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

[UKRLTD]

Sorry for being a noob..but what do I do?

Yes, I'd be very interested to hear what is said back but bear in mind they have 30 days to respond (I think).

Also though - has anyone disputed their demand from Gladstones and actually heard back from them or had any further contact from them or had anything back from complaints raised to the Solicitors Regulatory Authority as some said they had reported?

Really sorry if this has been answered already... But I received a letter today related to a 6 month contract I did in 2012, when I did a mistake to use Winchester contracts. And I am being requested to either pay full loan amount or pay just part of it from Gladstone's solicitors.

Not sure what I do or where I get help. Have been losing sleep already at the amount being asked.

Sorry again but any help is much appreciated

[Paulhoylake1976]

Here are your choices:

1. Do your own research and make such representations to the parties involved as you deem fit
2. Engage your own solicitor to challenge the claims
3. Join a group that is already doing that

(I'm assuming that paying the demand is not an option).

1. Requires a lot of time and probably the collection and collation of evidence that you may not have.

2. As you have gathered from reading this thread - please do that - you are in specialist territory and educating a lawyer as to the minutae of the issues here is something you will have to pay for.

3. To the best of my knowledge the people who have had demands and who have sought and perhaps joined a group, have joined either:

WTT's group (that's me and my firm), or

ETCtax's group (a guy called Andy Wood with whom we speak regularly)

I'm aware that other advisers have opined that either the matter is so straightforward that the simplest of rebuttals would suffice to make it all go away whilst others have asked for some quite substantial fees without actually saying what they plan. I have no other details on those.

We (WTT) offer a free call and a modest joining fee for our group.

ETCtax I think also offer a free call and will make the initial response for free as well (or at least they were last week).

I think that covers it.

No adviser is going to go into detail here as to their strategy.

Unfortunately there are many opinions and views in this thread to sift. Some are sensible, some not and some frankly are fantasy. However, read them all as it will repay you.

Thank you for the advise.

[seriouslyman]

When did you receive your letter, i've only just got mine.

Letter from Felictas the other week and Gladstones today.

'Interestingly' they both originated in the same envelopes with the same PO Box on them that seems to be where many 'debt collection' agencies mail out from.

They have kindly added 1.5% interest to my 'debt'...

[De Facto]

I have been sent the Gladstones letter by several clients now. For the record, I happened to specialise in both tax and contract law. I saw some misleading statements made in this forum, so I thought I would share a few observations.


Practicalities

1. Gladstones’ letter does not intend to recall the loan - it intends to collect interest and/or what appears to be a percentage of the total loan against a write off. In its nature it is very similar to the letter from THL, only the loan release charge has been increased. When some of my clients received the THL letter, I advised them to obtain evidence from THL in the form of loan statements, agreements etc but to ignore further demands and not to pay anything as THL appeared a bunch of chancers (19-year old director etc) and my view was that it was highly unlikely for the loans to be recalled. I am not sure that this would be the case now so all options should be considered carefully.

2. My clients’ letters state that interest is charged on various years. This appear to be wrong prima facie as in some of those years they obtained beneficial (zero interest) loans which were reported to HMRC via P11D at the time. If your loan was interest free (expressly stated in the deed), then no interest should be due.

Tax and Contract Law


3. The tax treatment of the loans is irrelevant to their de facto status under contract law. Under contract law, so long as the formalities for a valid deed have been complied with, the loans would be valid and repayable per the terms of your agreement and the only way to extinguish the liability is to either repay the loans, or obtain a release from the creditor. If however the loan agreement is invalid, it is unenforceable. If the purported creditor doesn’t have the creditor’s rights, again they cannot enforce the debt.

4. On the other hand, tax is imposed on (what is deemed) disguised remuneration. There is no conflict between the two areas of law. HMRC do not argue that your loans aren’t loans. They are arguing that your loans are taxable under the DR rules.

