EISS investments

bowlhead99

Pincher wrote: »

Obviously, the payroll department set up the PRP scheme purely to save on tax, ignoring the original intent, and was obviously evading tax, and Inland Revenue (HMRC) could have just declared it evasion, but they just pulled the PRP scheme, and we kept the tax saved.

Yes, the old PRP schemes were very neat, and started to snowball by the mid 90s when HMRC research showed huge numbers wouldn't have been set up were it not for the tax breaks. At one point before the government announced the phase out in '97, there were about 15000 schemes registered. You could get up to 20% of your salary (or £4k, whichever higher) paid as "profit related" tax free.

My company (a big accounting firm with thousands of UK staff) took 20% of salary and said it was profit related, and then paid us 95% of that each month anyway as an interim payment based on their projection that they'd hit the target, and then the 5% at year end was paid out. Even if the 5% of the 20% hadn't been paid out we'd still have been very happy with the tax result.

I remember explaining it to a junior member of staff while out at a client and said it was a simple tax dodge which the government knew about and sanctioned which is why they had a specific limit on it in terms of £ per year per person. My manager was at great pains to point out that that it *wasn't* just a tax dodge honest guv, while in earshot of the client. But of course it was, and the client's company was using it too.

However, the PRP schemes were at least using published government rules and limits which had been in place for a decade before it started to be phased out, when all the mainstream benefit consultants and accountants were recommending them to all and sundry, and then the limits were phased downwards after government cottoned on and the schemes stopped being used, without any grave punishment for most of the 10,000+ firms doing it.

Whereas the scheme from the OP is perhaps just some group with a quirky idea of structuring insurance products and loans to create guaranteed cash flow and selling that to companies as a service which is nobody would want other than to save tax by pushing their payroll through layers of complexity. It might work technically on paper but if the sole objective is tax avoidance and there are only tens of firms for HMRC to throw the book at instead of tens of thousands, it's the kind of thing that can get squashed.

Still it's the kind of thing where you'd expect HMRC to hit the companies concerned rather than the hundreds of employees acting in good faith - but that doesn't guarantee you are in the clear as an employee who benefitted from it.

Pincher

That's a sequel idea:

Dodgy and Dodgier
- a tax dodger tale

Jim Carrey has played a lawyer before.

Patton22

Yes it was the printing firm.

Patton22

They said they'd take 18% of your tax (take home pay never changed) and that you'd be given a loan each year that would be paid off with whatever interest coporate solutions made. The scheme was over 5 years. They said you could draw the money out within the 5 years but get taxed. Once the 5 years was up, you would receive the money tax free. We were all assured it was legal and above board. At the minute I'm not bothered about the payment I just don't want a huge tax bill. Thanks