Employee Benefit Trust

What are the differences between EBT solutions?

dickon — Tue, 13 Jul 2010 13:04:59 +0000

There are any number of reasons why this may be the case, however the most important factors to consider in choosing an EBT provider are their commitment to compliance and the quality of their payroll systems. Bedouin provide the very highest standards in both these areas, ensuring peace of mind and accurate, timely payments.

An important difference that can be found in the legal structure of EBT solutions, is in how payments are made out of the trust, and how these are accounted for. The solution we propose uses a loan mechanism to disburse funds from the trust, to the beneficiaries (you the contractor). Because a loan is made, it is declared to HMRC, and tax is paid upon it at the Benefit in Kind tax rate.

This ensures that all monies received are fully declared and tax paid, and that there is no tax avoidance, which could potentially be construed to be the case in a less robustly constructed trust arrangement.

Additionally in comparison with one high profile competitor, we make a more conservative calculation of the money to be paid as PAYE – we set this as either the national minimum wage or 15% whichever is the greater. The important point here is that your living salary (as opposed to discretionary EBT loans) is a credible and realistic salary.

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How safe is my money?

dickon — Tue, 13 Jul 2010 12:56:23 +0000

Should Bedouin ever go into administration, the Trust and your loans would be protected due to the Trust being an entirely separate entity to Bedouin (in a similar manner to your pension being held in a separate trust to the pension Company issuing it). Don’t forget that the “loan” is never written off. It merely stays on the asset register of the trust for 6 years; after that, the accountancy term is that the loan “falls away”. What this means is that there’s a footnote to the effect that the loan is unlikely ever to be repaid.

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If I receive money as a loan surely I would need to pay it back? There are a number of reasons that you will never...

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If I receive money as a loan surely I would need to pay it back?

dickon — Tue, 13 Jul 2010 12:55:00 +0000

There are a number of reasons that you will never be asked to repay the interest free loan. Firstly, it would contravene the deeds of the Trust (i.e. the rules by which it’s run), which state that all actions of that trust have to benefit the employee (i.e. you). It’s a benefit to you for the trust to lend you the money and it’s NOT to your benefit to repay that money. It’s merely a discretionary loan from the Trust to you.
Secondly, there are no loan agreements signed between you and Bedouin. We don’t register that loan with any credit agencies, so it won’t show on your credit file; it’s just a private agreement. Another very good reason the loan will never be called in is that our business proposition would be compromised and our business and its unique solution would cease to have value. We would, in effect, be shooting ourselves in the foot!

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Do you partner with agencies?

dickon — Tue, 13 Jul 2010 12:52:57 +0000

There are many advantages to agencies of partnering with Bedouin. Contractor attraction, contractor retention and competitive advantage are three major ones. The Bedouin solution represents something contractors want and Bedouin can help attract and retain the best candidates by giving higher net returns to those contractors, giving NetworkersMSB a competitive advantage.

We believe to only offer your contractors a choice of Umbrella Companies all offering the same product, is no choice at all.

Bedouin is no stranger to the myriad of rules and regulations regarding compliance in the areas in which it operates. Should you have any specific concerns regarding any of these areas, we would be happy to offer whatever support you need to put your mind at rest regarding the full compliance of our solution.

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Who uses Bedouin?

dickon — Tue, 13 Jul 2010 12:52:26 +0000

Bedouin’s solution is therefore not only legal, but is one of the few remaining tax-efficient working styles for contract workers. It falls outside of the scope of MSC and IR35 legislation and we make all tax and NI deductions as they fall due. Indeed, we consider our product to be one of the most robust available in the marketplace – also producing some of the best rates of return receipts.

EBT’s are a widely-used and long-standing financial vehicle used to provide employee benefits since Victorian times. The Bedouin solution is sound and legally robust and we are now on the ASL or PSL of many of the larger recruiters and city employers. We currently do business with Elan, Hays, Manpower, Adecco, Reed, Capita and Spring, among literally hundreds of other agencies.

We also have contractors on site at many major employers including Credit Suisse, RBS, Morgan Stanley, the FSA, the BBC and the Financial Ombudsman. In addition, many contractors are now choosing our solution, rather than use ‘umbrella’ companies, largely because the single-person and ‘expenses’ solution are no longer as tax efficient as they were – and are now coming under a greater level of scrutiny from HMRC. As a Bedouin employee, their administration, tax payments and invoicing are taken care of by us, and we include base-level accounting in our package.

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What type of Payroll Solution is Bedouin? For the record, Bedouin is a multi-disciplinary consultancy and provides...

