Offshore Umbrella Co

[northernladuk]

The silence is deafening on this one as well !!!

I think that is more a case of WGAS rather than cannot answer sorry.

[geoff from contracta IOM]

There has to be tax paid on the "LOAN AMOUNT" when it changes to income - when is that due? When the contractor leaves the scheme? when he dies? when the trust shuts down?

Sorry for the delay thought it was rhetorical . When will the loan be repaid ? It will depend on the trustees I can't ask them i'm afraid as it is none of my business.

[andyc2000]

Sorry for the delay thought it was rhetorical . When will the loan be repaid ? It will depend on the trustees I can't ask them i'm afraid as it is none of my business.

Surely this loan is the very basis of your business. Anyway as far as I can tell, typically it's a 50 year loan. If you are still alive at that point the loan will get extended for another 50 years. When you die it needs to be declared to your estate as outstanding and presumably will get written off at this point, as it's unsecured.

Who knows what happens to said loan if the trust goes kaput - debts can be sold on and then the new owner of the debt can do what they like with it, the nature of this means that there is no way to protect against this, you just get verbal assurances that this won't happen.

[geoff from contracta IOM]

Surely this loan is the very basis of your business. Anyway as far as I can tell, typically it's a 50 year loan. If you are still alive at that point the loan will get extended for another 50 years. When you die it needs to be declared to your estate as outstanding and presumably will get written off at this point, as it's unsecured.

Who knows what happens to said loan if the trust goes kaput - debts can be sold on and then the new owner of the debt can do what they like with it, the nature of this means that there is no way to protect against this, you just get verbal assurances that this won't happen.

You obviously haven't done much research on trusts

[andyc2000]

You obviously haven't done much research on trusts

I knew you knew more than your were letting on! Please enlighten me.

[andyc2000]

You obviously haven't done much research on trusts

Also I never said I knew alot about these sorts of trusts, the statement "Who knows what happens...if the trust goes kaput" should've given that away.

[geoff from contracta IOM]

Sorry Andy I didn't mean to give the impresssion I do not know about trusts, i'm a trust and estate practitioner so I know how to form and manage trusts for clients but in the case of the scheme I promote the trust is managed by trustees independent of Contracta.
Trusts cannot go Kaput or go into insolvency or liqidation a trust is essentially a deed thats confers responsibilities on a person ( trustee ) to look after chatels or property for another person or persons. The underpinning principle of trust law going back to their creation at the time of the crusades is that the trustee MUST act in the best interest of the beneficiary at all times and are accountable to the courts in this regard.
The burden of obligation placed upon trustees with regard to protecting the beneficiares provides unparelled levels of protection to those using trusts for any purpose including beneficiaries borrowing from trusts.

This might help explain trusts in more detail


Trusts Explained

[LisaContractorUmbrella]

Interesting article Geoff but it doesn't seem to support the idea of a contractor using a trust to process invoice payments:

Trusts are occasionally represented by some commentators as just devices to avoid tax. In reality, there are virtually no circumstances in which anyone would be well advised to set up a trust just to gain tax advantages. In setting up a trust, the settlor is giving up ownership of the assets in the trust. Such a dramatic move will normally only make sense if the settlor has clear objectives that they wish to achieve with those assets, and tax is likely to be a secondary issue.
In most countries, any tax advantages given to trusts are, in any case, tightly targeted by the tax authorities at trusts that are seen as doing a social good. Charitable trusts are an obvious example, but trusts set up to look after vulnerable or disabled relatives also often attract some tax advantages. Another example is the favourable treatment the Canadian authorities give to immigrant trusts. It goes without saying that there are quite strict rules about the sorts of trusts that attract significant tax advantages and the tax authorities tend to police those rules closely
Most other trusts attract relatively few tax advantages. In the UK, for example, the official position is to pursue a policy of being tax neutral towards most trusts, so that the tax system neither encourages nor discourages anyone from setting up a trust (although, in practice, most professional advisors think the UK tax system now actively penalises some types of trust). In line with this policy of fiscal neutrality, the trustees must give the UK tax authorities full details when a trust is established and are generally personally liable for taxes due on the trust.

[geoff from contracta IOM]

Interesting article Geoff but it doesn't seem to support the idea of a contractor using a trust to process invoice payments:

Trusts are occasionally represented by some commentators as just devices to avoid tax. In reality, there are virtually no circumstances in which anyone would be well advised to set up a trust just to gain tax advantages. In setting up a trust, the settlor is giving up ownership of the assets in the trust. Such a dramatic move will normally only make sense if the settlor has clear objectives that they wish to achieve with those assets, and tax is likely to be a secondary issue.
In most countries, any tax advantages given to trusts are, in any case, tightly targeted by the tax authorities at trusts that are seen as doing a social good. Charitable trusts are an obvious example, but trusts set up to look after vulnerable or disabled relatives also often attract some tax advantages. Another example is the favourable treatment the Canadian authorities give to immigrant trusts. It goes without saying that there are quite strict rules about the sorts of trusts that attract significant tax advantages and the tax authorities tend to police those rules closely
Most other trusts attract relatively few tax advantages. In the UK, for example, the official position is to pursue a policy of being tax neutral towards most trusts, so that the tax system neither encourages nor discourages anyone from setting up a trust (although, in practice, most professional advisors think the UK tax system now actively penalises some types of trust). In line with this policy of fiscal neutrality, the trustees must give the UK tax authorities full details when a trust is established and are generally personally liable for taxes due on the trust.

Lisa I know you love the broad brush approach but sometimes taxation issues are a bit more complicated that those discussed in wide appeal industry literature. The leaflet is designed to be understood by the man or woman in the street, it basically means don't assume that if you set up a trust you will get a tax benefit they are however one of the most sucessful and widely used instruments in IHT planning and other areas of tax mitigation.

[LisaContractorUmbrella]

Lisa I know you love the broad brush approach but sometimes taxation issues are a bit more complicated that those discussed in wide appeal industry literature. The leaflet is designed to be understood by the man or woman in the street, it basically means don't assume that if you set up a trust you will get a tax benefit they are however one of the most sucessful and widely used instruments in IHT planning and other areas of tax mitigation.

Oh right, so what your saying is that the industry literature (that you provided the link to) is incorrect and that the average man (or woman) on the street is too stupid to understand tax mitigation