What are the risks?
The participants of EBTs that have been highlighted in many reports, tend to have gone into the schemes in good faith, often as a result of very aggressive and glossy marketing and have been left with little support when challenged by HMRC, a large legal bill, and the prospect of a large tax bill hangs over them.
For an oil and gas contractor earning the industry average day rate of £540, and operating under an EBT scheme, an HMRC claim for tax avoidance, over a ten year period, would amount to almost £150,000 – add penalties at the same rate as Rangers FC and you would be looking at £225,000 (which you would have to foot the bill for)!
As mentioned in last week’s blog this is a hot topic for HMRC who have upped their game in their battle with offshore tax planners who market such tax schemes to contractors.
The future for EBTs…
EBT schemes are no longer effective as a tax planning vehicle from December 2010 as legislation was effective from then, with HMRC arguing that many were never effective, but tax evasion.
Schemes may well be promoted in the future, and it is probable they will have a QCï¿½s opinion and the provider will tend to be evasive about disclosing information to you about it. What you can be certain about is HMRC will target schemes that consider to be scams and it will be YOU the client of the scheme who is left with the tax investigation.
Our advice to you is that as soon as you think you may have cash flow problems, speak to your accountant. We are trained in how to deal with these situations and can you through the maze – contact us for more information.
Chancellor announces that IR35 reform will be scrapped
IR35 reform in both the private and public sectors is to be repealed, the Chancellor announced in the mini Budget, held on Friday 23rd September.
This surprise development made up just one of many welcome tax changes, as Liz Truss’s new-look government promised to start “a new era” and unleash the potential of UK business.
Why is accounting for a start-up business important?
Why do some start-ups succeed while others are doomed to fail?
It’s an often-quoted statistic that around 60% of businesses fail in their first three years – with 20% folding within just twelve months.
Why freelancers should hire an accountant
In the world of work, freelancing is an increasingly popular option. The promise of flexibility, unlimited earning potential and complete control over the way you work is a hugely attractive prospect for many.