Reply to: Paid as a loan from a trust fund

[malvolio]

These days they're a typical umbrella company with a slightly dodgy line in advertising and a very uninformative website. Nothing at all like old companies like Prosperity4, who went bust a while back - around the time Tarpon was set up, oddly enough - when they allegedly spent the tax money, and who, I believe but ICBW, used to have an offshore scheme or two.

[Maslins]

What do Tarpon actually do? All I see of them is some videos on YouTube with images of skaters, rock music, and the occasional flashes of text like "Take hom 85% of earnings" and "Market leading dispensations".

I figured they were an umbrella company that openly encouraged their clients to take huge flat rate expenses not actually incurred.

Are they actually offshore scheme bods?

[malvolio]

As a total aside, as part of a compeltely different conversation. I looked up waht a "Tarpon" was the other day. Seems it's an Atlantic-dwelling fishy predator of no commercial value whatsoever and is usually thrown back if caught.

Dunno why - it seemed a good choice of name to me...

[RockTheBoat]

yep, me too. I am still with MP - I must be a glutton for stress and worry

heh heh. yep me too

[Fred Bloggs]

You're quite right but back then the people who marketed the schemes were the people who devised them because that was their business. The charlatans arrived later. However, for many of the later arrivals as I understand it you never even get to meet them!!! I met with Montpelier personnel twice, once at their Knightsbridge office.

There are plenty of threads on CUK which provide the knowledge - BN66 shows what can happen in a world where the provider is still around and prepared to fund the fight. Sunday Solutions, Prosperity4/Tarpon and many others show what happens in flybynight country.

Hmmm, I'm not caught in any of this stuff. But I must admit, when I first started contracting, my head was almost turned by the old style P4, who at the time (IIRC) had some kind of offshore scam running. I started with a Ltd Co only because P4 smelled a bit fishy. A lucky escape for me.

[StellaFan]

I have to confess that when I joined the Montpelier scheme I didn't carry out the level of due diligence into the company that I would do if I was considering it now.

Looking back, it was more a case of luck that I ended up with a decent provider.

yep, me too. I am still with MP - I must be a glutton for stress and worry

[Emigre]

The problem is you and I speak from experience. I have to confess that when I joined the Montpelier scheme I didn't carry out the level of due diligence into the company that I would do if I was considering it now.

Looking back, it was more a case of luck that I ended up with a decent provider.

You're quite right but back then the people who marketed the schemes were the people who devised them because that was their business. The charlatans arrived later. However, for many of the later arrivals as I understand it you never even get to meet them!!! I met with Montpelier personnel twice, once at their Knightsbridge office.

There are plenty of threads on CUK which provide the knowledge - BN66 shows what can happen in a world where the provider is still around and prepared to fund the fight. Sunday Solutions, Prosperity4/Tarpon and many others show what happens in flybynight country.

[DonkeyRhubarb]

I've made this point about quality of provider so many times but we still get the questions. You wouldn't take a contract with Charlatan Limited without finding out who they are so why just give them all your income??? Where's that bottle?

The problem is you and I speak from experience. I have to confess that when I joined the Montpelier scheme I didn't carry out the level of due diligence into the company that I would do if I was considering it now.

Looking back, it was more a case of luck that I ended up with a decent provider.

[Emigre]

(drink speaking...excuse me)

Don't think that really proves anything. It's such a tempting market to go into.

Setup a website telling everyone they can keep 95% of their income, the other 5% being your fee.

Doesn't matter whether you've got any decent legal standing for what you're doing or not, you tell the individual to not disclose any income, you'll get a few naive people to sign up.

They don't file a return for 18 months or so, and HMRC won't raise an enquiry straight away.

During this time, the individual thinks the scheme is great, they get a few of their mates to sign up (especially as you give them £100-500 for each mate they sign up), and the scheme provider gets a nice big fee for doing nothing.

Enquiry only gets raised 3 years in, at which point you tell the individual it'll all be fine, they're confident, they've taken cash out for last 3 years with no issues.

After about 5 years it goes to court...or whatever, and scheme provider does a runner, having taken 4-5 years worth of fees from lots of people based on a scheme that had no substance to begin with.

Like I say, good market to be in...think I might go for it myself!n

Within the bottle here is a strong message. I think that there is an appearance of more scheme providers but that is all it is. The reality is that if you want to enter into scheme then you need to look at who is providing it, what else are they doing, how long have they been operating, how many countries, how dependent are they on income from the scheme you are looking at for their long term survival?

When you have done that realtively simple piece of homework you will discover that there are the same number of scheme providers (tax planners) as there ever were and the rest are doing little more than ripping off someone elses IP for their own benefit. There is no guarantee that these charlatans operate the scheme as it should be run with all the documents being executed in the right way in the right jurisdictions. Thus there is no guarantee that you are even getting what you thought you were.

