quote:
Originally posted by thebillet
As I understand it you cannot use these trusts to cover contractual arrangements e.g. salary and hence Amca's comment that agents will have a written record from the club that the players don't have to repay these "loans".
An EBT was exactly for that purpose, Employee Benefit Trusts were used to reward employees hence salary paid staff. The full benefit of an EBT scheme was best served from an offshore source, I'm not sure in this case but have been advised that RFC were trying to do this through a UK based solution and only moved it at a later date to offshore. By doing this they have operated outside of the guidelines and become non-compliant.
There are a few Premiership clubs that have used these payment methods in the past and never faced any problems. If you use professional people in this field then you should have no problems, use your Brother's mate's accountant and you are asking for trouble.
Loans paid out on these and similar solutions have certain hallmarks they must meet, they must accrue interest at the recommended rate of 4.5%, they must be paid back and they cannot be written off. Most users prefer the forex way of paying back the loan as this is easily controlled and can be spread over the recommended time span of 5 years. The user will only be liable for the tax element of the interest e.g. £80000 loan = £640 bill.
Loopholes are everywhere in the UK tax system and they will always be used by those wanting to reduce the amount of tax they pay. If HMRC were to change the tax % to a fairer one like 20% across the board, you would find that hardly anyone would use solutions because the companies running them would have to reduce their fees and it would not be worth their while doing so. If HMRC think they are getting 50% of my money they can think again, 20% everyday of the week but never half!!
