Reply to: Optima Professional / SP-Management / First 4 Lawyers

[HMRC made Atlas Shrug]

Hi All,

I’m new to using someone for my accounting and I’m about to take on a new contracts and was looking to go Limited.
I have found a company Optima Professional who essentially will handle all of my LTD stuff, book keeping invoicing ETC and work on what I can see is a EBT method for paying me.

What I don’t understand is, is this legal? – I’m no Tax expert but I really am worried. They have offered to do all of the LTD registration for me and cover the cost of this. Has anyone dealth with First 4 Contractors or SP-Management before and able to offer any light on whether this method of book keeping is legitimate?

Essentially they I will set up a new business account for when I go limited and I will continue to invoice my clients they will then calculate on my invoices how much money they need to invoice me, I will be paid £11,000 from my business account as a salary and then essentially sent money via a Trust. Here is an example which has been sent over for £40,000 per year.

Gross Value: £40,000
Dividends: £2,000
Retainer: £11,000
Discretionary Loan Award: £20,600
smartPAY Take HomeL £33,600

Any feedback on this company would be great. thank you.

Even if it is legal at the moment, HMRC will ignore all of that (the law does not apply to HMRC) years down the line. When they come for you for all manner of taxes, penalties and interest, how would you feel 15 years from now when you are forced to sell your house to pay your tax bill.

To help you I'm listing all the ways these scheme providers will be there to help/support you at the time as well as their contact details for when HMRC comes for you.





.

I hope the list is of help to you.

[Darren at Fox-Bartfield]

SP Management Trust

Just giving this thread a bump having taken on a couple of clients that appear to have used SP Management Trust over the last couple of years:-

Same company, different label

These things are still being touted around by recruiters by also, as we've found out, by an accountant that's owned by the same guys in the link above, The Knox Group.

If it's too good to be true then more often than not, it is!

[webberg]

Schemes were/are and always probably will be legit...

But the APN legislation means HMRC don't have to prove they are successful in avoiding taxation before issuing you with a bill

Do NOT confuse being "legit" meaning no/low tax.

All schemes are legitimate. Not being so opens them to criminal action.

The issue is that the legislation that they try to match is capable of different interpretations. The scheme provider has one view and HMRC perhaps another. In the end a Judge makes a decision. he does not decide that the scheme is not legitimate, just that the tax consequences are A B C.

Also APN has absolutely nothing to do with legitimacy.

APN issue is HMRC saying, I want to challenge your interpretation and whilst that is being sorted out (years) I want to hold the tax that we're disputing.

Completely separate and independent matters.

[LisaContractorUmbrella]

Schemes were/are and always probably will be legit...

But the APN legislation means HMRC don't have to prove they are successful in avoiding taxation before issuing you with a bill

It all depends on your definition of 'legit' - many of the schemes that have landed contractors in trouble with HMRC were completely sham arrangements rather than legitimate tax planning arrangements

[jonnieboy]

Schemes were/are and always probably will be legit...

But the APN legislation means HMRC don't have to prove they are successful in avoiding taxation before issuing you with a bill

[mdebashi]

No point posting anything else in here, OP hasnt been back since the initial couple of posts a week ago.

Although the OP has left, I would like to thank you all for your help, I had a meeting with these guys yesterday, I was about to join if it wasn't for my gut telling me to triple check everything. As you guys said, it probably is perfectly legit scheme now, but 5 years down the line, may not seem as legit.

[LisaContractorUmbrella]

Clause from SP
“indemnifies the corporate Trustee against any liability arising in respect of income tax, VAT or social insurance contributions, relating to Consultant’s duties under this contract”

If they are so confident, why do they have this clause?

Fairly sure that an indemnity against a tax debt is not worth the paper it's written on anyway

[DaveB]

No point posting anything else in here, OP hasnt been back since the initial couple of posts a week ago.

[regron]

If the previous 2 comments don't convince you, then spend some time looking and reading through the forum and if that still doesn't do the trick. Prepare to be shafted from here to kingdom come, in the not too distant future !!

[LandRover]

"Our solution"

That's enough to send anyone running for the hills.

Seriously wish I had known about CUK back in 2010-12 as I would have not be suckered into a scheme. HMRC have been very lax and allowed these schemes to be sold. You don't get a warning letter from HMRC after you join, in fact HMRC wait years and then attack you for being a scumbag tax avoider.

[BlasterBates]

I have been in touch and they seem to insist that they do not run a EBT system,

I received this feedback


EBT’S
We are quite different to the EBT type of scheme you refer too and quite rightly may have read articles that raise concerns. An EBT (Employment Benefit Trust) relates to effectively being Falsely Employed and receiving disguised remuneration by being Employed and also links into IR35. And more importantly old DOTAS products.