The opening post on this thread was probably spam for someone else setting up a loan scheme. They won't be there to defend it in 5 years time, they'll be on the proverbial beach with a number of elevated fingers pointed in your direction.

I've made this point about quality of provider so many times but we still get the questions. You wouldn't take a contract with Charlatan Limited without finding out who they are so why just give them all your income??? Where's that bottle?

[Maslins]

Because looking in the marketplace, the number of scheme providers seems to be increasing….

(drink speaking...excuse me)

Don't think that really proves anything. It's such a tempting market to go into.

Setup a website telling everyone they can keep 95% of their income, the other 5% being your fee.

Doesn't matter whether you've got any decent legal standing for what you're doing or not, you tell the individual to not disclose any income, you'll get a few naive people to sign up.

They don't file a return for 18 months or so, and HMRC won't raise an enquiry straight away.

During this time, the individual thinks the scheme is great, they get a few of their mates to sign up (especially as you give them £100-500 for each mate they sign up), and the scheme provider gets a nice big fee for doing nothing.

Enquiry only gets raised 3 years in, at which point you tell the individual it'll all be fine, they're confident, they've taken cash out for last 3 years with no issues.

After about 5 years it goes to court...or whatever, and scheme provider does a runner, having taken 4-5 years worth of fees from lots of people based on a scheme that had no substance to begin with.

Like I say, good market to be in...think I might go for it myself!n

[ASB]

Yeah, might have discussed it….I heard from a tax advisor I know. Yes, some schemes do work, for now –i.e. it will not be easy for HMRC to defeat them in court. Sempra obviously was one, as HMRC decided even not to appeal. I personally think at some point there will be legislation to close these schemes down – the question then will be: Will HMRC attempt to apply it retrospectively?

I’m not sure what legislation has currently been introduced that closes these schemes now? Because looking in the marketplace, the number of scheme providers seems to be increasing….

TBH a properly organised "scheme" will be difficult to close retrospectively - they don't to seem to fit in with the disclosure regime to me. By this I'm saying I think it will be difficult to apply the PMGs PRB from 2003 - they seem to be outside those rules.

AIUI with sempra - and I could be wrong - the current state is that the court decided there is no benefit to the individuals from the trust, it appears HMRC are not appealing that. However a second question seems to be whether the payments to the trust were allowable for CT purposes. This seems to still be open.

To me I don't "like" schemes. They are "morally" wrong. However it's not really different to how I have chosen to arrange my affairs. I have paid more in taxes in the last 20 years than most make in a lifetime (but I've only paid about half of what the the government think I should). I have been very fortunate in that with income sharing, large divis, retention in myco and ESC 16 I have achieved a retention of about 80%. It is extremely fortunate that I have been able to do that within a specific set of low risk rules - only IR35 to worry about.

So, to me, there was never any real mileage in schemes. However, were I IR35 caught I would have considered them.

I don't make the rules. But I sure as hell will be extremely cross if I play by them and somebody shouts "foul".

I simply don't like tax by terrorism. That, sadly, is where we are. The rule of law fundamentally requires certainty at the time of action.

[sal626]

Yeah, might have discussed it….I heard from a tax advisor I know. Yes, some schemes do work, for now –i.e. it will not be easy for HMRC to defeat them in court. Sempra obviously was one, as HMRC decided even not to appeal. I personally think at some point there will be legislation to close these schemes down – the question then will be: Will HMRC attempt to apply it retrospectively?

I’m not sure what legislation has currently been introduced that closes these schemes now? Because looking in the marketplace, the number of scheme providers seems to be increasing….

[ASB]

Last I heard, was that SC ruled against HMRC in sempra on the point that “loans can be classified as income” – and HMRC did not appeal this.

That is my belief. You either looked or knew Think we've talked about it before. My understanding from the judgement is that the CT position might be unclear - ie the payments by the co into the trust might not be allowable for CT.

My point was simple. This sort of scheme can work, and can be proved to do so. There is no guarantee any individual scheme can work though. Without doubt, some do. The gov would not have needed to introduce very specific and targeted EBT legislation otherwise.

[sal626]

Might be worth people looking up Sempra. Not sure if this is finally concluded yet though.

Last I heard, was that SC ruled against HMRC in sempra on the point that “loans can be classified as income” – and HMRC did not appeal this.

[malvolio]

More to the point, you have a multi-million pound business with significant reserves in hand. Someone with no jurisdiction over your activities asks you to repay a large amount of money on behalf of clients who are under their jurisdiction. You are a hard-nosed businessman, do you:

a) Immediately pay all monies claimed and promise to keep paying them in the future

b) launch a very expensive court case to prove the claimant to be wrong; if you lose, you still don't pay anything, of course, but you do earn money for the years the case is running

c) Stay hic militi concuspice, shut up shop, bank the profits and go into a new line of work.

Clearly the more honourable companies will take option (b). Most will take (c). I rather doubt any will ever go for (a)...