Employee Benefit Trusts

Worcsman

I am considering using one of these for a UK based contract, the trust is based in Cyprus and I am told by the guy selling the trust that it is above board and totally legal, indeed it seems to be but what if HMRC go after me.. Can they? They cant go after my employer as he is based in Cyprus. I do believe that if something is too good to be true then it is but it looks like I will pay around 5% tax instead of top rate plus 15% for the running of the trust, so all in all I retain 80% of my cash. This is better than any other scheme I have seen and better and more straight forward than a ltd company (cant anyway due to IR35 problems) but I am dubious.
Anyone have any experience with these EBT's?

For those interested, I will get paid 12k a year and the rest will be paid in loans that will be written off. How can something so dodgey sounding be legal?
Thanks for looking.

JasonLVC

EBT's are public enemy No.1 for HMRC. The budget that finished a few hours ago has anti-avoidance legisltion which will come into effect next year to kill off the more shady sides of EBT's.

They can (and do) work, but HMRC will attack them with aggression and they are very good at winning their arguments.

Get quotes from several providers, not just one becuase the schemes are different and individual, some work better than others based on the circumstances.

As soon as the loan is cancelled, paid off or written off, it becomes a benefit in kind which is taxable so you'll not 'just pay 5%' so the benefits are not quite as good as being proposed. Finally, have a look at this link which talks about some recent case law and attitudes :-

http://www.itcontractor.com/Articles_IR35_News_Advice/view_article.asp?id_no=6038&photopage=0

Worcsman

JasonLVC wrote: »

EBT's are public enemy No.1 for HMRC. The budget that finished a few hours ago has anti-avoidance legisltion which will come into effect next year to kill off the more shady sides of EBT's.

They can (and do) work, but HMRC will attack them with aggression and they are very good at winning their arguments.

Get quotes from several providers, not just one becuase the schemes are different and individual, some work better than others based on the circumstances.

As soon as the loan is cancelled, paid off or written off, it becomes a benefit in kind which is taxable so you'll not 'just pay 5%' so the benefits are not quite as good as being proposed. Finally, have a look at this link which talks about some recent case law and attitudes :-

http://www.itcontractor.com/Articles_IR35_News_Advice/view_article.asp?id_no=6038&photopage=0

Thanks for the reply, it's really tempting in the short term, I have read a lot about them from bad to good but no indifferent. I'm very tempted to take a risk. i have used umbrella companies for years but not for working in the UK. I just dunno what to do this time around.