Paying back the loan

[cojak]

So are we saying that because we have had no payment made back to LTD company nothing needs to be paid back..? A little confused tbh

No they are NOT saying this.

https://forums.contractoruk.com/hmrc...ml#post2556770

They are saying that having a Ltd company in this mix has made the outcome more serious for you as you need to consider Employer's NI as well.

They are saying that you need to speak to independent tax advisor to get help with this.

[I need advise]

Paying Back the loan

So for my case I paid an amount to Procorre (in my case) from the ltd company and then we got paid some money into our personal account directly from Procorre, including the a Business expense. They take 16% of the amount that was paid to them by the LTD company.


So are we saying that because we have had no payment made back to LTD company nothing needs to be paid back..? A little confused tbh

[WTFH]

. If I pay back, say £500k to the trust then I now have £500k in the trust

Someone else came out with this a few days ago, and he didn't seem to understand it either.

You started out with £0
The trust lent you £500,000
That means you were loaned £500,000.
The trust is currently owed £500,000 by you.

If you pay the trust back £500,000, then the trust is no longer owed anything by you. They do not have £500,000 of your money. They have a paid off loan.

Now there's a completely separate transaction that took place between your limited company - not you - and another company (but not the trust) where your limited company - not you - paid the other company some money.
Your limited company would have to get that company to credit those invoices for your company to get the money back.

[Iliketax]

Never a simple answer.

Yes, there is a simple answer. Don't do it. If it gets paid to your company you get taxed on it (PAYE, employee's NIC and employer's NIC) as you company is a "relevant person". If the trustee 'earmarks' the cash for you or your family or whoever you want then you get taxed on it (PAYE, employee's NIC and employer's NIC). If the trustee is not going to earmark it for you (however informally), why on earth are you going to repay it?

There's a few threads that mention earmarking (google "site:forums.contractoruk.com earmarking"). When you talk your tax adviser, ask them about s554B (the earmarking thing) and why s554R(1)(c) would stop s554R applying.

[Scruff]

Erm....

Without further details from you....you appear to be asking how, you, as the beneficiary of a Trust, which has loaned you £500k can repay the loan and get your money back?

Well, the truth be told, is simply - you can't...You don't have any money in the Trust, you have repaid the loan that you took out from them. You have had the use of that money. Its a bit like drawing cash from your Bank, as an overdraft. You have had the use of that money and you owe it to the bank. Once you repay your overdraft, you don't have any "money in the bank", you are neutral.

In the case of a Trust, I am assuming that you are referring to an EBT scheme? If so, then the income that "you" earned was assigned to the Trust, and you drew your "income" (mostly) as a (non-repayable) loan.

You need to seek Legal and Taxation advice.

[Not Losing Any Sleep]

I'm sure that this has been covered before and there will be no simple answer, but any advice on the pros and cons of paying back the loan would be much appreciated. All the costs of (IHT, NI, tax, interest etc) look prohibitive. If I pay back, say £500k to the trust then I now have £500k in the trust and assume that there are some pros..? The cons are obviously that I need to get my hands on it somehow. Also, can the trust be unwound and pay the money back to the company? My understanding is that the settlement opportunity allows one to pay back the loan. Any thoughts very much appreciated. Never a simple answer.