Talent Resource Management Situation - What are you going to do

[NotAllThere]

Not that I'd get into the position, but I'd choose 3 and 5.

[blacjac]

As i deliberate what to I was just wondering what you are going to do

Sit back and laugh?

Seriously though, it looks like you've done your homework, and accepted that your girlfriend is correct, you do owe the tax.

It never ceases to amaze me how people will try to avoid paying tax they know they owe by joining some 'scheme' the will allways get closed down after a couple of years....

[u9k82]

As i deliberate what to I was just wondering what you are going to do or what you would do ?

There are some of us here who used this scheme knowingly , there are some of us here who believed they were compliant and believed the sales pitch

However we are all in the same boat

I've spoken to several tax experts and the message is the same

If you delcare the loan you are going to pay Tax and NI on the outstanding amount and it will be treated as earnings for that year you declare it.

The fact is IF TRM is operating legally through some loophole . A law will be passed and at some point the scheme will be closed down .The scheme states that it is legal - it may be! . But what if the law changes! the tax man will come knocking .They will close down TRM and get a list of all its past users.

So its not a matter of IF we will have to pay its a matter of when! approaching the HMRC is always better than being investigated.

As the loans are bona fide employee loans and we a re paying interest , not tax is due until the loan is repaid or written off or the scheme is closed down.

To quote my girlfriend " Pull yourself together you actually owe these taxes anyway its not as if your expected to pay anything you dont owe!"

Options to consider

1) Get TRM to write off the whole loan and declare this to HMRC in april 09 for payment due in Jan 2010 - Start saving expect to pay at least 40 -50 % of the total loan amount based on if you leave TRM and go running to a compliant umbrella . the umbrella company will ensure you utilise your 36000 allowance taxable at 20 % (its 40 % tax for high earners) This to this years earnings , the whole loan ill be tavable at 40 % and NI at 10 % therefore 50%!!! - 60k loan - 30k tax bill in Jan 2010

2) Explore the possibility that TRM is a "closed" company . IF you can prove that TRM is a "closed" company and you are a "participator" then when the loan is written off it will be treated as if you have recieved a dividend for that amount - start saving but only expect to pay 25% tax on dividends (35 % for higher bracket net 10 % tax allowance)

3) Try and get TRM to write the loan off in chunks By doing this you can pay off chunks of the tax owing over how many years you want . Say your loan is 60k , you may choose to write off

20k written off in April 2009 - 10k tax bill in jan 2010
20k written off in April 2010 - 10k tax bill in jan 2011
20k written off in April 2011 - 10k tax bill in jan 2012

This may be one option of avoiding bankruptcy (If redding /TRM agree). If the scheme is closed down 2 years into your 3 year plan then all has gone to plan and you still will owe the final third

It relaistically going to take a few years to get a law passed

4) Ask for Time to Pay There is a scheme with HMRC where they give you payment options and time to pay the monies outstanding. I would suggest combining this option yearly with option three above you will pay interest but its another way of keeping your head above water

5) Work and live Abroad for two or three years If you are living in a foriegn country you pay tax in that country . You can still declare the loans as earning in the uk . If you declare a 30k loan april 2010 , providing your out of the counrty the whole tax year, then the loan will be classed as uk earnings for that year and you will be under the 36000 earnings limit therefore liable to 20% tax and NI , OR be away for two or three years and combine this option with writing it off in chunks

6) Bury your head in the sand and hope HMRC forget about potential millions

The options above are just my thoughts and no way reflect the opinions of a tax expert

My personal line of attack ?

1) = 2+4 - Dividend tax with time to pay
2) = 3+4 - Writing off the loan in three equal chunks over the next 3 years
3) = 1+4 - Take the bullet and declare in april 2009!
4) = 5+4 - Work abroad for a few years and write the loan of in chunks under the 36000 threshold

What are you going to do or what would you do!