Reply to: Dodgy umbrella. Advice on sorting out affairs

[Fred Bloggs]

Thats true. However knowing the kind of people currently operating in this area in this climate I would think a 'loan recall' some time in the future is extremely likely, and NOW is the best time to mitigate this not in 5 years time when they've disappeared and sold the loan book to their brother in-laws.

Maybe the original poster needs to hunt for other scheme users by publishing the Umbrella name and they can club together to explore ways to nullify the loan agreement and settle the PAYE through the umbrella as full salary.

100% agree with meeting this head on, right now. But it is unlikely to be a consumer regulated loan. That's why I suggested taking some advice in an earlier post.

[luxCon]

The downside would be that it probably isn't a consumer loan. It's likely to be a loan from employer to employee which wouldn't be regulated as a consumer loan.

Thats true. However knowing the kind of people currently operating in this area in this climate I would think a 'loan recall' some time in the future is extremely likely, and NOW is the best time to mitigate this not in 5 years time when they've disappeared and sold the loan book to their brother in-laws.

Maybe the original poster needs to hunt for other scheme users by publishing the Umbrella name and they can club together to explore ways to nullify the loan agreement and settle the PAYE through the umbrella as full salary.

[Fred Bloggs]

You need to protect yourself against Loan Recall in years to come where some company say in 5 years time demands you pay the loan back leaving you out of pocket by 80% on top of all the tax you've paid.

Was the contract with UK company of offshore, IF UK, in which case I would seek to get regulators involved and get the loan agreement nullified and raise a legal challenge as its potentially fraudulent act on their behalf and misspelling a product.

The downside would be that it probably isn't a consumer loan. It's likely to be a loan from employer to employee which wouldn't be regulated as a consumer loan.

[luxCon]

Loan recall

You need to protect yourself against Loan Recall in years to come where some company say in 5 years time demands you pay the loan back leaving you out of pocket by 80% on top of all the tax you've paid.

Was the contract with UK company of offshore, IF UK, in which case I would seek to get regulators involved and get the loan agreement nullified and raise a legal challenge as its potentially fraudulent act on their behalf and misspelling a product.

[Fred Bloggs]

Not sure on what you mean by not an umbrella company?

Getting all settled with HMRC and paying the tax owed. So in my eyes I’m ahead on that.

Have a solicitor currently looking at the loan agreement to try and pick any holes in it. When I discussed getting it settled with them they weren’t very forthcoming, however I didn’t push too hard.

I think Lucy means that they are a tax avoidance scheme pretending to be an umbrella company. It is actually very common and a source of great frustration to those running genuinely compliant brollies.

[Catscope]

Firstly, they are not an umbrella company, secondly they can do what they want if it is in the contract, can't see they would go legal if you didn't pay it as that would raise their head above the parapit.
Probably the only proper way to do this is to declare it to HMRC and face the penalites, clear the unpaid taxes and find a proper brolly.

Not sure on what you mean by not an umbrella company?

Getting all settled with HMRC and paying the tax owed. So in my eyes I’m ahead on that.

Have a solicitor currently looking at the loan agreement to try and pick any holes in it. When I discussed getting it settled with them they weren’t very forthcoming, however I didn’t push too hard.

[lucyclarityumbrella]

I have asked the umbrella to write off the loan. However they state there’s a clause that if they ask for the money back early they have to pay £1000 and aren’t willing to do so.
Does anyone have any advice going forward? Sack the accountant. Or follow his advice?

Firstly, they are not an umbrella company, secondly they can do what they want if it is in the contract, can't see they would go legal if you didn't pay it as that would raise their head above the parapit.
Probably the only proper way to do this is to declare it to HMRC and face the penalites, clear the unpaid taxes and find a proper brolly.

[cojak]

Oh and I will PM you separately - you will be a great case study for the thing I'm still working on to stop people getting into the mess you are in.

And for the avoidance of doubt, this is the exception to the rule - I'm OK with this. The OP won't get into further trouble if they choose to reply to eek's PM.

