside the window permitted in the settlement does not in theory, include a specific statement as above, but you should be able to rely upon the rules around overlap.

If you settle and do not check the box that the loan is to be written off, you are again relying upon 554Z5 applying in later periods.

[webberg]

So if you did settle are you saying the 554C doesn’t apply if /when loan is written off.
(I assume if wrote off means getting back funds from trust only if not settled)
Sorry bit confused by this.

Sorry - don't understand that.

[Iter]

Views of deed of release - confused

All based on a check box and scrappy xls they expected people to follow.
Ok so I did check that, although I guess it’s also stated in a contract to that effect.

If the window is only 30 days though that could prove difficult, or also if the trust do not allow this?.......

I’ve also heard hm do not expect to see evidence of this

[swicz]

webberg

If you settle and do not check the box that the loan is to be written off, you are again relying upon 554Z5 applying in later periods.

I thought that once I pay tax on the loan, HMRC will no longer pursue any other charges on it? Could you please clarify what 554Z5 is?

[Bemi]

Please note before deciding whether to pay for deeds of release

Two things for people to note:

After you request the Deeds you are send blank copies to sign and date. You have until the 15th to pay. Payment is not made to the trustees (ECS) or their masters (Baker Tilly IOM) but to another subsidy of Baker Tilly; DOR Resolutions. Unlike Baker Tilly and ECS, Dor was only set up last year. Which makes me nervous given the history of companies involved with EBTs being dissolved.

DOR DO NOT EXPLICITLY STATE THAT PAYING THEM WILL LEAD TO THE LOAN BEING WRITTEN OFF, OR EVEN THAT YOU WILL GET BACK A COPY OF THE DEEDS SIGNED BY THE TRUSTEES.

All DOR state is that:
“Once we are in receipt of the two payments, they will be processed and your signed copy documents will be returned to you for your records.”

So you get back your own signed documents... and perhaps nothing else.

While THL have promised that paying will get you the Deed of Release, and free you from the loan, THL are also the only company in this chain of Baker Tilly surrogates who are not owned by Baker Tilly. They are also, again, recently set up. This could all be coincidence or incompetence, but I would not bet that way.

And maybe if you put all the vomit of jumbled communications from THL together they don't actually promise anything that would hold up in a court of law. Just like the scheme providers' promises apparently won't.

[neveragain]

Two things for people to note:

After you request the Deeds you are send blank copies to sign and date. You have until the 15th to pay. Payment is not made to the trustees (ECS) or their masters (Baker Tilly IOM) but to another subsidy of Baker Tilly; DOR Resolutions. Unlike Baker Tilly and ECS, Dor was only set up last year. Which makes me nervous given the history of companies involved with EBTs being dissolved.

DOR DO NOT EXPLICITLY STATE THAT PAYING THEM WILL LEAD TO THE LOAN BEING WRITTEN OFF, OR EVEN THAT YOU WILL GET BACK A COPY OF THE DEEDS SIGNED BY THE TRUSTEES.

All DOR state is that:
“Once we are in receipt of the two payments, they will be processed and your signed copy documents will be returned to you for your records.”

So you get back your own signed documents... and perhaps nothing else.

While THL have promised that paying will get you the Deed of Release, and free you from the loan, THL are also the only company in this chain of Baker Tilly surrogates who are not owned by Baker Tilly. They are also, again, recently set up. This could all be coincidence or incompetence, but I would not bet that way.

And maybe if you put all the vomit of jumbled communications from THL together they don't actually promise anything that would hold up in a court of law. Just like the scheme providers' promises apparently won't.

If they (DOR/BT/ECS/THL etc) don't sign/date and return the documents then what proof do we get this releases us from the loan, as they state it will.
If they just send back what we sign, it's meaningless and expensive piece of paper nothing.
£250 for unprofessional documents, not even on headed paper, is OTT.

Correct me if i'm wrong, from my understanding of the DOR, the Trustee releases the borrower from remaining obligations of the remaining loan and payments (after paying their 5% + admin).

However, the indemnity statement should seriously be questioned.

[webberg]

webberg


I thought that once I pay tax on the loan, HMRC will no longer pursue any other charges on it? Could you please clarify what 554Z5 is?

It's a section in ITEPA that allows for the value of a relevant step to be reduced or tax paid on an earlier relevant step to be set off against a later step.

In other words, it seeks to prevent tax arising twice on the same money.

I have no doubt that where the action leading to the tax charge is within Part 7A of ITEPA, the section works as intended.

I am pretty sure that where one tax charge arises under a different part of the Taxes Acts and also Part 7A, the intention is that only one amount of tax is paid.

On the latter however, I'm still trying to find the linking mechanism because without it, I simply don't trust HMRC.

[jbryce]

THL/Baker Tilly rapicity

Who is behind THL? Do we have names for any of these people? Do the IoM regulatprs know who they are?
The THL/DOR/Baker Tilly demands of 10% - what actually happens to that 10%?
Does it disappear?
Is it actually used to repay a portion of the loan?
Assuming the trust is working in the beneficiaries interest, how does it benefit me?
How many times do I have to tell THL to go away before they actually do?