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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15747
Experience:  International tax
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Ive been a sole trader for some years and paid full rates

Resolved Question:

I've been a sole trader for some years and paid full rates of tax. I have been approached by a company which offers a system where I am contracted on the minimum wage and the balance of any income is paid as a loan from a Trust. Is this legal?
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
HMRC warns of any scheme to avoid tax on income. Tax avoidance scheme promoters sold contractor loan schemes with a variety of different features but they all involved individuals signing an employment contract with an offshore company and receiving a large proportion of their income in the form of a 'loan' from their employer - either directly or through an intermediary.
I think you should be careful when accepting any contract if it is presented as a way to lessen your tax.
It would not be illegal but you would still need to report the amount as income.
Customer: replied 3 years ago.

From your answer there would appear to be no tax advantage to taking this approach on the basis that if I report the "Loan" as income it would still be liable for the full rate of tax. Is this correct?

Expert:  TaxRobin replied 3 years ago.
That is correct unfortunately. HMRC would not see this as anything but income to you.
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