5. If you opted to settle with HMRC, you will note that they deliberately ask you to confirm whether the loans are intended to be written off. This is for two reasons: (1) the write off could be deemed either a relevant step under Part7A, or a capital distribution from the trust - both trigger an income tax charge. This in the light of a settlement with HMRC is not an issue as the settlement deed lists the loans and the years in question and double tax charge is not imposed, and (2) because the write off may affect the Inheritance Tax position - there could be an ‘exit charge’ where discretionary trust assets are distributed (i.e. the loans are written off) or there might be a ’10-year anniversary charge’ where the assets remain in the trust (i.e. loans are not written off). With all settlements I have handled to date, HMRC issue £0 Inheritance Tax statements on the basis that they hold insufficient information about the trust arrangements and therefore cannot ascertain whether it is a s86 trust or a s65 trust which are under different IHT rules.

6. If you didn’t opt to settle with HMRC and you are now subject to the Loan Charge, Spotlight 48 confirmed that “if a settlement is not reached and the loan charge becomes payable, we [HMRC] may accept a payment made to secure a deed of release or exclusion, as reducing the outstanding loan balance if it: (i) represents a genuine repayment of the loan, and (ii) is paid in cash. So for those of you who are considering paying Gladstones, you have to insist on a formal document that states that (1) you are making a loan repayment (so that the value can be deducted for Loan Charge purposes) and (2) the remainder of the debt is written off, and (3) the write off is binding on the creditor and any successors or assigns. Then you may elect to spread the new loan value over 3 years (2019, 2020 and 2021) as per Loan Charge Review terms so that you are not taxed on the entirety of the loan in YE Apr 2019. Alternatively, you can fight HMRC in court.

Gladstones - Next Steps

7. Save time and representation fees and do the ground work yourselves. Judges don’t like it when parties do not attempt to mediate and are wasting court time so it is highly unlikely for you to receive a court letter next.

8. Ask for evidence for the creditor’s rights - Gladstones may refuse to provide this, they appear to be acting merely as debt collectors, but Felicitas (as purported creditor) might provide evidence in an attempt to settle out of court. If they have your loan details and can provide a detailed loan statement that coincides with your bank entries, then likely they have indeed obtained the rights subject to proper execution of the assignment.

9. Find your loan agreements; check the jurisdiction in the jurisdiction clause (usually at the end of the agreement) - if it states exclusively Isle of Man, then this is where you will have to fight this. Check with a local lawyer whether you can have a class action - I don’t specialise in Manx law so I am unable to comment but it is unlikely for this to be a class action - you have had individual agreements with the schemes, if there is even a minor discrepancy between your loan agreements, each client would have to be represented individually.

10. If you hold written evidence - representation in writing made by the scheme promoters that the loans will never have to be repaid - include it in your objections.

11. Finally, to the users who are hoping to launch the “I was mis-sold the scheme” argument - even if you could argue that you were subjected to negligent or fraudulent misrepresentation, which is unlikely for various reasons, you can only hold responsible the original scheme promoter (and that isn’t necessarily the lender) but they presumably no longer exist.

[Iliketax]

2. My clients’ letters state that interest is charged on various years. This appear to be wrong prima facie as in some of those years they obtained beneficial (zero interest) loans which were reported to HMRC via P11D at the time.

A benefit in kind on a P11D normally just means that no interest has been paid. It does not mean that no interest is charged.

Spotlight 48 confirmed that “if a settlement is not reached and the loan charge becomes payable, we [HMRC] may accept a payment made to secure a deed of release or exclusion, as reducing the outstanding loan balance if it: (i) represents a genuine repayment of the loan, and (ii) is paid in cash. So for those of you who are considering paying Gladstones, you have to insist on a formal document that states that (1) you are making a loan repayment (so that the value can be deducted for Loan Charge purposes) and (2) the remainder of the debt is written off, and (3) the write off is binding on the creditor and any successors or assigns. Then you may elect to spread the new loan value over 3 years

This is misleading. If some or all of a loan is repaid now it will not reduce the April 2019 loan charge. Spotlight 48 was a creature of its time. It sets out the right interpretation of the law where the loan was repaid before 6 April 2019. But as the outstanding loan was fixed on 5 April 2019, repaying the loan today does not reduce the loan charge.