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What type of Payroll Solution is Bedouin?

dickon — Tue, 13 Jul 2010 12:51:46 +0000

For the record, Bedouin is a multi-disciplinary consultancy and provides full employment – with all associated benefits – to all our staff. In that way we are akin to Cap Gemini and Manpower, and considered a bona-fide consultancy supplier by HMRC in the UK, although the employment we offer is more tax efficient. We offer a fully-disclosed and tax-paid solution, compliant with all relevant tax rules in the UK and which is not considered a tax avoidance product by HMRC.

Our solution was designed by a veteran of international tax planning who was behind a number of previously successful iterations of tax-efficient contractor vehicles. We are currently in the process of obtaining an official legal counsel for our solution and, during the design phase of our business model, we consulted closely with Andrew Thornhill QC, one of HMRC’s top tax lawyers, who confirmed that the Bedouin business model adheres fully to all relevant HMRC legislation.

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5 Benefits of an EBT Payroll Solution

Sun, 11 Jul 2010 14:10:49 +0000

You keep 85% of your contract value

It is hard to talk about this benefit – simply because it is so clearly obvious why this is important! The take home net pay resulting from using an EBT is around an additional 20% for most contractors, which is the same as working for 5 days and being paid for 6, or to put it another way you could instead work for 40 weeks a year in place of 48. Where would you go with all that free time?

There are no expense claims to keep track of

Which contractor does not find expense claims to be a right royal pain? How much would you like to know that you would never need to waste time and energy dealing with this unwanted and un productive administrative overhead?

IR 35 does not figure in the picture

Rather than have to qualify as a contractor through avoidance of falling within the IR35 legislation, which is designed to ensure that contracting does not yield appreciably more take home pay than PAYE, you can also fall outside of all of this legislation and therefore not worry about ever being re-classified and hit with an unexpected tax bill.

You qualify for a referral commission, simply by being paid via an EBT

Because it pays not to advertise EBT schemes, but because like all good businesses we wish to grow, being paid via the EBT qualifies you for a referral commission of 1% of all income paid out to your referee. Put another way, if you are the first in your team to catch on and can spread the benefits to 5 other people, there is an additional 5% pay rise on top of the 20% you have already netted by changing across your own payroll. In today’s economic climate, not many people are going to be the beneficiaries of such a big jump in pay without having first invested heavily in gold.

There are no set up fees

Unlike previous high yield schemes, there are no complicated tax efficient vehicles to set up, no up-front costs, you only pay fees upon any pay which you receive (deducted before your 85% net pay out)

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What is an Employee Benefit Trust?

Sat, 10 Jul 2010 14:17:24 +0000

An Employee Benefit Trust is:

A 100% legal way to keep hold of your hard earned money (up to 30% extra every month) and in this economic climate, that will make a massive difference to your comfort and security.

An Employee Benefit Trust is not:

An Umbrella company offering;

A Managed Service Company;

An investment scheme. The value of an investment can go up as well as down. Instead YOU simply keep more of YOUR own money.

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Why isn’t everyone doing this?

Fri, 09 Jul 2010 14:31:27 +0000

It is only recently that an offering which takes advantage of the opportunities afforded by off shore tax schemes, has been developed and offered to the lower salaried contractor. Until recently these arrangements have been the privilege of the super rich, but now through the application of the same laws, efficiently processed and then offered to a more mainstream audience, it is possible for you to similarly benefit.

Post from: Employee Benefit Trust

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BN66 / Montpelier

dickon — Thu, 01 Jul 2010 13:03:57 +0000

The ruling in favour of HMRC in respect of the application of retrospective taxation per BN66 applies only to the tax avoidance scheme that made use of limited partnerships and the double taxation treaty between the Isle of Man and UK. The way is now clear for HMRC to pursue contractors who made use of that scheme for retrospective taxation. It is likely however (but as yet cannot be confirmed) that a case will now be taken before the European Court of Human Rights where the ruling may or may not be overturned. There is no precedent in the European Court in such a case and so the outcome cannot be determined. It is the case however that there is a clear contravention in human rights where law or legislation is changed or implemented after the fact, as in this case.

Because we do not make use of this double taxation treaty Bedouin does not and has not ever operated such a scheme and as such is not affected by the ruling. Being based around a direct employment model and because the use of the EBT is as part of our flexible benefits package, we are considered a bona-fide consultancy supplier, exactly as Cap Gemini or Manpower, and are not considered a tax avoidance product.

For your comfort, the Bedouin product is founded in the basics of English common law, and has been taken offshore only to circumvent HMRC’s last effective move against similar structures which used to be popular onshore. This type of arrangement continues to be used by many higher paid city executives as part of their package, in addition to the many contractors who are also able to use it.

Post from: Employee Benefit Trust

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