Trust demanding repayment of loan

[Paralytic]

I was in the process of getting the loans written off but hadn't got as far as handing over the £900..........it would have been cheaper than where I currently appear to be!!!

Are you assuming that writing off a loan would mean HMRC would drop the claim that it was income?

[surfgeo]

Are you assuming that writing off a loan would mean HMRC would drop the claim that it was income?

No, I had settled with HMRC and was in the process of geting the loan written off as per HMRC and my accountants advice. I mean I'm worse off now as potentially I have to pay the loan back as well!!!!

[DavidD]

No, I had settled with HMRC and was in the process of geting the loan written off as per HMRC and my accountants advice. I mean I'm worse off now as potentially I have to pay the loan back as well!!!!

I will never pay a penny of the loan once I have settled with HMRC. I don’t give a hoot about tax law vs contract law - it’s either or for me - and I will take that the whole way. The entire premise of law is supposed to be reasonableness and in absolutely no ones view could it be deemed reasonable to pay both the tax and the loan.

[webberg]

Having loans written off without first agreeing a settlement with HMRC is not recommended.

First, such a write off now will not impact the loan charge liability.

Second, a loan write off is a "relevant event" for the purposes of disguised remuneration rules. The value of that event can be reduced by an earlier relevant event but if these has not been an earlier, event then clearly the loan write off becomes fully taxable.

A loan repayment post 5th April 2019 will not reduce the loan charge. A repayment is not a relevant event UNLESS the money finds its way back to you. If there is a degree of circularity then I suspect that HMRC would be looking to say that the whole transaction is effectively a write off.

A loan repayment or write off does NOT alter HMRC's view that the payment of the money was taxable in the year it was received.

A repayment via a trust lender who recycles the money to you as a trust distribution is likely to create a taxable distribution event that may be difficult to escape.

[webberg]

I will never pay a penny of the loan once I have settled with HMRC. I don’t give a hoot about tax law vs contract law - it’s either or for me - and I will take that the whole way. The entire premise of law is supposed to be reasonableness and in absolutely no ones view could it be deemed reasonable to pay both the tax and the loan.

With respect, that is an unsustainable position.

Laws are specific in what they apply to. The ability of a result obtained under one set of laws to "frank" the outcome of a different set of laws, is very limited.

Going to a court to argue that you will not repay a loan because it has been taxed as income, may win you some sympathy, some points for common sense and perhaps some mitigation of the amount repayable. It will not however be a knock out blow for the lender demanding repayment. You will have to pay attention to the law here and be clever about how you approach this argument.

Playing Devil's Advocate here, a Judge might say to you, "in absolutely no one's view could it be deemed reasonable for you to have income which you claim is a loan". Having claimed it was a loan, to then seek to say it is not, is perhaps an equally "unreasonable" position?

[DealorNoDeal]

I will never pay a penny of the loan once I have settled with HMRC. I don’t give a hoot about tax law vs contract law - it’s either or for me - and I will take that the whole way. The entire premise of law is supposed to be reasonableness and in absolutely no ones view could it be deemed reasonable to pay both the tax and the loan.

+1

I'd like to see one of these scam merchants actually try and legally enforce repayment of these so-called loans.

The terms were an absolute joke. Typically of indefinite duration, interest free or rolled up, no regular repayments and all totally unsecured. They make sub-prime mortgages look like the epitome of responsible lending.

[surfgeo]

Having loans written off without first agreeing a settlement with HMRC is not recommended.

First, such a write off now will not impact the loan charge liability.

Second, a loan write off is a "relevant event" for the purposes of disguised remuneration rules. The value of that event can be reduced by an earlier relevant event but if these has not been an earlier, event then clearly the loan write off becomes fully taxable.

A loan repayment post 5th April 2019 will not reduce the loan charge. A repayment is not a relevant event UNLESS the money finds its way back to you. If there is a degree of circularity then I suspect that HMRC would be looking to say that the whole transaction is effectively a write off.

A loan repayment or write off does NOT alter HMRC's view that the payment of the money was taxable in the year it was received.

A repayment via a trust lender who recycles the money to you as a trust distribution is likely to create a taxable distribution event that may be difficult to escape.

In my instance the settlement with HMRC was all agreed before I attempted to get the loan written off. I settled with HMRC in July 2018. I haven't heard a thing from Pinotage in trying to write off the loan since then.

[surfgeo]

This is all way above my head really.

The bit I can't quite understand is how the loans managed by a trust can go from a trust in Switzerland to a company in The British Virgin Islands to a debt collector in Birmingham......sad and very scary times

[DealorNoDeal]

With respect, that is an unsustainable position.

Laws are specific in what they apply to. The ability of a result obtained under one set of laws to "frank" the outcome of a different set of laws, is very limited.

Going to a court to argue that you will not repay a loan because it has been taxed as income, may win you some sympathy, some points for common sense and perhaps some mitigation of the amount repayable. It will not however be a knock out blow for the lender demanding repayment. You will have to pay attention to the law here and be clever about how you approach this argument.

Playing Devil's Advocate here, a Judge might say to you, "in absolutely no one's view could it be deemed reasonable for you to have income which you claim is a loan". Having claimed it was a loan, to then seek to say it is not, is perhaps an equally "unreasonable" position?

Meanwhile in the real world...

[piebaps]

This is all way above my head really.

The bit I can't quite understand is how the loans managed by a trust can go from a trust in Switzerland to a company in The British Virgin Islands to a debt collector in Birmingham......sad and very scary times

That detail will be included in the loan agreement which each individual will have signed at the start. The loan will likely be between the borrower and the lendor (or its successors or assignees). The exact wording will vary but will amount to the same weasel words.