Reply to: HMRC letter regarding Loan scheme + Loan Company Liqudation

[lowpaidworker]

See my quote on the HMRC review thread. Its starting to get might messy as everthing gets squeezed. Its an absolute mess.

https://www.contractoruk.com/forums/...ml#post2725720

[Iliketax]

5. The Employer shall be entitled to assign the benefit of this Agreement.

The statement of affairs at Companies House (that you linked to) says the only assets of the company are the £49,804 in the bank account. That suggests that the company's loan receivable has been transferred to someone else. That in turn suggests that liquidator will not have a loan receivable to try to recover from you.

That's probably not the end of the story as a liquidator can sometimes ask a court to reverse the transaction and get the assets back (in this case the loan receivable). Whether that is possible, and whether that actualy happens, is something for the the company's liquidator. As another company's liquidator says on this thread, get some professional advice.

The Employer retains a lien over any bonus to which the employee will or may be entitled until such time as the facility is repaid

If I was the liquidator, I guess I'd also be wondering what this meant. My guess is that it means nothing in practice as you probably won't have given any "security" you gave under Schedule 5 but it's not a tax question.

Surely in law is either a loan or a salary it cannot be both at the same time.

The employment income tax legislation says that you can be taxed on (i) salary, and (ii) money received from certain types of loans. A loan made by an employer, with the loan receivable then transferred to someone else, might well fall within that second category. So for employment income tax they do not need to be both at the same time.

[webberg]

This is one point on which we disagree. I feel that HMRC have almost unlimited powers and don't focus enough on stopping schemes. They also focus little on large multi-nationals(though to be fair that needs a law change). They focus too much on bullying individuals. Of course, I fully support your right to express your opinion.

HMRC has absolutely no powers to prevent any person/company from trading.

They can name and shame those who have failed to pay their tax.

They can use the GAAR Panel to test their view of certain arrangements (who reads those?)

HMRC cannot however prevent a legitimate, unregulated business from peddling its wares.

Not my opinion - the law.

[DealorNoDeal]

I feel that HMRC have almost unlimited powers and don't focus enough on stopping schemes.

I'm not sure they can stop them, as in marching in and shutting them down.

But they could be more proactive in discouraging people from using them. For example, I believe they have the power to demand lists of users. Armed with this, they could write to users and warn them of the dire consequences of using these arrangements.

[BrilloPad]

There is no body in the UK capable of stopping them trading.

That legislation does not exist.

This is one point on which we disagree. I feel that HMRC have almost unlimited powers and don't focus enough on stopping schemes. They also focus little on large multi-nationals(though to be fair that needs a law change). They focus too much on bullying individuals. Of course, I fully support your right to express your opinion.

[Superfly]

More imprantly do or did the end users know what they were getting into. I think not. Thats one of the main points. Most of these schemes sold as compliant all dressed with wording as efficient and QC approved.

Ive seen a lot of disquiet from the LC APPG group. Still not happy with the review. Ive seen people sent letters threatening banruptcy and being asked to sell assetts including houses depsite the review and HMRC directors saying that would nt be the case. This mess is going from bad to diabolical since the reivew. Its even more confusing.

I think not, many people who were caught up in this chose their scheme like they choose their car insurance, go for the cheapest, in this case the one that provides the biggest returns . The 85% and 90% figures being banded about looked good at the time. For some it was there first foot into the world of contracting, and ease them in gently, they decided to go down the Umbrella (scheme) route rather than set up a Ltd company. So you could say the scheme providers preyed on their naivety.

Having said that, I know of seasoned contractors who have been around for many years that have previously been using Ltd companies that have now been caught up in this. The scheme providers tempted them with the reassurance that they would no longer be at risk of IR35 enquiries.

Neither group perceived that they could be doing anything wrong, otherwise I'm sure they would not have gone into it.

I remember when the fallout of all this was starting, I spoke to the scheme provider and he started using words like "appetite for risk" and I was thinking "I didn't think there was any risk, I thought all this was above board, I thought it was HMRC approved and backed up by QC opinion. Why then would I have to have an appetite for risk?"

