IQ Consultants, Felicitas Solutions, ECS Trustees - loan repayment demands

[webberg]

Webberg, I was with Sanzar. The only thing I signed was a contract for employment, no mention of loans, I was paid NMW. Without trying to guess your then level of expertise etc, did you not think it odd that you were only legally entitled to NMW?
The rest was paid to me direct to my account without me asking for it or having signed anything to request this payment, neither as a loan or under any other premise. So what did you think that was? A gift? An error?

The word loan was never (I emphasise again, never) mentioned to me, neither in any written or verbal communication. Not really relevant. A judge will ask the question above. What did you - a reasonable person - think it was? If a reasonable person would say "a loan" then a judge would ask whether you/reasonable person would consider a loan was ever repayable?

Even if you say that if my salary has been paid into a trust and I lose all rights to it, but it was paid back to me without me requesting it. No, your "salary" was not paid into trust. Your "salary" was NMW. Everything else you had was only at the discretion of the promoter/trustee. When you signed up, you understood that such payments could - indeed would - be made (I have those documents).

If you imagine somebody put some money into your bank account without you asking for it (maybe they got the account number wrong and it ended up in your account instead of the intended recipient). There is no written or verbal record of you having asked for this money. Now, over 10 years later the sender realises their mistake and requests the money back, do you think they will get it back? No chance. Even a month later it may be difficult to get the money back. This is why we are asked to check and double check the account number and sort code before transferring money. I have to say I think that the position you sketch and the "answer" has little or no legal support.

How can they now ask for it back? It is a silly notion that I will not be entertaining. I am not saying that I am withholding their money, I am saying that the net cumulative affect of the this transaction is that I get to maintain rights to money which was originally mine anyway.

So if the "net cumulative affect (sic)" is that you had rights to money which was always yours, why did you not pay tax on it or declare it for tax purposes?

Was it because you believed it was paid in a non taxable form?

What was that form? Can't have been a loan based on your analysis, so what was it?

I can think of perhaps half a dozen such forms but all of them require a degree of preparation and structuring that makes the processes followed by Sanzar look at best amateurish and at worst hopeless.

By all means resist repayment demands and I'll be right here supporting you. I may deploy different arguments but I support the idea.

If you are to do this however, understand the FACTS. These are things that are reliable and which cannot be turned against you.

Relying upon what you were told (hearsay), what you understood but have no proof of, what was omitted from the transaction chain but "must have happened", is simply not a sustainable strategy.

I know it's tough to admit that you were perhaps conned into something, but you were. the sooner you accept that, gather the FACTS and come up with a strategy based on what cannot be challenged, then the sooner you will be able to move on.

[why]

HMRC would ask you what proof you had that the loan had been discharged.

A debit to your bank account would be incontrovertible evidence - I have never seen that.

Instead you have a mechanism that claims something like:

Money was earned by the promoter who passed 70% of it to a trust.

You are a beneficiary of the trust.

The trust loaned this money to you until the end of the tax year.

The trust then decided that as your interest in the trust assets was equal to your liability under the loan, they would net the two down = net position zero.

Unfortunately tax does not work by "netting".

Tax says that the probable answer here is that you had a distribution from the trust (taxable) and used it to repay the loan (not tax relieveable). In essence the trust had converted a set of rights into cash.

Where is that cash?

Can any of the above be evidenced by debits and credits in a bank account?

Even if this was a loan connected to an employment and even if the P11D were correct, why was the "discharge" not taxable under section 188? After all, if you had a loan from an employer which that employer wrote off, you have a very valuable benefit. That is recognised and taxed by the tax statutes.

In my opinion (others do not agree) a better position is reached if the loan did not exist - ever - which again means that the P11D is an unreliable document upon which to base a defence.

Ok understood.

Take out the HMRC side of things. As far as I'm aware that has all been cleared up way back in 2013 and 2014 (for me). As soon as I realised I had been conned, I got out of the scheme and went into a PAYE scheme (much to the dismay of Modis!).

I went online to HMRC and submitted an online form saying I had used a tax evasion company and even said Darwin. Long story short, HMRC looked at it and it was sorted out. They initially wanted 50% of what had been earned over that 8 week period (incidentally which is 50% of what is on my P11D item H discharge was)

So, I'm not debating on HMRC, I am debating on this letter and if it holds anything since my P11D states the 'loan' as discharged etc. All of my posts are relating to FELICITAS unless I've missed something regarding the HMRC side (which I hope not as they have had all of my info and it should have been settled IN 2014 CSO).

So taking out HMRC and just looking at the validity of Felicitas and both our points made, do they have a commercial case against us i.e. if they say their loan is real, then counteract it with the P11D discharge was therefore real (somebody in their Darwin office put the figures in and discharged the amount)?

[QueasyRider]

Good advice

I know it's tough to admit that you were perhaps conned into something, but you were. the sooner you accept that, gather the FACTS and come up with a strategy based on what cannot be challenged, then the sooner you will be able to move on.

As ever, Webberg talks much sense.

I used Darwin/Winchester in various forms for several years. I knew there was a chance HMRC would eventually want the tax due on the "loans". I took a calculated risk, got the calculation wrong and I have now agreed settlement terms with HMRC which will cause me serious financial grief for many years to come.

