Edge EBT thread

[SimonJones]

So for example you had a loan of £100k for one year in a scheme 10 years ago and you settle this year


you could still be liable to £1k x10 = £10k + interest?

is that correct?

Yes, this is correct. For example if you used the scheme since 2005/2006 for 4 years than at £100 loan/year your IHT liability will be:
2005/2006 - present = 10 years x 1k = 10K
2006/2007 - present = 9 years x 1k = 9K
2007/2008 - present = 8 years x 1k = 8K
2008/2009 - present = 7 years x 1k = 7K

Total IHT = £34K

In some cases one's IHT will be greater than the actual tax + interest that they are initially after!

This is absolutely crazy. They already tax you with interest, and than on top they want even more.

[webberg]

I've registered for settlement - keeping my options open, but meanwhile i'd like to hand over wonga to hm to avoid interest.

I believe there is a service which allows such payments to be accepted by them.

does anyone have the name or link to it please.

thanks

Certificate of Tax Deposit via HMRC website

[ireland2013]

Calculation of IHT

So for example you had a loan of £100k for one year in a scheme 10 years ago and you settle this year


you could still be liable to £1k x10 = £10k + interest?

is that correct?

[SimonJones]

Paying mine in full this week. This won't go away so bye bye cash.

I'm assuming when you say "Paying in full" meaning you are settling.
If this is the case, than please note, this is not final as IHT will still be outstanding.
IHT is applied at 1% of the total loan, from the years that you have used the scheme to the year you finally settle. This accumulates substantially if the scheme was used for few years.

[IPMAN]

How to avoid incurring interest on disputed APN amounts

I've registered for settlement - keeping my options open, but meanwhile i'd like to hand over wonga to hm to avoid interest.

I believe there is a service which allows such payments to be accepted by them.

does anyone have the name or link to it please.

thanks

[Brompton]

settlement

Paying mine in full this week. This won't go away so bye bye cash.

Could you please give us a some detail on how you came to a settlement?

[EBTContractor]

I'll pay mine and probably in full

Paying mine in full this week. This won't go away so bye bye cash.

[tax is taxing]

Link please?

Read it on hard paper copy and hence no link....

[Underbase]

No.

A loan document deals with a transfer of money and the terms and conditions attached to that. Relatively simple and very flexible and easy to manipulate.

For example can anybody explain convincingly the difference between a loan and deposit account? Both have very similar characteristics depending on whose perspective you view them from. This is a favourite trick question in banking exams.

As a random side story, I actually know of at least one large financial institution that couldn't shoe horn a deposit into their FO trading system, and instead used "reversed loans" always confused newbies.

[webberg]

Thank you for the response.

As HMRC are classing the "loan" as artificial, than shouldn't the "trust" deemed artificial as well?

No.

A loan document deals with a transfer of money and the terms and conditions attached to that. Relatively simple and very flexible and easy to manipulate.

For example can anybody explain convincingly the difference between a loan and deposit account? Both have very similar characteristics depending on whose perspective you view them from. This is a favourite trick question in banking exams.

Given the legal and defintional flexibility of loans, it's often actually easier to look at the circumstances and context of the transaction to determine its true nature.

A trust operates in a very legally defined way with real penalties, obligations, rights and responsibilities for the parties - trustee, settlor, beneficiary, etc. This is necessary when you reflect on the meaning of the word used to define the arrangement - "TRUST".

It's way harder to allege that a trust does not really exist, than to allege a loan is something else.

In fact it's probably easier for HMRC to say that a trust exists in the facts and context of a set of circumstances, even if no formal deed has been written. This is essentially what they tried in Jones v Garnett (Arctic Systems) and failed to do, thankfully.