Recovering loans?

[webberg]

We have in the past few days been passed a letter sent to a client, from a law firm.

The law firm claims to be acting on behalf of a liquidator of a scheme that closed a while ago.

The gist of the letter is that the loans made some years ago are assets and that they will be seeking to realise those assets, i.e. ask our client for repayment of the loan.

There is a lot in the letter that is unclear.

The legal basis for a claim; who the law firm's client is; the implication that HMRC is driving the action - or perhaps not; the interaction (if any) between this action and settlement; who is paying their fees or is it a no win, no fee?

We are taking professional advice on this.

Our concern is that if this is the first of the ambulance chasers then we will see more and therefore it would be sensible for us to understand the basis of the claims and how they can be resisted.

This particular scheme is well known but we have relatively few clients involved in. We have reached out to other advisers who may have clients in this scheme in order to share information and perhaps in due course come up with a joint defence.

In the meantime, given that this is the first such we have seen, I'd be interested to know (anonymously in terms of your name and scheme name) how widespread this sort of activity might be.

[Calmbeforethestorm]

We have in the past few days been passed a letter sent to a client, from a law firm.

The law firm claims to be acting on behalf of a liquidator of a scheme that closed a while ago.

The gist of the letter is that the loans made some years ago are assets and that they will be seeking to realise those assets, i.e. ask our client for repayment of the loan.

There is a lot in the letter that is unclear.

The legal basis for a claim; who the law firm's client is; the implication that HMRC is driving the action - or perhaps not; the interaction (if any) between this action and settlement; who is paying their fees or is it a no win, no fee?


We are taking professional advice on this.

Our concern is that if this is the first of the ambulance chasers then we will see more and therefore it would be sensible for us to understand the basis of the claims and how they can be resisted.

This particular scheme is well known but we have relatively few clients involved in. We have reached out to other advisers who may have clients in this scheme in order to share information and perhaps in due course come up with a joint defence.

In the meantime, given that this is the first such we have seen, I'd be interested to know (anonymously in terms of your name and scheme name) how widespread this sort of activity might be.

I guess if the loans are enforced and repayment is made then neither the LC or settlement will be applicable.

Where did the original fees earned go then???????

[webberg]

I guess if the loans are enforced and repayment is made then neither the LC or settlement will be applicable.

Where did the original fees earned go then???????

Not necessarily.

If the loans are repaid (assuming the money can be found) before 5th April, then yes, the charge might be avoided but only by paying 100% rather than the loan charge.

Also, if the money comes back to the payer, eventually, it does not avoid the charge.

Also, if the main creditor on liquidation is HMRC and they take their share (which is presumably the PAYE element), then there is nothing in the loan charge rules to give a credit for this situation. (Unless this is seen as paying tax on the loans, but the tax here is paid by the employer).

Also, what happens if some people pay and some don't? Let's say that HMRC want 40% of the loans to cover PAYE. If 40% is paid by say 20% of the borrowers, what happens then?

Also, what happens if more money than HMRC want is collected? Who gets that? The shareholders? If the scheme used a trust and the excess is redistributed, then again, I suspect the loan has not been repaid and the charge applies.

It's a mess.

I'm not sure HMRC are behind this. It may be a law firm chasing a fee, it may be the promoter sqeezing the contractors for more.

I do know I don't have enough to answer the above questions.

[Endofdays]

Not necessarily.

If the loans are repaid (assuming the money can be found) before 5th April, then yes, the charge might be avoided but only by paying 100% rather than the loan charge.

Also, if the money comes back to the payer, eventually, it does not avoid the charge.

Also, if the main creditor on liquidation is HMRC and they take their share (which is presumably the PAYE element), then there is nothing in the loan charge rules to give a credit for this situation. (Unless this is seen as paying tax on the loans, but the tax here is paid by the employer).

Also, what happens if some people pay and some don't? Let's say that HMRC want 40% of the loans to cover PAYE. If 40% is paid by say 20% of the borrowers, what happens then?

Also, what happens if more money than HMRC want is collected? Who gets that? The shareholders? If the scheme used a trust and the excess is redistributed, then again, I suspect the loan has not been repaid and the charge applies.

It's a mess.

I'm not sure HMRC are behind this. It may be a law firm chasing a fee, it may be the promoter sqeezing the contractors for more.

I do know I don't have enough to answer the above questions.

I assume the promoter /scheme can't be revealed?

[webberg]

I assume the promoter /scheme can't be revealed?

I'm sure that they can, but not by me.

[Calmbeforethestorm]

Ive put my comments in italics.

Not necessarily.

If the loans are repaid (assuming the money can be found) before 5th April, then yes, the charge might be avoided but only by paying 100% rather than the loan charge.Agreed, the capital value of the loan has to be paid back to avoid the LC

Also, if the money comes back to the payer, eventually, it does not avoid the charge.I dont think there is any further tax until there is a distribution back.... funds were always earmarked for the loan holder from the inception of the loan so paying it back cant be a relevant step but its a moot point

Also, if the main creditor on liquidation is HMRC and they take their share (which is presumably the PAYE element), then there is nothing in the loan charge rules to give a credit for this situation. (Unless this is seen as paying tax on the loans, but the tax here is paid by the employer).I cant see how HMRC is a creditor unless its for corporation tax, unless the companies had employees theres no pays or nic which would be preferential ct is not

Also, what happens if some people pay and some don't? Let's say that HMRC want 40% of the loans to cover PAYE. If 40% is paid by say 20% of the borrowers, what happens then?See above. Distributions on a liquidation are a simple divi up amongst all the creditors after fees unless there are prefentials

Also, what happens if more money than HMRC want is collected? Who gets that? The shareholders? If the scheme used a trust and the excess is redistributed, then again, I suspect the loan has not been repaid and the charge applies.As above, disagree that the loan is not paid back...it is if its in cash therefore no LC, almost certainly tax at some point in future if the loanee gets hold of the money again

It's a mess.Absolutely no disagreement there

I'm not sure HMRC are behind this. It may be a law firm chasing a fee, it may be the promoter sqeezing the contractors for more.Unlikely its HMRC, they probably not even creditors, not sure how it can be the promoter as they had the original earnings did they not?more likely a selfie perhaps as part of more avoidance?????

I do know I don't have enough to answer the above questions.Completely agree on that too

[webberg]

I can assure you that HMRC is the main creditor.

The liability arises because I think they see the company as an employer, so it's PAYE.

[Calmbeforethestorm]

I can assure you that HMRC is the main creditor.

The liability arises because I think they see the company as an employer, so it's PAYE.

But you can't put anything into liquidation unless you have an actual debt, so, they must have raised at least some sort of assessment to do this.

A disputed debt is not enough to gain a liquidation... it has to be a real debt, eg a judgement in court.

You must have some evidence to support your assertion.

[webberg]

But you can't put anything into liquidation unless you have an actual debt, so, they must have raised at least some sort of assessment to do this.

A disputed debt is not enough to gain a liquidation... it has to be a real debt, eg a judgement in court.

You must have some evidence to support your assertion.

The company went into liquidation owing HMRC a few thousand. When the liquidator went out to the creditors asking for any more claims, HMRC made a huge (tens of millions) claim.

The liquidator notes in the report that it is disputed but that has not stopped the law firm issuing threats.

[webberg]

The point of the thread is to seek information on more instances of this sort of thing happening.

If we could stick to the subject, I'd appreciate it please.