Signing Loan Agreements

[Chief]

Hi,

The trustees of Newquay Professional Benefit Trust keeps on requesting that i sign loan agreements for the interest free loans they made available to me when i used their services for about 6 months in 2010...
The terms of the loan are "advanced unsecured loan to the borrower during the period 1st July 2010 to the 1st July 2015 up to a maximum of £50,000.00 ...."
I guess they realized that i never signed their loan agreements at the time and they want to come clean with their scheme if HMRC come knocking at the door, but i have some doubts and maybe someone can explain :
- Why they are so keen to get this loan agreement signed 3 years after?
- Is there any risk that they will indeed request me to repay the loan at the due date (1st July 2015)? And then what?
- What is my exposure if i do not sign these loan agreements?
The worse i can think about is that the HMRC could mentioned that if not signed, these loans agreements were not duly formed loans and i would need to pay income tax (if they were to investigate the scheme), but it seems that HMRC consider all these benefit trusts' loan agreements as disguised income and will request income tax whether they were signed or not signed by the borrower...
So i am probably less confident in the Benefit Trustees than any outcome from an HMRC letter.... I would appreciate if anyone can shed some light on my questions.

[northernladuk]

Exactly the same question has been asked here..

http://forums.contractoruk.com/accou...trusts-64.html

Hope I am not getting the wrong company but is this run by Newquay Professional Limited? Seems to be a lot of noise about them having a winding up petition in and no accounts since 2010. I don't know much about all this so here is a link to google with lots of reading.

https://www.google.co.uk/search?q=Ne...m=122&ie=UTF-8

[DirtyDog]

Exactly the same question has been asked here..

http://forums.contractoruk.com/accou...trusts-64.html

In fact, the same question was asked by the same poster seven months ago. I'd follow the advice that Cojak provided in that thread:

Hi Pexel and Chief,

I would ask your question in the HMRC Enquiries forum, you may get an answer there.

HMRC Scheme Enquiries

[Chief]

Exactly the same question has been asked here..

http://forums.contractoruk.com/accou...trusts-64.html

Hope I am not getting the wrong company but is this run by Newquay Professional Limited? Seems to be a lot of noise about them having a winding up petition in and no accounts since 2010. I don't know much about all this so here is a link to google with lots of reading.

https://www.google.co.uk/search?q=Ne...m=122&ie=UTF-8

Thanks! It is Newquay Professional Limited indeed and i was not aware of the wind up petition. This will definitely influence my decision.

@ DirtyDog, i did post the original message 7 months ago and i have finally asked my question in the HMRC enquiries forum ... after 7 months

[eek]

Surely its irrelevant. If the paperwork was there when you took out the "loan" you implicitly accepted those terms when you accepted the loan. Everything else is just semantics.

[LisaContractorUmbrella]

Getting a loan agreement signed will make no difference at all to whether HMRC will regard this as tax avoidance

[ASB]

"Why they are so keen to get this loan agreement signed 3 years after?"

Because they have handed you some money, and would really like to evidence what it is.

"Is there any risk that they will indeed request me to repay the loan at the due date (1st July 2015)? And then what?"

If the loan agreement gives them that power then yes, there is a risk that they may choose to try and enforce their right. And then you repay. Or eventually, if you cannot agree to some mutually acceptable settlement, go and explain you position to a district judge, the other side do the same. The judge decides what next.

"What is my exposure if i do not sign these loan agreements?"

That will depend upon what documentation exists. What they claim it is. But there is a pretty obvious question. "Why did they hand over a sum of money". You could always claim it was a gift. I doubt it will be successful though.

Another question though. HMRC want to treat it as income. This does NOT mean they are saying it miraculously changes into income. Only that it is taxed as such. i.e. you still have the alleged loan.

If this comes to pass you still have an alleged loan. What will the trust do in these circumstances? (I would imagine they will choose to write it off, but they may have other options).

[Chief]

"Why they are so keen to get this loan agreement signed 3 years after?"

Because they have handed you some money, and would really like to evidence what it is.

"Is there any risk that they will indeed request me to repay the loan at the due date (1st July 2015)? And then what?"

If the loan agreement gives them that power then yes, there is a risk that they may choose to try and enforce their right. And then you repay. Or eventually, if you cannot agree to some mutually acceptable settlement, go and explain you position to a district judge, the other side do the same. The judge decides what next.

"What is my exposure if i do not sign these loan agreements?"

That will depend upon what documentation exists. What they claim it is. But there is a pretty obvious question. "Why did they hand over a sum of money". You could always claim it was a gift. I doubt it will be successful though.

Another question though. HMRC want to treat it as income. This does NOT mean they are saying it miraculously changes into income. Only that it is taxed as such. i.e. you still have the alleged loan.

If this comes to pass you still have an alleged loan. What will the trust do in these circumstances? (I would imagine they will choose to write it off, but they may have other options).

>> Thanks ASB for taking the time to answer my questions. I guess that there is no need for me to rush and sign the agreement after all this time. At worst it seems that it does not make any difference to me (i.e. consequences will be the same). At best, i won't hear from neither them nor the HMRC (unless they were to be investigated).

Anyone is / has been in the same situation with Newquay Professional Limited?

[jhalinson]

>> Thanks ASB for taking the time to answer my questions. I guess that there is no need for me to rush and sign the agreement after all this time. At worst it seems that it does not make any difference to me (i.e. consequences will be the same). At best, i won't hear from neither them nor the HMRC (unless they were to be investigated).

Anyone is / has been in the same situation with Newquay Professional Limited?

Am in a similar situation although worse I haven't received an amount owing from Newquay and can't seem to get in touch with anyone associated with them. My understanding is that the money was held in a trust, anyone know if the money can still be accessed?