Reply to: Repayment of Directors Loan in 2.5 Months

[d000hg]

What's wrong with gaming the system. If these guys are smart enough to enter on borrowed 50k and UK fold are stupid enough not to see that, then I'd say UK is still getting a decent deal by letting some creative people in. Not sure what to do with the ones already here...

Benefit cheats are creative as well. Are we impressed with that as well?

Following a basic fudge which is openly discussed on the immigration forums is hardly being creative is it.

Paying yourself £7k salary and taking the rest as dividends is gaming the system though really, isn't it? Getting a state pension while paying £0 NI definitely seems dodgy to me.

Benefit cheats are committing fraud and breaking the law; if this wheeze is illegal than it's very dodgy but otherwise it's no different than us manipulating the system to pay less tax than our permie friends in my book.

[LisaContractorUmbrella]

What's wrong with gaming the system. If these guys are smart enough to enter on borrowed 50k and UK fold are stupid enough not to see that, then I'd say UK is still getting a decent deal by letting some creative people in. Not sure what to do with the ones already here...

It's people thinking that's it's not wrong to cheat the system that's wrong

[northernladuk]

What's wrong with gaming the system. If these guys are smart enough to enter on borrowed 50k and UK fold are stupid enough not to see that, then I'd say UK is still getting a decent deal by letting some creative people in. Not sure what to do with the ones already here...

Benefit cheats are creative as well. Are we impressed with that as well?

Following a basic fudge which is openly discussed on the immigration forums is hardly being creative is it.

[yasockie]

What's wrong with gaming the system. If these guys are smart enough to enter on borrowed 50k and UK fold are stupid enough not to see that, then I'd say UK is still getting a decent deal by letting some creative people in. Not sure what to do with the ones already here...

[d000hg]

He needs the money in a current account so that they don't ask questions about where the money came from (i.e. he wants to pretend its money he's brought in rather than generated while here).

Smart move!

[northernladuk]

Strangely I've just found our friend Immigrationboards.com :: View topic - Maintaing funds

and I think he answers the question there:-

He needs the money in a current account so that they don't ask questions about where the money came from (i.e. he wants to pretend its money he's brought in rather than generated while here).

If you look at his posting history he is championing himself as a bit of a guru in the T1E process as well. Posts about creating a standard form that everyone else can follow and telling people he will guide them through for a small fee etc

https://www.google.co.uk/search?q=ki...hrome&ie=UTF-8

Even a post with templates of official letters from relevant bodies they can use.

I could go on forever reading through these. He even says on one post...

Transferring money to business account does not mean that you have already invested money.

which is exactly what he didn't do.

Another set of posts on shifting money about to beat the system..

Thank you so much for your reply.yes i have access to 50k my brother will transfer that money to my account.do i have sufficent time left to apply for T1 E VISA? Thanks Darvesh

Absolutely !
But for that Start saving a minimum of 900 pounds from Today !!!!!
coz u need it in your account for a minimum of 90 days.
Lucky for you that July and August have 31 days.
for every thing else 3 months are hell more than enough. KickASS

OMG can't look anymore, it's just ridiculous.

How they make sense of any of these threads I will never know. No wonder my clients business is turning to rat tulip.

[kevpuk]

Good find ^^

[eek]

Strangely I've just found our friend Immigrationboards.com :: View topic - Maintaing funds

and I think he answers the question there:-

He needs the money in a current account so that they don't ask questions about where the money came from (i.e. he wants to pretend its money he's brought in rather than generated while here).

[Martin at NixonWilliams]

I think we are all agreed with that, just interested in the technicalities.

So the only ways to get out of the company are to loan it out or divi it out (lets assume we don't have high capital costs so don't need to buy stuff with it). Is OG correct in saying it would be an illegal dividend if it included the (on paper) tax money as this is not profit?

Yes, any dividend declared in excess of the profit available is unlawful. The directors and/or shareholders would be required to make good any unlawful distribution.

The profit position is very different to the cash position of a company. It is common for companies that are highly profitable but poor in cash flow to pay dividends using money that is technically set aside for taxes.

[northernladuk]

No you are not legally required to have this money in the account at all times. It is just very risky I would always advise against it.

I think we are all agreed with that, just interested in the technicalities.

So the only ways to get out of the company are to loan it out or divi it out (lets assume we don't have high capital costs so don't need to buy stuff with it). Is OG correct in saying it would be an illegal dividend if it included the (on paper) tax money as this is not profit?

[Martin at NixonWilliams]

Are you legally required to always have enough money to pay the tax bill based on accounts to date that year though? If you are, then my argument falls down... otherwise there is absolutely nothing wrong taking a loan of all the money set aside for CT, legally speaking. I think.

No you are not legally required to have this money in the account at all times. It is just very risky I would always advise against it.

The legal implications usually kick in later on when the tax liabilities cannot be met.. The great thing about a limited company is the protection it gives you personally, as you are not liable for the company's debts beyond your share capital. However, in this sort of scenario the 'corporate veil' would be lifted, meaning you are no longer protected and would be liabile for the company's debts up to the amount previously loaned. If you have spent the money you loaned, it gets messy..

[Old Greg]

Good point. Be interesting to know if it is any different for loaning that money and just divi-ing it out early with the idea the rest of the year will make it up.

Surely the latter would be an illegal dividend? In the case of a loan - and WTFDIK - I assume you would at least have to demonstrate due diligence that it will be repaid.

[northernladuk]

Don't know the answer, but even if you don't have the cash, you do have the asset (the loan).

Good point. Be interesting to know if it is any different for loaning that money and just divi-ing it out early with the idea the rest of the year will make it up.

[northernladuk]

You do have to have the £50k profit in your business to start with though.

I still think the OP has fudged his numbers using 17k that shouldn't be in the bank and committing his entire future years pay that he hasn't earned yet etc. I have a suspicion that the £12k could just be the tip of the mess the OP is in.

[Old Greg]

Are you legally required to always have enough money to pay the tax bill based on accounts to date that year though? If you are, then my argument falls down... otherwise there is absolutely nothing wrong taking a loan of all the money set aside for CT, legally speaking. I think.

Don't know the answer, but even if you don't have the cash, you do have the asset (the loan).