Old Umbrella Company (Tailored) in Liquidation

[cojak]

being absultiely blunt why would HMRC help someone who tried to avoid paying them tax.

this is no matter what WTT are selling not a tax issue it is as Iliketax states above and I stated earlier an old fashioned debt dispute between yourself and the company liquidator.

Oh God. The penny has belatedly dropped.

Is this is Pembroke all over again? I'll add something in my generic close down post about liquidators.

Sorry guys, eek and iliketax are absolutely right - you need non-tax advice. I'm not sure if it's insolvency advice because HMRC haven't wound it up, but I'll look up my other posts on this.

[webberg]

I would agree with most of what Iliketax says above.

The issues are really whether a loan or form of credit exists and if so whether the insolvency practitioner appointed can lawfully ask for the money to be repaid.

The Implement Consulting case is important. There is also the PD Allen case (I'm looking for a link) which was heard shortly after the Implement case and pretty much found the opposite. The lesson here is that the facts can make a difference.

Both cases involved EBT schemes in which the directors/shareholders/beneficiaries of the EBT were all the same and to a large degree therefore controlled the whole arrangement.

In the instance here we have something that is much more like a mass marketed loan scheme in which participants had very little control over the distribution of money. I suggest therefore that there is scope to distinguish Implement in these circumstances.

You are also correct that this is not really a tax issue and as such HMRC is unable (and would be unwilling) to help.

We are involved because although we do not an internal Insolvency Practitioner to call upon, we have worked with a number of reputable names over the past few years in similar situations, some of which can be found in these threads. We have built up a range of contacts and have a relatively good handle (for non specialists) on what is happening and some of the bear traps.

Our role is usually two fold. One is to provide specialist advisers with background and information as to how schemes work, the tax situation with them and the like, including whether the liquidation is genuine or just a means of the "umbrella" escaping tax bills and moving on, ensuring that the owners get another slice of the pie. The other is to bring people together in order to share the costs of the specialists that will be needed.

Hence our fees are modest reflecting the range of our input.

Interesting to note that in the initial statement of affairs as filed by the liquidator, the liability to HMRC is prices at £1.

That seems to me to be an indication that the company acknowledges that HMRC has a claim, does not know how much it might be, wants other creditors to control the liquidation. Those other creditors appear to be the recommended legal adviser and another umbrella owned ultimately by some of the same names.

[Laith]

No. That is just not true. There are lot of tax rules that mean that tax of one sort or other is due on loans but that doesn't change it from being a loan (e.g. employee disguised remuneration, self-employed disguised remuneration, loans to participators, mixed partnership rules, disguised investment management fee rules, etc). Each of these can mean that someone has to pay tax when a sum of money received. But that money is still paid by way of a loan.

Now I'm going to be accused of scaring people now but last year that were a couple of cases that involved companies in liquidation where money had been paid out of the companies as part of a tax avoidance scheme that had failed. The liquidators asked the directors to repay the money that the directors had caused the companies to pay to an EBT (and to another type of trust). In each case, the tax avoidance scheme had failed and tax was due. These court cases were not about the tax though. It was all about the responsibilities of directors under insolvency law. It had nothing to do whether there was a loan involved and so in that way it is different to your potential situation (i.e. if it can be shown that you still owe money).

In one (Toone - Toone & Ors v Ross & Anor, Re Implement Consulting Ltd [2019] EWHC 2855 (Ch) (30 October 2019)) the court held that the directors had to repay the money back to the company as a matter of insolvency law as they had been wrong to cause the company to pay it out. The other (Vining Sparks - can't easily find a subscription free link) the court said that the directors did not have to as a matter of insolvency law. The reason for the difference is that the facts were different.

The bit I'm going to be accused of scaring you on is that in my view:

(i) the tax treatment is irrelevant to whether you owe money,

(ii) if you owe money the court will require you to repay it, and

(iii) it will be a question of fact whether the liquidator can convince the court you borrowed money and still owe the company that money.

I have no idea what happened in your circumstances but just saying that the company advanced you money is not enough to say that it did actually lend you money and that you still owe it. However, the liquidator may (or may not) have documents that show that.