[eek]

1st priority, continue to talk to HMRC. 2nd priority is to get some professional advice, but be careful. The world of tax advisers is full of current and ex-scam artists. Luckily it's a pretty small loan exposure, I'm sure it can be sorted out but it'll cost you, for certain.

1) talk to HMRC and find out how much you owe in tax and pay that back (you have to January 31st 2022 so you have a year to find the money and there may well be additional leeway if you ask).

2) there is zero need to worry about tax advisors (beyond any free initial calls) as the amount is going to be small

3) the longer term issue is that loan exposure - but I suspect knowing its there and hoping it's written off is better than trying to force the issue at the moment. The fact the tax has been paid should mitigate some of the loan issues if it comes to ahead.

To the OP - did you read the contract before you signed it and does it have any mention of loans inside it. It does seem to based on the their comments about that £1000 for early repayment

Oh and I will PM you separately - you will be a great case study for the thing I'm still working on to stop people getting into the mess you are in.

[Fred Bloggs]

Do yous feel I should go on the offensive and try hard to get the loan written off. Or should I bide my time and wait and see what happens.

(HMRC are being dealt with separately if I’ve learnt anything from eek and the others, it’s that these are two very separate issues)

1st priority, continue to talk to HMRC. 2nd priority is to get some professional advice, but be careful. The world of tax advisers is full of current and ex-scam artists. Luckily it's a pretty small loan exposure, I'm sure it can be sorted out but it'll cost you, for certain.

[Fred Bloggs]

Are there any regulatory avenues that the individual can follow up on with respect to the agency in parallel with talking to HMRC? I am very surprised indeed that an otherwise reputable (?) agency could get away with directing people into a tax avoidance scheme these days. The agency will be getting a kick back, that must mean something can be followed up on somewhere? Agency is unlikely to be completely unregulated? It would be a tragedy if the agency can just carry on recruiting more folks into tax avoidance schemes that will fail whilst lining their own pockets. Good luck.

[cojak]

Do yous feel I should go on the offensive and try hard to get the loan written off. Or should I bide my time and wait and see what happens.

(HMRC are being dealt with separately if I’ve learnt anything from eek and the others, it’s that these are two very separate issues)

Do not bide your time - it will only get worse from here (and will only cost you more money).

Try to get the loan written off, speak to a reputable tax advisor. It may cost you a bit but it will be worth it for peace of mind.

And dob in the agency to the HMRC.

[Catscope]

Do yous feel I should go on the offensive and try hard to get the loan written off. Or should I bide my time and wait and see what happens.

(HMRC are being dealt with separately if I’ve learnt anything from eek and the others, it’s that these are two very separate issues)

[eek]

Completely nieve, believed everything the recruiter said. Disaster I know.

Currently anyone I talk too seems to get confused by what’s going on. I am at the moment going to settle things up with HMRC. Ask a solicitor to check the contract for the option agreement (loan) and see if it’s worth it’s weight in paper.

I know of 4 other people I work with in the same or much worse situation and I haven’t got the heart to tell them. The umbrella and agency’s just say ignore the letters from HMRC and they are taking them at their word.

If I hadn’t discovered this forum. I would be none the wiser.

If an agency is involved make sure HMRC are fully aware of the fact as they should be able to pass the issue back to the directors of the agency.

It won't solve all your problems but it will make you feel better known that the directors will be suffering a whole world of pain.

[Catscope]

Completely nieve, believed everything the recruiter said. Disaster I know.

Currently anyone I talk too seems to get confused by what’s going on. I am at the moment going to settle things up with HMRC. Ask a solicitor to check the contract for the option agreement (loan) and see if it’s worth it’s weight in paper.

I know of 4 other people I work with in the same or much worse situation and I haven’t got the heart to tell them. The umbrella and agency’s just say ignore the letters from HMRC and they are taking them at their word.

If I hadn’t discovered this forum. I would be none the wiser.