Pembroke PAYE Umbrella closing down

[DealorNoDeal]

I have sought professional advice and there was no strong steer. I was advised to declare loans in the free text box but quote the company that stated there was no third party involved so I was not in scope of the loan charge.

From reading the most recent report, if I am impacted I don't see that it improves my situation anymore.

I understand that there is now more information out there on Pembroke so maybe it's worth following up. I will do that.

Thanks.

If the loans came directly from your employer, and not through a 3rd party, then it sounds like you've got a reasonable defence for not declaring them on your 18/19 return. Putting something, to this effect, in the white space (free text box) seems like a sensible precaution. HMRC can't then accuse you of trying to hide anything.

[NeedTheSunshine]

I have sought professional advice and there was no strong steer. I was advised to declare loans in the free text box but quote the company that stated there was no third party involved so I was not in scope of the loan charge.

From reading the most recent report, if I am impacted I don't see that it improves my situation anymore.

I understand that there is now more information out there on Pembroke so maybe it's worth following up. I will do that.

Thanks.

Regardless of whether you are in scope for the loan charge, I would be expecting HMRC to be looking into your loan tax affairs sooner or later.

[AnthonyB]

I've just noticed that two previous employees now work for a company called Synergy PAYE, just doing some digging now...

[piebaps]

I've just noticed that two previous employees now work for a company called Synergy PAYE, just doing some digging now...

Incorporated January 2019. No named staff on website. Address is a "virtual office" which you can rent for £55 per year.

I've seen all I need to see.

[AnthonyB]

Is anyone fighting HMRC or Pembroke on this situation?

Does anyone know enough to advise as to whether it's worth fighting or not?

There's a group of 4 of us talking on an email chain if anyone is interested please PM me.

[webberg]

Is anyone fighting HMRC or Pembroke on this situation?

Fighting for what? HMRC seem to have raised assessments on Pembroke. We ahve not seen any suggestion so far that individuals will be taxed - although it would not surprise me if that were to happen. Pembroke is no more. The Liquidator now controls whatever assets etc the company had when it tipped over. To date the Liquidator appears not to have issued demands for loan repayments. Not sure what "fight" is in point?

Does anyone know enough to advise as to whether it's worth fighting or not?

We certainly understand the scheme they used and have had conversations with the Liquidator.

There's a group of 4 of us talking on an email chain if anyone is interested please PM me.

PLease see above.

[AnthonyB]

PLease see above.

In terms of 'fighting' I mean that the two people that have told me about their position have informed me that they have paid the tax on their loans, to HMRC.

I also understand that the liquidator MAY seek to claw back the loans.

That is what I mean by fighting. HMRC have asked me to complete a self assessment which I plan to do whilst including the fact that I have a loan (and the assurances from Pembroke about why it isn't in scope of the loan charge). Once they receive that I think they are likely to request I pay tax on that. I wanted to understand if anyone is fighting back against HMRC requesting that the tax be paid.

I also wanted to know what people plan to do if/when the liquidator asks for money back.

[DealorNoDeal]

HMRC have asked me to complete a self assessment which I plan to do whilst including the fact that I have a loan (and the assurances from Pembroke about why it isn't in scope of the loan charge). Once they receive that I think they are likely to request I pay tax on that.

If you include actual loan amounts on your SA, in the section for the LC, then HMRC may expect you to pay up irrespective of any additional info you provide.

If you don't believe you need to pay the LC, then it might be better to omit details of the loans and just put a note in the white space.

"I received loans in 2017/18 and 2018/19 from my employer which I have been advised are exempt from the Loan Charge because the loans did not involve any 3rd party."

[webberg]

The claimed exemption for loans made directly by an employer and which do not involve a third party is legally valid.

It is however a position that HMRC has already sought to challenge via the GAAR Panel.

HMRC put up a scheme to them in which there were loans made by an employer which were subsequently transferred or assigned to another party. The GAAR Panel held that even though the loans fell outside of section 554A(1)(d) - the sub section requiring the presence of a third party - it was clearly the intention of Parliament that "such arrangements" should be subject to the rules.

I am not aware that this opinion has been subsequently tested in the Tribunals.

I am unsure on how much weight may be placed on the GAAR opinion in a Tribunal but clearly it's not helpful.

In the case of schemes like Pembroke (and for all I know Pembroke itself), the money flow is that the company gets 100 and pays say 10 to contractors. They pocket 20 and the remaining 70 is a loan.

Think about it.

That 70 is a profit for the company unless they can somehow expense it. They make that expense (usually) by making a contribution of the loan to some form of employee trust.

Does that constitute the involvement of a third party?

[DealorNoDeal]

In the case of schemes like Pembroke (and for all I know Pembroke itself), the money flow is that the company gets 100 and pays say 10 to contractors [as salary]. They pocket 20 [in fees] and the remaining 70 is a loan.

Think about it.

That 70 is a profit for the company unless they can somehow expense it. They make that expense (usually) by making a contribution of the loan to some form of employee trust.

Does that constitute the involvement of a third party?

Probably. It certainly looks contrived to sidestep the LC.