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Thousands of workers hit with massive tax avoidance bills

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2 hours ago, mrtickle said:

I hope they all burn. One of my ex-colleagues ended up being paid with these fake loans, and boasted that he was being paid minimum wage so that he paid some tax + NI (this was in 2009). The rest was all a free loan.

Everyone who benefited from these loans should be eviscerated. I don't mean the employers, I mean the employEES. Only if society at large is burned will people shy away from accepting tax-dodges in the future. People have to learn the hard way.

 

2nd thread.

Its a scam, believed by idiots.

 

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8 minutes ago, Quicken said:

I wonder if HMRC will be going after BOMAD. Plenty of 'loans' that will never be repaid there... 

Q

Err. You dont understand tax. Their money to waste, taken post tax.

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1 minute ago, spyguy said:

Err. You dont understand tax. Their money to waste, taken post tax.

Twas but an idle thought. I think all inheritance money should count as income, but I realise that's a bit radical atm. 

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1 hour ago, mrtickle said:

This.

And now, the rest of the people are going to end up with very large tax bills.

I'm shocked that anyone would say that they should be let off - that's disgusting.

 

My advice is -

Self employed, working rather than trading? Make sure you have >1 contract in 12 months. Otherwise youll be classed as an employee.

If you are self employed youll be able to take travel and accomodation off pre tax. Than pay tax on the rest, about 30 to 50%

Anything that offers to optimise the last bit is a scam.

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1 minute ago, Quicken said:

Twas but an idle thought. I think all inheritance money should count as income, but I realise that's a bit radical atm. 

Its not inheritance unless bomad are dead.

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2 hours ago, Ah-so said:

Over 10 years ago some "advisors", or snake oil salesmen, asked me "how would you like to pay no tax?"

I rejected straight away. I knew it would not hold water. The scheme they were selling collapsed as did the company and a lot of people ended up with very large tax bills.

The people who claim that they didn't understand that it was wrong are being disingenuous - when people are told there is a way to pay no tax through a special scheme, it is greed that drives them to sign up, not that they were pure victims.

I would agree.

As a retired accountant who is not a tax expert this is pretty obvious tax evasion - not avoidance. It's hardly surprising they're going people who have benefitted from this; and they have benefitted from it. 

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8 hours ago, spyguy said:

Id question where the income which has resulted in a 300k tax bill has gone. Divorce maybe?

These insane pay from a offshore loan shemes were so insanely screaming dodgy i fail to grasp how anyone smart enough to earn 50k would have believed them.

I know someone who was in one.

He seemed at the time we discussed it to think it was ok as he was from Jersey. Not quite sure how that would make a difference to someone living and working in London.

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My father in law was a supply chemistry teacher paying himself from the Isle of Man. Mate of mine at work was in a similar scheme. Both reckon they can legitimately pay 9% tax a year and both reckon their schemes are legit because the have a letter from a solicitor saying the scheme is above board. I haven't seen the letters myself. 

I understand a lot of temping nurses and teachers are in similar schemes. I think they started with  high flying professionals using them but as they became well known more and more people got involved the schemes became impossible for HMRC to ignore.

As pointed out, people In these schemes have taken a fictitious 'loan' with an overseas agency which they don't expect to repay. Most of the people running these schemes have now disappeared so they can't attempt to repay or modify the loan, but for some people whose schemes are still running there's the risk that these 'loans' could be recalled In full, that they send back the cash to the scheme holder who does a runner, then HMRC hits them for the tax anyway, leaving them with no wages at all and a massive tax bill. 

Bear in mind that these people will have been paying virtually no tax when the people they worked alongside paid their full due. They deserve what's coming to them. 

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2 hours ago, spyguy said:

My advice is -

Self employed, working rather than trading? Make sure you have >1 contract in 12 months. Otherwise youll be classed as an employee.

 

I've worked with contractors who have sat next to me for 4 years doing the same job. The UK automotive industry is full of them. PLEASE tell me how I can shop them, because they are certainly not being classed as employees at the moment.

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1 minute ago, mrtickle said:

I've worked with contractors who have sat next to me for 4 years doing the same job. The UK automotive industry is full of them. PLEASE tell me how I can shop them, because they are certainly not being classed as employees at the moment.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/reporting-tax-evasion

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31 minutes ago, regprentice said:

Most of the people running these schemes have now disappeared so they can't attempt to repay or modify the loan, but for some people whose schemes are still running there's the risk HOPE that these 'loans' could be recalled In full, that they send back the cash to the scheme holder who does a runner, then HMRC hits them for the tax anyway, leaving them with no wages at all and a massive tax bill. 

Bear in mind that these people will have been paying virtually no tax when the people they worked alongside paid their full due. They deserve what's coming to them. 

Fixed for you, and I agree with your last sentence wholeheartedly. Sick to my stomach of people boasting to my face that they are dodging tax and not getting caught. Some of them were dodging tax with schemes like these, AND BTL landlords as well on top. They now have section 24 on their backs and April to look forward to.

 

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I did some contracting abroad around the time these dodgy schemes were floating around.

I remember colleagues were reputedly using schemes like this.  

I thought it was incredibly greedy and selfish. I was on maybe 600 euros a day and I assumed they were too.  I just thought it was too ******ing greedy and too ******ing selfish not to mention dodgy as ****** for me to do it as well. 

I do hope they all got or get caught. But I doubt it. 

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11 hours ago, spyguy said:

Id question where the income which has resulted in a 300k tax bill has gone. Divorce maybe?

These insane pay from a offshore loan shemes were so insanely screaming dodgy i fail to grasp how anyone smart enough to earn 50k would have believed them.