[IWasRobbed]

Finally got my Gladstones letter

I have been sent the Gladstones letter by several clients now. For the record, I happened to specialise in both tax and contract law. I saw some misleading statements made in this forum, so I thought I would share a few observations.


Practicalities

1. Gladstones’ letter does not intend to recall the loan - it intends to collect interest and/or what appears to be a percentage of the total loan against a write off. In its nature it is very similar to the letter from THL, only the loan release charge has been increased. When some of my clients received the THL letter, I advised them to obtain evidence from THL in the form of loan statements, agreements etc but to ignore further demands and not to pay anything as THL appeared a bunch of chancers (19-year old director etc) and my view was that it was highly unlikely for the loans to be recalled. I am not sure that this would be the case now so all options should be considered carefully.

2. My clients’ letters state that interest is charged on various years. This appear to be wrong prima facie as in some of those years they obtained beneficial (zero interest) loans which were reported to HMRC via P11D at the time. If your loan was interest free (expressly stated in the deed), then no interest should be due.

Tax and Contract Law


3. The tax treatment of the loans is irrelevant to their de facto status under contract law. Under contract law, so long as the formalities for a valid deed have been complied with, the loans would be valid and repayable per the terms of your agreement and the only way to extinguish the liability is to either repay the loans, or obtain a release from the creditor. If however the loan agreement is invalid, it is unenforceable. If the purported creditor doesn’t have the creditor’s rights, again they cannot enforce the debt.

4. On the other hand, tax is imposed on (what is deemed) disguised remuneration. There is no conflict between the two areas of law. HMRC do not argue that your loans aren’t loans. They are arguing that your loans are taxable under the DR rules.

5. If you opted to settle with HMRC, you will note that they deliberately ask you to confirm whether the loans are intended to be written off. This is for two reasons: (1) the write off could be deemed either a relevant step under Part7A, or a capital distribution from the trust - both trigger an income tax charge. This in the light of a settlement with HMRC is not an issue as the settlement deed lists the loans and the years in question and double tax charge is not imposed, and (2) because the write off may affect the Inheritance Tax position - there could be an ‘exit charge’ where discretionary trust assets are distributed (i.e. the loans are written off) or there might be a ’10-year anniversary charge’ where the assets remain in the trust (i.e. loans are not written off). With all settlements I have handled to date, HMRC issue £0 Inheritance Tax statements on the basis that they hold insufficient information about the trust arrangements and therefore cannot ascertain whether it is a s86 trust or a s65 trust which are under different IHT rules.

6. If you didn’t opt to settle with HMRC and you are now subject to the Loan Charge, Spotlight 48 confirmed that “if a settlement is not reached and the loan charge becomes payable, we [HMRC] may accept a payment made to secure a deed of release or exclusion, as reducing the outstanding loan balance if it: (i) represents a genuine repayment of the loan, and (ii) is paid in cash. So for those of you who are considering paying Gladstones, you have to insist on a formal document that states that (1) you are making a loan repayment (so that the value can be deducted for Loan Charge purposes) and (2) the remainder of the debt is written off, and (3) the write off is binding on the creditor and any successors or assigns. Then you may elect to spread the new loan value over 3 years (2019, 2020 and 2021) as per Loan Charge Review terms so that you are not taxed on the entirety of the loan in YE Apr 2019. Alternatively, you can fight HMRC in court.

Gladstones - Next Steps

7. Save time and representation fees and do the ground work yourselves. Judges don’t like it when parties do not attempt to mediate and are wasting court time so it is highly unlikely for you to receive a court letter next.

8. Ask for evidence for the creditor’s rights - Gladstones may refuse to provide this, they appear to be acting merely as debt collectors, but Felicitas (as purported creditor) might provide evidence in an attempt to settle out of court. If they have your loan details and can provide a detailed loan statement that coincides with your bank entries, then likely they have indeed obtained the rights subject to proper execution of the assignment.

9. Find your loan agreements; check the jurisdiction in the jurisdiction clause (usually at the end of the agreement) - if it states exclusively Isle of Man, then this is where you will have to fight this. Check with a local lawyer whether you can have a class action - I don’t specialise in Manx law so I am unable to comment but it is unlikely for this to be a class action - you have had individual agreements with the schemes, if there is even a minor discrepancy between your loan agreements, each client would have to be represented individually.

