Reply to: Norla Consulting

Re: One Other Thing

Chunks - great to see such charisma and restraint; and after only three posts - I can see you lasting a long time on this forum :rollin

Re: One Other Thing

antagoneyes

Why the aggresive attitude ? I suggest it is you that should piss off and get a course in some manners you arrogant little pleb.

Re: EBT's

I believe that Turkish Lira were a common currency to denominate these arrangements

These EBT's/offshores companies are very secretive about their activities and I am very surprised that an actual genuine currency was used for their operation. As far as I was aware the currencies used were basically ficticious and were artificially devalued to reduce the loans to zero such that clients paid no actual capital, only a nominal amount of interest on these currency loans.

Must apologise to the original poster once again for drifting well off subject but hopefully some of this info is of some use

Re: EBT's

I believe that Turkish Lira were a common currency to denominate these arrangements. Given the recent EU expansion and the commitment of the new entrants to join the Euro PDQ this must at least have a stabilising effect on the currency.

I'm not sure I'd like to be owing somebody a few billion turkish lira right at the moment. Granted any sensible EBT would probably have hedged most of the risk but that just costs money and erodes the returns.

If one is outside IR35 a lot of people can retain about 80% of profit - even on fairly substantial billings. Single this tends to drop to about 70%. I know a couple of people who have used various schemes like this pre IR35, but I never could work out why. The best most of them were going to make was betwenn 5 and 10k. Didn't seem worth it for the risks.

Post IR35 I Can see the attraction but I still don't see how it justifies the risks. I would have thought ploughing some net income into forestry might have been better.

Re:EBTs

If the scheme were wound up for any reasons surely the individual would simply be a creditor, as such they could come and demand their cash back.

They wouldn't be a creditor because they gave up their rights to the money earned. The money earned is the EBTs not the contractors. The EBT trustees are then supposed to look through the list of "employees" who are potential beneficiaries of the trust and bestow something like an interest free loan upon them.

They could be a debtor of the EBT if the EBT has advanced them a loan in which case the EBT could come after them for repayment of the loan at any time.

Re:EBTs

If the scheme were wound up for any reasons surely the individual would simply be a creditor, as such they could come and demand their cash back.
They wouldn't be a creditor because they gave up their rights to the money earned. The money earned is the EBTs not the contractors. The EBT trustees are then supposed to look through the list of "employees" who are potential beneficiaries of the trust and bestow something like an interest free loan upon them.

They could be a debtor of the EBT if the EBT has advanced them a loan in which case the EBT could come after them for repayment of the loan at any time.

Re: EBT's

Yes this would appear to be the big risk with the EBT/offshore setups we have looked at. The depreciating currency loan has to fully depreciate in order for the client to take ownership of their money.

If anything went wrong those currency loans may well be a significant liability to clients who may be forced to pay them back to an unscrupulous EBT at face value. I also wonder what would happen to these depreciating loans if the scheme were to be forced to close partway through the loan cycle for some reason.

Historically these systems have worked well despite the dubious setup but there are questions to be asked in the current unpredicatable situation.

EBT's

Bradley,

Ignoring the fact that an EBT's effectiveness as a shelter is questionable (although personally I think they may have been effective up until this year - or why would there have been very specific new rules) - I would have one other concern about it.

If the scheme were wound up for any reasons surely the individual would simply be a creditor, as such they could come and demand their cash back. Alternative would just be to write it off - this could be a dodgy action for the liquidators if the creditors have any assets. It seems reasonable to assume that this could happen before the repayment mechanism put in place had matured.

I don't know if that could happen in practice but would surely be a serious risk in the event of a revenue challenge.

Re: One Other Thing

Sorry, but what do the last two responses have to do with the original question ? !

It's clear that nobody knows anything about Norla chunk but at least they are not taking this piss out of you and have tried to be helpful.

If you don't like the responses may I suggest you go to computercontractor.net where you will get the respect you probably deserve. In other words feck off !!

Re: One Other Thing

Assuming that everyone can is just plain silly

I wasn't assuming anything tim123 just presenting the best case scenario for someone on a lower contract rate and with a partner who can absorb the dividend without going into higher rate tax. It obviously doesn't fit your profile tim123 but I imagine a large percentage of contractors fit or nearly fit this profile and may not be aware of the position they are in.

Your comment was rude and unhelpful - being accused of being silly when I am trying to give out useful information is not what I would expect

One Other Thing

IMO this will fall within the Revenue's definition of a scheme to avoid tax - it's certainly marketed like that. This means that either Norla or their clients will have to inform the Revenue about its existence and that its been created to avoid tax.

In any event you should ask Norla if they consider that they're caught under the new rules. Schemes registered overseas without a UK presence don't have to but the liability to register then falls on the clients to do so i.e you

Re:EBTs

chunk - if Norlas an EBT then the its too good to be true.

The Revenue are clamping down on EBTs currently, especially those based offshore.

To be effective you have to give away what you earn to the EBT and then ask the trustees if they'll consider giving back some of your money as a loan.

The truth is of course that the EBT never has a choice about lending you back the money. The Revenue don't like that and will argue that the money is all earnings subject to PAYE.

The other thing to consider with EBTs is that they could disappear with your cash and you don't have any legal right to get it back as you've given it away.

Sorry, but what do the last two responses have to do with the original question ? !

The trick is to have a non-working partner with which you can share dividends and keep all of your billing in the standard tax bracket.

But not everyone is in a position to do this and if you can't, you are stuffed.

Assuming that everyone can is just plain silly

tim

I have a contract on a very modest rate. I employ an accountant and pay myself a minimum wage salary. The company secretary and I have a 2:3 split of the remaining dividend payout. I pay tax at the basic rate, use flat rate VAT and claim very little on expenses. Last time I worked it out my return on gross was surprisingly around 80%.

The trick is to keep the salary low, share dividend payout, keep out of IR35 and never pay higher rates of income tax. If you can do all of these things your return will be as good or better than any other option and without any risks or stress.

Sorry completely forgot the original question and very unfair to go off at a tangent in the 2nd post of a thread. I have heard of Norla consulting but do not know their payment system. Would imagine they operate some sort of Irish/offshore system that uses rapidly depreciating currency loans to mask payments. From our experience these sorts of companies are not taking on new clients at the moment, unless you know different ?