I also took a calculated risk on the central tenet of these schemes which is that the "loans" are not genuine loans and were never intended to be paid back. I received "fishing" correspondence from THL last year, which I ignored, and have just received correspondence from Felicitas. I will be ignoring this too. If it ever got that far I believe a court would look at all the evidence of how these schemes worked and conclude that the loans were never "real".

I think engaging with these various fishing exercises is probably counter-productive. If this forum is anything to go by, at least some people react with confused arguments and righteous indignation which is understandable but proves to the scum behind the schemes that it's worth having a pop. Some people will be scared enough or confused enough to cough up yet more money to "end the nightmare". It almost certainly won't. The letters will keep coming until the cost of sending them outweighs the income. Just keep ignoring them (or, if you are going to engage, do it through somebody who knows what they're talking about - e.g WTT).

[webberg]

Ok understood.

So taking out HMRC and just looking at the validity of Felicitas and both our points made, do they have a commercial case against us i.e. if they say their loan is real, then counteract it with the P11D discharge was therefore real (somebody in their Darwin office put the figures in and discharged the amount)?

With the caveat that I'm not a lawyer and that you should seek proper advice.

If I were to play devil's advocate here I might argue that the loan is real because YOU signed the agreement but that the P11D, which you did not complete, did not sign and have no legal rights and obligations towards, is a false document.

There are perhaps other arguments that I'm not going to make a gift of here.

I can think of a number of counter arguments as to the claimed integrity of the loan as well.

[why]

With the caveat that I'm not a lawyer and that you should seek proper advice.

If I were to play devil's advocate here I might argue that the loan is real because YOU signed the agreement but that the P11D, which you did not complete, did not sign and have no legal rights and obligations towards, is a false document.

There are perhaps other arguments that I'm not going to make a gift of here.

I can think of a number of counter arguments as to the claimed integrity of the loan as well.

Ok, I thank you for your time. I may be in touch regarding this and will keep an eye out here but I think my decision is going to ignore these low life viruses. I think they will feed off people paying up.

[why]

And I am sure that you are joking with this statement.

Please be aware I am moderating this thread for many reasons, one being that I do not want to see anger turning into somethings else.

Take this as a reminder.

I will remove it for sake of clarity but yes, a joke.

[uplock]

With the caveat that I'm not a lawyer and that you should seek proper advice.

If I were to play devil's advocate here I might argue that the loan is real because YOU signed the agreement but that the P11D, which you did not complete, did not sign and have no legal rights and obligations towards, is a false document.

There are perhaps other arguments that I'm not going to make a gift of here.

I can think of a number of counter arguments as to the claimed integrity of the loan as well.

I appreciate your wish to ensure there is a balanced discussion on this question of the P11D. My own thoughts (and that's all it is), is that a P11D is a legal requirement to be prepared by our then scheme employers. They completed the form and submitted it to HMRC as part of normal PAYE compliance. The notes that "Why" mentioned to his P11D states clearly that the loan is discharged on the basis it has been repaid before the tax year end (2010/11).

As HMRC used the P11D as the basis to raise assessments for additional tax, it does not look like the tax authorities have doubts on the validity of the P11D entries, otherwise HMRC would have insisted (I am assuming) to see banking records for those tax years.

While I agree the P11D has no benefit in defending a tax charge that HMRC may assess, I would also agree, to comments made by others, that the document has some relevance as regards answering the question whether the debt still exists.

[uplock]

I appreciate your wish to ensure there is a balanced discussion on this question of the P11D. My own thoughts (and that's all it is), is that a P11D is a legal requirement to be prepared by our then scheme employers. They completed the form and submitted it to HMRC as part of normal PAYE compliance. The notes that "Why" mentioned to his P11D states clearly that the loan is discharged on the basis it has been repaid before the tax year end (2010/11).

As HMRC used the P11D as the basis to raise assessments for additional tax, it does not look like the tax authorities have doubts on the validity of the P11D entries, otherwise HMRC would have insisted (I am assuming) to see banking records for those tax years.

While I agree the P11D has no benefit in defending a tax charge that HMRC may assess, I would also agree, to comments made by others, that the document has some relevance as regards answering the question whether the debt still exists.

Ultimately, it will be Felicitas's responsibility to prove that the P11D's statement of discharge is false, not the employee (us) who receives the P11D and uses it to complete his/her tax return in good faith. With the absence of loan statements, correspondence over the last 10+ years, this would likely be difficult for them to prove.

[DealorNoDeal]

While I agree the P11D has no benefit in defending a tax charge that HMRC may assess, I would also agree, to comments made by others, that the document has some relevance as regards answering the question whether the debt still exists.

If they're looking for low hanging fruit, it may be enough for them to turn their attention elsewhere.

[webberg]

As HMRC used the P11D as the basis to raise assessments for additional tax, it does not look like the tax authorities have doubts on the validity of the P11D entries, otherwise HMRC would have insisted (I am assuming) to see banking records for those tax years. Did HMRC do that? In my experience that have been asking for loan values etc to be validated by bank statements and similar and they have not used P11D values for anything of note since the APN exercises in 2015 and 2016. I'm pretty sure that HMRC may see the P11D as an indication that a loan was made and little else. Certainly I've not seen them used as the basis of an assessment.

While I agree the P11D has no benefit in defending a tax charge that HMRC may assess, I would also agree, to comments made by others, that the document has some relevance as regards answering the question whether the debt still exists.

And you may well be correct in the second statement.