Premium Bond Syndicate Agreement

andybrock

opinions4u wrote: »

I'd say not. Take legal advice before doing anything. The individual holder of the PBs is potentially creating a situation that would be beyond traumatic for his family.

From HRMC:

No liability to inheritance tax arises on winnings by a football pool, National Lottery or similar syndicate provided that the winnings are paid out in accordance with the terms of an agreement drawn up before the win.

Where for example football winnings are paid out, in accordance with a pre-existing enforceable arrangement, among the members of a syndicate in proportion to the share of the stake money each has provided, each member of the syndicate receives what already belongs to him or her. There is therefore no ‘gift’ or ‘chargeable transfer’ by the person who, on behalf of the members, receives the winnings from the pools promoter.

Members of a pool syndicate may think it wise to record in a written, signed and dated statement, the existence and terms of the agreement between them. But HM Revenue and Customs cannot advise on the wording or legal effect of such a statement, nor do they wish copies of such statements to be sent to them for approval or registration. Where following a pools win the terms of an agreement are varied or part of the winnings are distributed to persons who are not members of the syndicate, an IHT liability may be incurred. The same principles apply to premium bonds syndicates and other similar arrangements.

andybrock

Sampong wrote: »

Because mathematically - there is no point to doing it. AFAIK you can post your opinions on here as long as they're not offensive so I thought I would point that out, even though the point I made doesn't seem to have been comprehended.

But if the OP still wants to proceed, then that is his/her choice.

It could be construed as a collective investment scheme though, so he/she might want to check that with the FSA ( as if it did turn out to be a collective investment scheme it would need to be regulated);

http://www.joelsonwilson.com/news/briefing-notes/collective-investment-schemes

So would this apply to a lottery syndicate?

talexuser

The question is whether the syndicate agreement is legally binding because taken out before signing the T&Cs of the bonds, or whether the bond ownership takes precedence. I would say the later signing, ie taking out the bonds, is the legal agreement since you have signed the bonds T&Cs, which voids the previous syndicate agreement. So any winner can keep all the money. Can't see how a judge would rule that money can be split when won specifically against the rules of the draw in the first place.

If then you decide to sign the agreement after signing for the bonds, then you have broken the T&Cs of the draw and will be ineligible for any winnings - if they find out.

andybrock

talexuser wrote: »

The question is whether the syndicate agreement is legally binding because taken out before signing the T&Cs of the bonds, or whether the bond ownership takes precedence. I would say the later signing, ie taking out the bonds, is the legal agreement since you have signed the bonds T&Cs, which voids the previous syndicate agreement. So any winner can keep all the money. Can't see how a judge would rule that money can be split when won specifically against the rules of the draw in the first place.

If then you decide to sign the agreement after signing for the bonds, then you have broken the T&Cs of the draw and will be ineligible for any winnings - if they find out.

:eek:


???

Its not that complicated.
One person purchases the bonds as per the t+c's.
As far as NSI is concerned thats it-that individual has complied.
The agreement is between the other parties and totally independent.
They will not be remotely interested what the individual would do with the money.
You must realise premium bond syndicate are well established-have you ever heard of a case were the manager of the fund was refused a prize due to a syndicate been formed ??;)

andybrock

vectistim wrote: »

Irrespective of other syndicates existing, I suggest you check with National Savings.

With Premium Bonds there is a limit to the number that any person can own. In that case syndicate membership should decrease the number any syndicate member can own in their own right, in order for that to work National Savings would presumably need to know what stake each member had in the syndicate.

I would _imagine_ the best approach would be for each member to own their own bonds but then make some undertaking with the rest of the syndicate members to share their winnings.

Looking at some earlier posts you seem to say this would not be possible, although I can't imagine why. What happens if under the single investment syndicate the person in whose name all the bonds are held goes bankrupt, gets divorced or has some other financial calamity?

Only an individual can purchase a holding.
What you do after purchasing the bonds is no concern to NSI.
An agreement is drawn up to address the issues in your last paragraph.
The T+C's are clearly laid down by NSI.

Vortigern

So far we've considered what might happen to the £1M potential winnings if the holder should die within 7 years of the win. Any agreement would have to consider what would happen to the stake money (the PB holding) if the holder should die. Would this stake money form part of the holder's estate, and how would it then be distributed?

I have no answers, only questions. Sorry

talexuser

andybrock wrote: »

Its not that complicated.

Unfortunately it is that complicated because the winner of a large sum (in his own name) might want to keep it for himself. The only way this is going to work is on absolute trust, and if you have that trust you don't need an agreement which might well be dubious in law and not comprehensive enough to meet all the eventualities that have come up in this thread, and those that have possibly not yet.

alanq

Apart from issues in the event of a win, doesn't depositing funds for others' benefit while stating that you are the beneficial owner risk being labelled as money laundering?

A savings account is different to a lottery as syndicates can openly buy lottery tickets.

Another issue that occurred to me was the possibility of the distribution of shares of the prizes being regarded as deprivation of assets for the purposes of means tested benefits. Any sum held in a claimant's name would almost certainly be counted as their asset.

andybrock

talexuser wrote: »

Unfortunately it is that complicated because the winner of a large sum (in his own name) might want to keep it for himself. The only way this is going to work is on absolute trust, and if you have that trust you don't need an agreement which might well be dubious in law and not comprehensive enough to meet all the eventualities that have come up in this thread, and those that have possibly not yet.

This has already been discussed in earlier posts and the fact that trust is required.
The agreement covers the following as stated by HRMC:


No liability to inheritance tax arises on winnings by a football pool, National Lottery or similar syndicate provided that the winnings are paid out in accordance with the terms of an agreement drawn up before the win.

andybrock

alanq wrote: »

Apart from issues in the event of a win, doesn't depositing funds for others' benefit while stating that you are the beneficial owner risk being labelled as money laundering?

A savings account is different to a lottery as syndicates can openly buy lottery tickets.

Another issue that occurred to me was the possibility of the distribution of shares of the prizes being regarded as deprivation of assets for the purposes of means tested benefits. Any sum held in a claimant's name would almost certainly be counted as their asset.

Isn't it strange how the HRMC openly give advice on the tax implications on running such a scheme.
Are you really being serious when suggesting the above.:o
With a written agreement in place(regardless of its legal status) which would be fully transparent not suffice.