So you may need tax advice in sorting out your position with HMRC. But that is very different to dealing with the liquidator.

Noted. My tax position will have no bearing on this case.

[eek]

did you pay tax on money as it was paid into your account. As you didn’t it was a “loan” and not wages and that is why the liquidator is asking for the money back.

Now you can continue arguing the above as much as you want but if you do that with the liquidator you are

1)confirming that you received the money
2) the paperwork within you contract reference an advance and you didn’t query receiving the money
3) just told the liquidator that the debt is valid

i would, strongly, suggest to stop posting on here and go and find a decent lawyer who will advice you to handle this mess which every post of yours is making worse.

yes life is unfair but the fact HMRC want tax on money that a liquidator is asking for you to return are 2 entirely different problems that you need to deal with separately as they aren’t linked.

[Laith]

did you pay tax on money as it was paid into your account. As you didn’t it was a “loan” and not wages and that is why the liquidator is asking for the money back.

Now you can continue arguing the above as much as you want but if you do that with the liquidator you are

1)confirming that you received the money
2) the paperwork within you contract reference an advance and you didn’t query receiving the money
3) just told the liquidator that the debt is valid

i would, strongly, suggest to stop posting on here and go and find a decent lawyer who will advice you to handle this mess which every post of yours is making worse.

yes life is unfair but the fact HMRC want tax on money that a liquidator is asking for you to return are 2 entirely different problems that you need to deal with separately as they aren’t linked.

My intention wasn't to argue. I noted that the issues are two separate issues and didn't mention Tax in that post at all. Thanks for the advice I have removed the post

[Missy07]

Help please!

My intention wasn't to argue. I noted that the issues are two separate issues and didn't mention Tax in that post at all. Thanks for the advice I have removed the post

Hello everyone,

Unfortunately I have had the same letter demanding an extortionate amount of money in 28 days from Tailored UK.

Has anyone sought legal advice and is anyone wanting to do this jointly? Please can you let me know what solicitors you have gone through as we may have a better chance of fighting this together.

[Laith]

Hello everyone,

Unfortunately I have had the same letter demanding an extortionate amount of money in 28 days from Tailored UK.

Has anyone sought legal advice and is anyone wanting to do this jointly? Please can you let me know what solicitors you have gone through as we may have a better chance of fighting this together.

Waiting to hear back from WTT, hopefully tomorrow. Tom Wallace is leading on the matter

[eek]

Hello everyone,

Unfortunately I have had the same letter demanding an extortionate amount of money in 28 days from Tailored UK.

Has anyone sought legal advice and is anyone wanting to do this jointly? Please can you let me know what solicitors you have gone through as we may have a better chance of fighting this together.

I'm not so sure about that- you have a "loan" that the liquidator is seeking to have repaid.

However the liquidator has limited time and money to spend so it may be better to use your own solicitor as that adds to his costs.

[Laith]

I'm not so sure about that- you have a "loan" that the liquidator is seeking to have repaid.

However the liquidator has limited time and money to spend so it may be better to use your own solicitor as that adds to his costs.

What’s the logic behind using your own solicitor? That’s potentially going to cost us more individually? Wouldn’t strength in numbers appear as a stronger case?

How long has the liquidator got in terms of time?

[eek]

What’s the logic behind using your own solicitor? That’s potentially going to cost us more individually? Wouldn’t strength in numbers appear as a stronger case?

How long has the liquidator got in terms of time?

The liquidator has until the money they can justify spending runs out.

Now it's possible to justify a lot of time (so money) talking to a solicitor who is representing say £500,000 it's a lot harder to justify the same time talking to a solicitor representing £8,000.

So my viewpoint is more solicitors = more work for the liquidator = so less potential return for the time spent.

Were this a tax issue WTT or another tax firm and group advice makes sense. This isn't a tax issue so I personally think the best advice is everyone for themselves and try to ensure its not worth the liquidator's time to recover the loan from you.

But this is not my battle - take whatever option you want to take but I know I wouldn't be using a tax experts for a loan repayment dispute.