EBT HELL: Assignment Solutions Isle Of Man / Premier Tax Strategies / DMS

[FTTM]

HMRC Loan Charge Form

Hi - just revisiting the thread I started 7 years ago.

EBT really is the gift that just on keeps giving!!

anyway , anyone know how to complete this bit of the HMRC LC form?

Seems contradictory , is the question were you an employee or is the question were you an employee AND a director of your own company?.

"Were you an employee while you were using the scheme?

If you were a director and an employee of your own company, answer ‘Yes’."

Im scared that if I answer this wrong it might add another 10 years on to the time frame to sort this out

Thanks

[Paralytic]

Seems clear to me. If you were an employee, select yes. If you were an employee and a director, select yes. If you were a director only, select no.

[Iter]

Agree if u were using the scheme as an umbrella you were an employee. If you were setup as ltd as sole director then you would still be an employee receiving the loan

[dangermaus]

Director/Employee

Agree if u were using the scheme as an umbrella you were an employee. If you were setup as ltd as sole director then you would still be an employee receiving the loan

Not strictly true.

I was a director of my Ltd company but never paid myself a salary, never set up a payroll etc

The retainer payment came from the promoter as self employed income and the loans came from the trust.

The only monies paid to my personal account from my Ltd company were dividends.
This was argued to HMRC and they then came back and accepted my settlement figure based on it being a self employed scheme i.e class 4 NI due instead of class 1. Effectively accepting the fact that being a ltd company director doesnt automatically make you an employee of your company as well unless you were receiving a salary from it.

It's quite logical too and certainly makes a difference in the settlement figure. (9% NI instead of 12% employee's NI and 13.8% employer's NI)

[Iter]

What happens though if money was transferred from your ltd business account to the scheme and then a percentage of that pays to your personal account. I’m probably veering away from the original query now.

[dangermaus]

What happens though if money was transferred from your ltd business account to the scheme and then a percentage of that pays to your personal account. I’m probably veering away from the original query now.

Thats exactly how my scheme worked and that was fully explained to HMRC but they agreed that I was not an employed person

[webberg]

Thats exactly how my scheme worked and that was fully explained to HMRC but they agreed that I was not an employed person

They agreed because to claim otherwise meant that they should be chasing that employer and not you.

As the employer is likely long gone, the Choice for HMRC was collect nothing (because of their own incompetence) or collect something from you.

Easy choice to make.

[dangermaus]

They agreed because to claim otherwise meant that they should be chasing that employer and not you.

As the employer is likely long gone, the Choice for HMRC was collect nothing (because of their own incompetence) or collect something from you.

Easy choice to make.

The "employer" i.e my Ltd company is still around and hasn't yet been closed down until the final accounts have been filed. HMRC are also already aware of the relationship between myself (as the director) and my Ltd company.

To say a director is employed by his/her company by default, without a salary, employment contract or anything else that makes somebody an employee of a company, is certainly incorrect in my view!

[webberg]

The "employer" i.e my Ltd company is still around and hasn't yet been closed down until the final accounts have been filed. HMRC are also already aware of the relationship between myself (as the director) and my Ltd company.

To say a director is employed by his/her company by default, without a salary, employment contract or anything else that makes somebody an employee of a company, is certainly incorrect in my view!

You were an office holder in the company and for many (virtually all) tax purposes that is equivalent to being an employee.

Also your "employer" may not have been your limited.

In the Hoey case it was argued that the end client was in fact the employer. I have views on that argument and the way it was put, but if nothing else it demonstrates that defining "employer" is not as easy as you might think.

[malvolio]

And I would argue that you aren't an employee of YourCo anyway, you are an officer of it. Being employed is not the same as drawing a salary.