10. If you hold written evidence - representation in writing made by the scheme promoters that the loans will never have to be repaid - include it in your objections.

11. Finally, to the users who are hoping to launch the “I was mis-sold the scheme” argument - even if you could argue that you were subjected to negligent or fraudulent misrepresentation, which is unlikely for various reasons, you can only hold responsible the original scheme promoter (and that isn’t necessarily the lender) but they presumably no longer exist.

I finally got the Gladstones letter through today. With the offer of an early settlement.

I emailed Felicitas when I got their letter and demanded to have proof of the loans and haven't heard anything. I'm planning on sending similar to Gladstones.

Can I demand my money back from the Trustees since the loan was made up of MY money?

I've reported Felicitas to the Isle of Man Trading Standards and reported Gladstones to the SFO for Fraud.

This is what I got from IoM:
Dear Mr ...

Thank you for your email below which refers to Felicitas Solutions Limited, a company registered with this office as a moneylender under the Moneylenders Act 1991.

The information you have provided is helpful in assisting us to carry out our duties as the registration body for moneylenders in the Isle of Man and we will contact you further should we require any further information.

Yours sincerely


Pauline Wood
Ombudsman Services Manager
Isle of Man Office of Fair Trading

Thie Slieau Whallian, Foxdale Road, St John's, Isle of Man, IM4 3AS

Tel: 01624 686519
Email: [email protected]

What can I do now?

[eek]

I finally got the Gladstones letter through today. With the offer of an early settlement.

I emailed Felicitas when I got their letter and demanded to have proof of the loans and haven't heard anything. I'm planning on sending similar to Gladstones.

Can I demand my money back from the Trustees since the loan was made up of MY money?



What can I do now?

Let's be clear - it wasn't your money - you signed it away when you joined the scheme...

I think webberg outlines your options in https://www.contractoruk.com/forums/...ml#post2733103 as they really are:-

1) ignore it
2) join WTT's group
3) join ETCtax's group

What I wouldn't be doing is given any of them reason to want to go particularly after a particular person especially when the allegations probably won't stick (it was an internal loan to employees so the IoM FSA aren't involved).

At the moment it's simply a matter of writing a letter to all parties and waiting for their next moves..

[IWasRobbed]

thanks for your posts

"Normally PAYE" whilst I hear you, the issue here is whether a loan, backed by an agreement you signed, can force you to repay money.

Doesn't matter what you think the money was - it has been papered as a loan.

Therefore denying the alleged lender what they consider is due has to be primarily based on legal actions.

You also need to be careful calling all of this a sham or something deliberately designed to avoid tax. That is drifting you towards evasion which is major league trouble.

Webberg,

Thanks for your post on this. I've emailed WTT on the Big Group website and I hope to hear from them tomorrow or I'll give them a ring.

I'm emailing Gladstones now disputing the loans & hopefully that will maybe scare them off. The letter itself infers a £34/month charge essentially for life ON TOP of the loans themselves.

I DID report Felicitas to the Isle of Man AUthorities and Gladstones to the SFO a s this is blatently a cash grab and there is literally no proof that either of these firms have anything to do with the original schemes.

Any additional help would be appreciated.

[UnhappyRed]

Second demand

Has anyone recieved a second letter from Gladstones 'demanding' interest on ANOTHER portion of loan? This time with a different interest rate, and payments from now must be made MONTHLY to Gladstones! OR another 5 days to settle.....

Yes Ive received one today like yours

[DealorNoDeal]

Important point

This is misleading. If some or all of a loan is repaid now it will not reduce the April 2019 loan charge. Spotlight 48 was a creature of its time. It sets out the right interpretation of the law where the loan was repaid before 6 April 2019. But as the outstanding loan was fixed on 5 April 2019, repaying the loan today does not reduce the loan charge.

If you have not already settled, and will be paying the Loan Charge instead.

Repaying any of the loan to Felicitas now will not reduce the Loan Charge.