I haven't got too much sympathy either.  I was a contractor in the UK between 2006-2011, one quite dodgy contractor I sat next to was seriously considering one of these schemes, but even he decided against it (his reasoning was what if they ever want their "loan" back).

 

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2 hours ago, mrtickle said:

Fixed for you, and I agree with your last sentence wholeheartedly. Sick to my stomach of people boasting to my face that they are dodging tax and not getting caught. Some of them were dodging tax with schemes like these, AND BTL landlords as well on top. They now have section 24 on their backs and April to look forward to.

 

I recall an IT contractor, earning 6 figures and with a BTL 'portfolio' approaching a dozen properties at the time, telling me a few years ago that he has never paid more than the basic rate of income tax, I imagine through the use of this scheme.

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7 hours ago, thirdwave said:

I recall an IT contractor, earning 6 figures and with a BTL 'portfolio' approaching a dozen properties at the time, telling me a few years ago that he has never paid more than the basic rate of income tax, I imagine through the use of this scheme.

I seems to go with  the territory.

Get someone off PAYE, get them paying their own NI IT.

Oh IM earning ...... I have to pay XXXXXXX.

Well, says accountant ... if you buy everyone cars, get wife as a secretary ....  we ca nreduce it a bit.

Sees saving, starts googling for more tax savings.

Stumbles into the wierd and wild world of tax advice - EBT offshore loan.

Then they see IO BTL. Im not sure why contractors have been drawn to mass IO BTL. But they have, in their 1000s. And this is the insane IO BTL - buy 1, extract money from 1, buy 2, extract money from 2, buy 3. Repeat.

I know a couple of contractors ho are paying little tax. But they are doing in the only legal way I know off - putting up to 40k into a pension.

 

 

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19 hours ago, EnglishinWales said:

Sweden is laughing their head off right now. Their system of mandatory publicly available tax data for every citizen protects them from such evils as this.

Whilst transparency may not be everyone’s cup of tea....an attitude of proudly paying your tax is something everyone should do.

In Greece (allegedly) they are great at not paying tax and it’s done wonders for them as individuals and their country as a whole 😉

Pay what is due, deduct rightly what you can ie costs...and be proud to pay that tax. 

Keep tax simple, fair and unavoidable. 

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55 minutes ago, spyguy said:

I seems to go with  the territory.

Get someone off PAYE, get them paying their own NI IT.

Oh IM earning ...... I have to pay XXXXXXX.

Well, says accountant ... if you buy everyone cars, get wife as a secretary ....  we ca nreduce it a bit.

Sees saving, starts googling for more tax savings.

Stumbles into the wierd and wild world of tax advice - EBT offshore loan.

I know a couple of contractors ho are paying little tax. But they are doing in the only legal way I know off - putting up to 40k into a pension.

True. 

As an employee paying higher rate, a LL (yep, apologies) and someone who has sold several properties I am no stranger to tax. 

No tax scams from me.  CGT paid on sales, income split 50/50 despite my wife having no other income etc. The only mitigate I used was the ability to offset interest. Which is why my cash pile was high and so was my debt. S24 should close that issue....pleased it has. 

However there is a problem. 40% tax with NI, P11D benefits and negative K codes means working 5 days a week and feeling 2.5 days are paid away.

So as your contractor friends did for 5 years I put 50/60% of my earnings into my pension....and lived off savings if need be. With other things (and that flipping k code) I still was a higher rate tax payer but overall in total I saved maybe £40k/£50k in tax. (Although will pay tax taking it out of the pension over the years to come...so a net gain of say £25k). 

Two points

1) despite being the very liberal in my views and leaning left wing in my politics....I have always struggled with proportionately higher taxes. If you charge someone 40% they will look at ways to legally avoid it. Particular into a pension

2) Yep, no idea about these ‘loans’ from offshore companies to avoid tax. Anyone sold into that scheme and able to avoid £300k tax knows it’s too good to be true. To save £300k is massive, the earnings must have been enormous. 

So overall, whilst I empathise slightly with the motive I cannot agree with the method. Earning such large amounts and paying little or no tax is wrong. If you can shave £5k off a £20k tax bill by paying into a pension...fair enough. But if you owe £40k tax and pay nothing...that can’t be right  

Tax should be simple, unavoidable and fair. 

Edited by Pop321

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11 hours ago, regprentice said:

 

I understand a lot of temping nurses and teachers are in similar schemes. I think they started with  high flying professionals using them but as they became well known more and more people got involved the schemes became impossible for HMRC to ignore.

 

I know someone who worked for Harris Academy for a short period and he had to go through the agency to get paid and they used one of these schemes, only know about it as I caught up with him at Christmas and he had the HRMC on his back about it.

I think it's unfair to penalise low paid workers who had no choice but accept the agencies terms compared to contractors on £500+ per day who willingly chose this scheme to keep under the 40% tax bracket.

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1 hour ago, Pop321 said:

 Keep tax simple, fair and unavoidable. 

 

50 minutes ago, Pop321 said:

Tax should be simple, unavoidable and fair. 

Or do I mean fair, unavoidable and simple? 😆

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1 hour ago, untakenname said:

I think it's unfair to penalise low paid workers who had no choice but accept the agencies terms compared to contractors on £500+ per day who willingly chose this scheme to keep under the 40% tax bracket.

At the tax dodge place they wouldn't bother with anyone earning less than £22ph. 

Just checked and the dodgy recruitment company is still going - looks like the directors have escaped HMRC's clutches. Sk1llsAll1ance - dirty dealers. 

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