Reply to: Hypothetical question

[Gonzo]

Ford Open Prison is full of people similar to you; the difference being they were slightly more greedy than cautious.

Does that help?

Greedy and arrogant surely?

I am not arrogant. I am far too superior to succumb to such foibles.

[RichardCranium]

That's what I was thinking too.

The people that I work with that are in it are convinced that it is legit, but they haven't persuaded me to join though.

Ford Open Prison is full of people similar to you; the difference being they were slightly more greedy than cautious.

Does that help?

[Gonzo]

Isn't this similar to that shonky Jersey based setup? You have the money paid into a trust fund, and then borrow against it. As the trust has to work in your best interest, they never call in the debt.

That sounded really dodgy to me too....

That's what I was thinking too.

The people that I work with that are in it are convinced that it is legit, but they haven't persuaded me to join though.

[b0redom]

Isn't this similar to that shonky Jersey based setup? You have the money paid into a trust fund, and then borrow against it. As the trust has to work in your best interest, they never call in the debt.

That sounded really dodgy to me too....

[TheBigYinJames]

Here you go oh fruit of my loin, A 300k tax bill to pay off for my years of spunkin all my cash up aginst the wall chasing loose women and cheap beer.
It makes a good epitaph doesn't it?

Your estate might have to pay, so they won't get any inheritance, but I don't think they inherit the tax bill.

[Incognito]

Yeh but you're dead, you don't care.

Here you go oh fruit of my loin, A 300k tax bill to pay off for my years of spunkin all my cash up aginst the wall chasing loose women and cheap beer.

It makes a good epitaph doesn't it?

[zathras]

Leaving aside the obvious issues of trusting your money to other people etc etc, what does the congregation think of this from a tax/legal perspective. Would it fall foul of any specific taxation legislation? And no, I'm not intending to do this, I'm just curious about the legalities.

You work for an umbrella Co. as a full time employee. All PAYE etc is taken care of based on a low salary.

Under a seperate arrangement you are given access to funds through a loan facility for an amount equal to the difference between your salary and your gross earnings. The loan is provided by a third party unconnected to the umbrella co. you work for. You draw on this arrangement on a 6 weekly basis with the total loan amount being adjusted each time.

The loans run for a fix term of 40 years, accrue interest and are fully repayable. Shortly before the loan becomes re-payable you are given access to a second loan, also fixed for 40 years for the amount of the previous loan + interest due.

Sounds like an EBT which would be a no goer as they are illegal.

It is also worth ensuring how the repayment of the loan is going to be organised. So is this a secured loan that gets paid back from unsecured payments from the brolly?

Or what the IR would say given that there is in reality no intention of paying back the loan - so it sounds like income to me, give hector all the wonga that would have been due if it was salary.

Then there is Ramsey

so have you got a nice big barge pole because if you are going to touch this at the very least.

[SueEllen]

Is the debt not deductable from your estate?

It depends on the terms of the loan agreement.

I remember that only a few years ago did banks and credit card companies add a clause in the agreement where they could deduct any debts from your estate. However it doesn't stop them harassing parents of students who commit suicide even though the parent is not liable as the student is over 18 and the student doesn't have any money in their estate.

[TheBigYinJames]

Is the debt not deductable from your estate?

Yeh but you're dead, you don't care.

[Incognito]

Is the debt not deductable from your estate?

[TheBigYinJames]

I think the moral of this tale is that loan offsets to avoid tax only work if you die before you pay it off.

[ASB]

The loan income isn't taxed....

No but it has to be paid back at some point, or it is taxed.

Ok, so you pay it back from the next loan but the capital amount outstanding is constantly increasing. Also if the interest is rolled up it might be a beneficial loan, and if the interest is actually paid this will pretty soon wipe out the tax saving.

[DaveB]

It doesn't look like a beneficial loan, provided the interest is at an appropriate commercial rate and actually paid.

I don't see how it can possibly be of any benefit though.

The loan income isn't taxed....

[ASB]

Leaving aside the obvious issues of trusting your money to other people etc etc, what does the congregation think of this from a tax/legal perspective. Would it fall foul of any specific taxation legislation? And no, I'm not intending to do this, I'm just curious about the legalities.

You work for an umbrella Co. as a full time employee. All PAYE etc is taken care of based on a low salary.

Under a seperate arrangement you are given access to funds through a loan facility for an amount equal to the difference between your salary and your gross earnings. The loan is provided by a third party unconnected to the umbrella co. you work for. You draw on this arrangement on a 6 weekly basis with the total loan amount being adjusted each time.

The loans run for a fix term of 40 years, accrue interest and are fully repayable. Shortly before the loan becomes re-payable you are given access to a second loan, also fixed for 40 years for the amount of the previous loan + interest due.

It doesn't look like a beneficial loan, provided the interest is at an appropriate commercial rate and actually paid.

I don't see how it can possibly be of any benefit though.

[TheBigYinJames]

But it could be recieveing money from the brolly via some other means...?

You sounds as vague as that advert was. Finding the other (legal) means is the trick. Solve that and you'll be rich.