Reply to: EBT again

[malvolio]

So stop faffing about, you have four realistic choices:

1 - get a permie job and stop pretending to be a freelance.

2 - Use a Ltd and work as a one man band like 95% of us

3 - as 2, but then build it into a full time business (or go broke trying)

4 - go self-employed - except you won't then get any work.

It really is that clear cut.

[maxima]

that something other than your own company working under UK law is a good idea is living in cloud cuckoo land.

This is why I am so concerning now... The difference in take home money not that big and I am not after that difference (I mean EBT / Ltd)...

The problem for that in my perception (I know - the perverted one) that working outside IR35 for someone as me - is 'pretending' to be a businessman.

From my point of view - this is Ltd and IR35 avoidance is complete cuckoo land.

This is why I started this thread - to find out for myself whether I can escape Ltd nightmare...

Please note that everything in this thread is for myself. I am not going to convince anyone on this forum that EBT is kind of option to the ltd.. Thanks.

P.S. I can explain why I see like that but afraid no one will be actually interested.

[ChimpMaster]

Steed Solutions?

Or some loans firm along that name, is closing down at this moment. Not sure why though.

[malvolio]

ISTR the revenue didn't pursue Dignatio because it wasn't wotrth it for the outstanding tax, which is all they were worried about. The losers were the contractors who didn't get paid (an average £30k each, from memory) and were not in the list of creditors since it was their money that was lost, nobody else's.

It's a risk assessment at the end of the day. Personally I wouldn't even think about using any form of EBT or similar ruse, but you make your own decisions. IMHO Anyone who is UK resident and concludes that something other than your own company working under UK law is a good idea is living in cloud cuckoo land.

[ASB]

Yep, that's them. A lot of contractors ended up being quite heavily out of pocket when they went out of business if I recall correctly.

Yes, but the question is did they end up being out of pocket by more than the invoices unpaid?

ie did they get chased by the revenue, did they get chased by the receivers. A couple of posters here were caught up in it if I recall. Maybe one of them will 'fess up for us.

[Cowboy Bob]

Yep, that's them. A lot of contractors ended up being quite heavily out of pocket when they went out of business if I recall correctly.

[THEPUMA]

It might have been Dignatio? From recollection I think they may have lost their unpaid invoices. i'm not sure whether or not they also had to pay back the tax they had underpaid.

[Cowboy Bob]

There was a case where the contractors had to pay a whole bunch of money to the Revenue when a scheme went tits-up, can't remember if it was an EBT or not which is why I haven't mentioned it here. My Google-fu has failed me though so I can't find the case in question. I'm sure someone else can post a link, I've seen it posted here before.

[ASB]

Maxima,

The real answer is "nobody knows". There have been few cases persued. There was a I think an EBT that wents tits up.

As far as I am aware the liquidators did not chase the outstanding loans, presumably the loan agreements were well enough written to preclude that. I don't beleive the IR attacked the subscribers either.

Ultimately, of course, if you are skirting close to the wind it does rely on you being caught. That may well not happen. The IR are likely to have more expensive lawerys than an individual and deeper pockets.

If you are comfortable with it then do it.

[Cowboy Bob]

sorry i am messing again.. the correct question - how they can ask u to do so retrospectively?

surely u are aware that noone has been asked yet... means - that possibility that u have borught to the attention must be retrospective (to be worth to talk about)....

is it possible? isnt it braking western law basics?

It isn't retrospective. What you fail to understand is that tax is due where you are tax resident. It has nothing to do with whether the EBT is based offshore or not. You have earned income in the UK where you are tax resident, therefore tax is due on it here. The Revenue aren't stupid, they will instantly categorise the "loan" as income because that is what it is. They will then ask you for the full income tax and NI contributions on all the money that you have been "loaned" whilst you were in the scheme.

Of course no-one will be found out unless the Revenue do an audit, but they do audit contractor income on a random basis - there are many on this board who have been investigated for everything from expense claims to full on PAYE/IR35 reviews. It's sailing very close to the wind. If you want to take the risk, that's up to you, but don't come crying back here when you get the brown envelope from the Revenue through your door.

[maxima]

sorry i am messing again.. the correct question - how they can ask u to do so retrospectively?

surely u are aware that noone has been asked yet... means - that possibility that u have borught to the attention must be retrospective (to be worth to talk about)....

is it possible? isnt it braking western law basics?

[Cowboy Bob]

that was the question actually. How possibly IR can invalidate your rights for loan? (Surely they cannot in any possible situation to ask you repay loan in favour of 3d side (trust))...

They can ask you to pay the tax due on the income (due to you being a tax resident of the UK and the EBT being offshore). And they will win, and you will have to pay.

[maxima]

that was the question actually. How possibly IR can invalidate your rights for loan? (Surely they cannot in any possible situation to ask you repay loan in favour of 3d side (trust))...

[Cowboy Bob]

but if the trust is abroad and is off-shore IR can lick they butt and never get a penny from there.

Which is why they'll get it from you.

[maxima]

sure thing. they will build a special Contractor Bridge. gonna drink scotch then!