HMRC Enquiry letters on Loans from EBT and other schemes

[LisaContractorUmbrella]

Who says there not genuine employees?

Contractor found the contract themselves. Not genuine employee?
IOM company found contract for employee. Genuine employee?

It's not that simple. The courts would look at whether there was a contract of employment in place, whether the individual had to carry out the work personally, whether there was mutuality of obligation between the 2 parties and whether the individual is under the supervision, direction and control of the company.

[jbryce]

Lisa - you're one smart cookie.

It's not that simple. The courts would look at whether there was a contract of employment in place, whether the individual had to carry out the work personally, whether there was mutuality of obligation between the 2 parties and whether the individual is under the supervision, direction and control of the company.

It is a hard one - I have a contract of employment, loan aggreements and even directions for work. The latter insisted on by the ex-accountant who pushed me into the scheme. This all helps.

BUT

Your points earlier are probably more valid. For all of this to matter, for a court to rule that a scheme was effective then the courts, somewhere would be involved. That's painful.

A few well organised schemes delivering a bloody nose to HMRC might be a game changer - they have their record to defend. But this would go on for years. They most likely won't target another EBT until Rangers has finished which, by the way, is not guaranteed an appeal at the Court of Session. They are unlikely to challenge multiple schemes - well users - in parallel as they end up fighting the same battle on multiple fronts.

In fairness to HMRC one of the reasons for the backlog is the sheer number of schemes and d1ckh3@d users (like me) and the fact that they have to pursue these in serially rather than in parallel.

FNs and APNs is a pretty sh1t, but elegant, solution to the problem. HMRC will get *most* of the cash without having to hit the courts.

[Boobetty]

The arrangements HMRC are targeting are invariably sham arrangements - there is no intention that the 'loan' will ever be repaid. The money received is earnings from a contract and the loan arrangement serves no other purpose than to avoid tax.

If the loans are a 'sham' then why are HMRC attempting to collect IHT? Surely that in itself is HMRC acknowledging the loans are genuine.

[ASB]

If the loans are a 'sham' then why are HMRC attempting to collect IHT? Surely that in itself is HMRC acknowledging the loans are genuine.

That is a fair point. In my view it is not about what the payments are, simply how they are charged to tax. If a case is lost then scheme payments dont actually become employment income. Just taxed as suc this could conceivably lead to the worst of all worlds.

[LisaContractorUmbrella]

If the loans are a 'sham' then why are HMRC attempting to collect IHT? Surely that in itself is HMRC acknowledging the loans are genuine.

What makes you think that they are? They are targeting trust schemes that have been put in place with the specific purpose of avoiding IHT but I haven't seen anything which says they are using IHT rules in tackling the sort of schemes that contractors on here have been using

[eek]

What makes you think that they are? They are targeting trust schemes that have been put in place with the specific purpose of avoiding IHT but I haven't seen anything which says they are using IHT rules in tackling the sort of schemes that contractors on here have been using

Isn't this just another occasion where people are seeing an hmrc attack on another scheme type and assume it relates to them.

[LisaContractorUmbrella]

Isn't this just another occasion where people are seeing an hmrc attack on another scheme type and assume it relates to them.

I think so but there's so much coming out from HMRC at the moment it's not really surprising

[jbryce]

Gotta love 'em

I think so but there's so much coming out from HMRC at the moment it's not really surprising

I'm getting a sneaking respect for HMRC.

[Boobetty]

I think so but there's so much coming out from HMRC at the moment it's not really surprising

The terms of the recent settlement opportunity specifically state that IHT is payable in addition to income tax, although I think HMRC are on shaky grounds here.

[LisaContractorUmbrella]

The terms of the recent settlement opportunity specifically state that IHT is payable in addition to income tax, although I think HMRC are on shaky grounds here.

I think that this was for trust schemes that were set up to specifically avoid IHT rather than loan schemes that were set up to indefinitely defer tax - happy to be corrected though - do you have a link