Lesson is, you go into things with eyes wide open in this game. If it is too good to be true, then it probably is so leave it and move on.

[lowpaidworker]

No such thing as "QC approved".

It's meaningless.

All it says is that a QC was given a specific set of facts, a specific set of questions and answered them as narrowly as possible.

Pretty much any real life situation is unlikely to accord with those specifics.

I don't mean to say that all QC views are worthless, but it's possible to "shop" for a particular opinion in the QC community as some are known to be more bullish about certain matters than others.

A few years ago one QC (recently in the red tops for all the wrong reasons) published an article that essentially accused his peers of providing opinions designed to pander to the client and/or generate current and future fees rather than be an objective assessment of the law.

that last paragraph does not suprise me.

[webberg]

More imprantly do or did the end users know what they were getting into. I think not. Thats one of the main points. Most of these schemes sold as compliant all dressed with wording as efficient and QC approved.

No such thing as "QC approved".

It's meaningless.

All it says is that a QC was given a specific set of facts, a specific set of questions and answered them as narrowly as possible.

Pretty much any real life situation is unlikely to accord with those specifics.

I don't mean to say that all QC views are worthless, but it's possible to "shop" for a particular opinion in the QC community as some are known to be more bullish about certain matters than others.

A few years ago one QC (recently in the red tops for all the wrong reasons) published an article that essentially accused his peers of providing opinions designed to pander to the client and/or generate current and future fees rather than be an objective assessment of the law.

[webberg]

2019, 2020?? Why are people still using these vile scumbags? How are they still allowed to operate?

There is no body in the UK capable of stopping them trading.

That legislation does not exist.

[webberg]

PNO Group Ltd was a successor co to Pembroke Payment Services Ltd

The liquidator is Edward Gee of CG & Co in Manchester

I'd suggest that the OP takes (& follows) professional advice and try to tie both HMRC and the liquidator into any settlement …..

Thanks Ian.

I agree that professional advice is necessary.

[lowpaidworker]

Yes, but are they HMRC approved? And do they have a QC opinion to back it?

More imprantly do or did the end users know what they were getting into. I think not. Thats one of the main points. Most of these schemes sold as compliant all dressed with wording as efficient and QC approved.

Ive seen a lot of disquiet from the LC APPG group. Still not happy with the review. Ive seen people sent letters threatening banruptcy and being asked to sell assetts including houses depsite the review and HMRC directors saying that would nt be the case. This mess is going from bad to diabolical since the reivew. Its even more confusing.

[webberg]

Do you have any feel for how many schemes are still operating today?

One would hope they're not as prevalent/popular as they were 10 years ago.

Schemes operating today?

Depends what you call a scheme.

I suppose we divide them roughly into the following categories:

A. "Umbrella*" operations claiming to maximise expenses and salary sacrifice arrangements.

B. Structured "solutions" that involve some specialist entities created for the purpose.

C. Schemes that rely upon non disclosure of certain elements.

On our books as of today.

A. - perhaps 20 to 25

B. perhaps 10 to 12

C. perhaps 3 to 5

*I do not mean to include in that term all those legitimate umbrellas who subject ALL payments to tax and NIC. Unfortunately however it's a name they give themselves and in the absence of anybody in the "umbrella community" seemingly caring two hoots about the misuse of the name and doing something about striking down these imposters, it's a name we use in order to be consistent.

[Superfly]

But, but they score 4.8 out of 5 on Feefo ………

https://www.feefo.com/en-GB/reviews/...timeFrame=YEAR

Yes, but are they HMRC approved? And do they have a QC opinion to back it?

[Ian Richardson GT IoM]

"vile scumbags"

2019, 2020?? Why are people still using these vile scumbags? How are they still allowed to operate?

But, but they score 4.8 out of 5 on Feefo ………

https://www.feefo.com/en-GB/reviews/...timeFrame=YEAR

[DealorNoDeal]

2019, 2020?? Why are people still using these vile scumbags? How are they still allowed to operate?

Sadly, there is clearly still a sufficient supply of naive suckers for the scam merchants to prey on.