Our solution is not considered to be a notifiable proposal or arrangement because it does not have any of the relevant hallmarks of a tax avoidance scheme. There is no confidentiality from HMRC or other promoters, there is no premium fee, there is no off market terms, it is not a mass marketed standardised product, it does not create losses, it does not involve pensions, and it does not involve leasing arrangements. Finally, the primary purpose of the arrangements is to provide workers with a vehicle through which they can work to provide services to clients that is convenient for them and which takes away the administration hassles of business/limited companies i.e. it demonstrates commerciality.

The disguised remuneration legislation is relevant to employment income only, not self-employment income. Also, it is not EBT’s that do not work, it is how long they have been used and abused in the past.

Difference between ourselves and an EBT?
The prefunded Trust is funded prior to discussions with the end client and has a pre-set limit for example £150,000 made available for the client’s benefit.

An EBT is an employee’s benefit trust and caught up in the 2011 Finance Act. Legacy EBTs are not recommended or used by ourselves.

Our solution has been designed to fully comply with all current and upcoming legislation. The group employ some of the leading tax experts in the country who continually monitor changes in legislation to ensure all our of consultants work in a compliant manner. Moreover, the solution has been fully reviewed and backed up by Queens Counsel opinion. The solution is not affected by GAAR or registered for DOTAS.

Everything we do is absolutely legitimate, compliant and lawful. If it wasn’t, we wouldn’t be where we are today. To confirm in writing - We make a pledge to our clients that if they are challenged by HMRC in relation to the solution, we will support those clients up to and including 1st Tier Tribunal to defend their case. If you were to become a client, this would extend to you. It’s worth noting that as a result of the robust planning and vast financial investment we put into our compliance teams, this has never had to be implemented, as none of our clients have ever been challenged by HMRC in relation to the solution.

It’s a PAYG service essentially, you’re not tied in to use our services for any amount of time. By all means, you can see how things work with ourselves – and if for whatever reason you wished to leave our service, you could take your Ltd Company elsewhere. If we don’t have an invoice to work with, and you don’t transfer the funds to ourselves, we can’t implement the planning.

Any thoughts? - Still stay away? I have a meeting with an accountant tonight to discuss also.

You're being lead up the garden path. You are getting a discretionary loan, this is identical to an EBT scheme.

If you go ahead you will be in severe trouble 5 years from now. The advantage of the scheme is that in the short term you will have more money, the disadvantage is that HMRC will come take the money back with interest and possibly penalties.

You will definitely regret it if you go ahead, absolutely no question about that.

[eazy]

Indemnity Clause

Clause from SP
“indemnifies the corporate Trustee against any liability arising in respect of income tax, VAT or social insurance contributions, relating to Consultant’s duties under this contract”

If they are so confident, why do they have this clause?

[neil99]

Moreover, the solution has been fully reviewed and backed up by Queens Counsel opinion. The solution is not affected by GAAR or registered for DOTAS.

QC Opinion is just a view of one expert on the structure before it has been tested in court. Would you run alpha software in production ? No. Most if us facing very large tax bills used schemes that a QC said might work. HMRC took another view. The courts have yet to decide in the majority of cases.

HMRC is already going after non-dotas scheme users.

There's too much risk in using anything but Ltd company.

I expect the chancellor to attempt to shut down Ltd 'personal service' company at the next budget anyway, so you may as well use an umbrella company and pay the max tax.

[ASB]

This.
That's why I love all the guys on these boards that serve harsh judgement ("If you were dumb enough to...") on people's decisions of 10-15 years ago, while totally ignoring the circumstances of the these times.

I never joined any schemes because I didnt think they worked. I have revised that opinion over time. I believe they probably did in fact work, under the law at the time.

I also think that there was a general view that the downside would be broadly equivalent to being ir35 caught.

There was huge uptake in schemes with IR35. It was, in my view, a bit optimistic with what was known and practice at the time. But the expected risk was, in effect, the fees. That was a fair risk/reward ratio for lots of folk

It is only in the last 5 years or so that it has become a bit mad. Really since the "we will backdate to today" is where the tipping point was for me.

[NotAllThere]

Moreover, the solution has been fully reviewed and backed up by Queens Counsel opinion.

An opinion that the Queens Counsel is never called to account about, nor suffers any consequence, when it goes tits up.

1. I have no idea why this is the wrong section
2. Im asking for advice, this is what this whole website is about right?
3. If its in the wrong section, move my post.
4. I don't take 1 or 2 peoples word, I'm thorough and require thorough research. If you expect me to just listen to 1 or 2 people when I'm shedding more light on the situation then your a fool.
5. I posted because I received more information stating it was not a Scheme...

6. Delete the thread.. I'm off to speak to some real legal advice.

Thank you everyone else for your feedback, much appreciated.

As a warning to others, I've quoted the deleted sections. It seems the OP wanted advice but didn't like the advice he got. However, I did some background checks and he's not, as I originally suspected, a shill for any of those scheme providers. Just, in my view, rather foolish.