Umbrella Loan Agreement


Posted by lapi | Posted in Uncategorized | Posted on 13-10-2021

Whatever your views on HMRC`s retroactive measures towards users of credit systems, it should be clear that the risks associated with the use of tax avoidance agreements far outweigh the long-term benefits. Anyone who works as a freelancer or subcontractor should be extremely careful when a system charges an unrealistic share of income as a salary at home – even if these systems are covered by current legislation, measures taken through credit programmes prove that HMRC can consider them tax evasion and impose penalties at an indefinite date in the future. Therefore, we will not change our minds – liberal professions and contract workers should always be paid with compliant, proven and proven means, such as an umbrella company or a limited liability company, by organizations that take seriously the financial security of their customers and offer services such as IR35 in order to ensure that contractors are always paid fairly and compliantly. Contractor loan schemes (or, as the government calls them, disguised remuneration agreements) take many forms – but the underlying structure is that a self-employed or contract worker signs an employment contract with an employer or EBT (Employment Benefit Trust) that is normally outside the jurisdiction of the continental United Kingdom. The employer then pays the contractor in the form of tax-exempt “loans” – which appear on paper as loans, but must never be repaid. In return, the system provider accepts a percentage of the contractor`s income as an “administrative fee”. If you are one of the tens of thousands of people who are already under investigation by HMRC, it is likely that you will already have legal advice – the heart of the matter is that the tax should be refunded before 6 April 2019. There are concessions if you speak to HMRC and reach an agreement before that date – if you earn less than £50,000 a year, repayments can be spread over five years and if you earn less than £30,000, repayments can be spread over seven years. This is not as generous as it seems – the fact that interest is charged on outstanding amounts during the repayment period shows that HMRC does not offer much leeway to users of these systems. If you are currently using a credit scheme (which is unlikely as the operators of these schemes have been largely discouraged by the strong measures taken against them), be warned that HMRC does not seem to accept any defences in terms of naivety, ignorance or deception – considering that you have personally avoided income tax, your motivations are not taken into consideration…

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