Hearts' New Stand Thread (Merged)

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

The FoH accounts to June 2017 are on their web page.


https://www.foundationofhearts.org/m...ts-30jun17.pdf

So lets get this straight. If a punter makes a donation to FoH it must be recorded in their accounts as turnover yet whe transfered to HMFC the donations are lent to HMFC but deemed impaired and effectively written off so HMFC does not have to record them as liailities on their balance sheet but the donations commit Budge to relinquish control to Bidco so someobe somewhere in this menage a trois must be recording the liability somewhere a la Vlad?

Probably legal and tax efficient somehow owing money to yourself but given the FoH has turnover in excess of 1.5m are they not supposed to be VAT registered and paying HMRC something?

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

So lets get this straight. If a punter makes a donation to FoH it must be recorded in their accounts as turnover yet whe transfered to HMFC the donations are lent to HMFC but deemed impaired and effectively written off so HMFC does not have to record them as liailities on their balance sheet but the donations commit Budge to relinquish control to Bidco so someobe somewhere in this menage a trois must be recording the liability somewhere a la Vlad?

Probably legal and tax efficient somehow owing money to yourself but given the FoH has turnover in excess of 1.5m are they not supposed to be VAT registered and paying HMRC something?

1. it's not written off. It's shown as a Reserve on HMFC's Balance Sheet.

2. No, because donations of this type are outwith the scope of VAT.

[greenginger]

This quote is hidden because you are ignoring this member. Show Quote

1. it's not written off. It's shown as a Reserve on HMFC's Balance Sheet.

2. No, because donations of this type are outwith the scope of VAT.

Lets see if I've got this right.

Company FoH generates a heap of cash by selling an idea that they will own HOMFC one day.

FoH loans said cash to HOMFC, interest free, to be used as working capital. They then classify the loan to be fully impaired and of no future economic value to FoH.

Now, if I had a company which loaned a few million to myself, then wrote it off, I'd guess I'd be receiving a visit from Hector very soon.

I would guess me being connected to the company would get the red flag waving at HMRC central.

I wonder why its not an issue with FoH and HOMFC. They do have common company directors after all.

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

Lets see if I've got this right.

Company FoH generates a heap of cash by selling an idea that they will own HOMFC one day.

FoH loans said cash to HOMFC, interest free, to be used as working capital. They then classify the loan to be fully impaired and of no future economic value to FoH.

Now, if I had a company which loaned a few million to myself, then wrote it off, I'd guess I'd be receiving a visit from Hector very soon.

I would guess me being connected to the company would get the red flag waving at HMRC central.

I wonder why its not an issue with FoH and HOMFC. They do have common company directors after all.

Like I say, it hasn't been written off. It's in HMFC's reserves. In time, that reserve will be converted to shares.

If anybody, connected person or not, lends a company money, and that loan is converted to shares, there is no tax charge.

Further, though, the money given by FOH is not a loan. It's a donation. FOH's accounts are explicit in that respect.

[Libby Hibby]

This quote is hidden because you are ignoring this member. Show Quote

Like I say, it hasn't been written off. It's in HMFC's reserves. In time, that reserve will be converted to shares.

If anybody, connected person or not, lends a company money, and that loan is converted to shares, there is no tax charge.

Further, though, the money given by FOH is not a loan. It's a donation. FOH's accounts are explicit in that respect.

Is it 100% legit or a bending of the law? A legal loophole so to speak.

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

Is it 100% legit or a bending of the law? A legal loophole so to speak.

Which bit?

The donations by fans? The donation by FOH? The conversion of the donations to shares?

I don't see anything wrong with any of it.

[greenginger]

This quote is hidden because you are ignoring this member. Show Quote

Like I say, it hasn't been written off. It's in HMFC's reserves. In time, that reserve will be converted to shares.

If anybody, connected person or not, lends a company money, and that loan is converted to shares, there is no tax charge.

Further, though, the money given by FOH is not a loan. It's a donation. FOH's accounts are explicit in that respect.

According to FoH accounts note 11, the FoH money is a loan.

2nd para, " ....taking the total advanced as a loan to £ 5,691,274 ........ the directors are of the opinion that this loan has no economic value and as such has been impaired in full. "

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

According to FoH accounts note 11, the FoH money is a loan.

2nd para, " ....taking the total advanced as a loan to £ 5,691,274 ........ the directors are of the opinion that this loan has no economic value and as such has been impaired in full. "

..which is why it is expensed in the P and L account. In substance, it is not a loan.

[greenginger]

This quote is hidden because you are ignoring this member. Show Quote

..which is why it is expensed in the P and L account. In substance, it is not a loan.

In the FoH , P & L accounts the sums are described as " Exceptional items ", and in the FoH detailed accounts , under the heading of exceptional items, the sums are described as " impaired loans ".

FoH thought they were giving a loan.

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

In the FoH , P & L accounts the sums are described as " Exceptional items ", and in the FoH detailed accounts , under the heading of exceptional items, the sums are described as " impaired loans ".

FoH thought they were giving a loan.

In reality, I'd doubt they ever expected repayment. There would have been a loan agreement drawn up, to protect the FOH donors in the event that the Budge regime collapsed in the early days. But I don't think you'd find anyone who would be thinking "We'll get that money back".

[BSEJVT]

Although shown as a loan that is an accounting accommodation for dealing with the gift.

They knew fine they were donating it.

It then gets shown as an impaired loan before getting written off and the monies and the loan disappear from the accounts no tax paid.

However I do wonder about their dealing with it in this way.

I am sure they know what they are doing and will have researched all the angles but I can imagine the response I would get from HMRC if my company loaned money to my wee brother, who was known to be trading precariously and then wrote the loan off with no effort to recover it whilst he was buying a new library?

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

Although shown as a loan that is an accounting accommodation for dealing with the gift.

They knew fine they were donating it.

It then gets shown as an impaired loan before getting written off and the monies and the loan disappear from the accounts no tax paid.

However I do wonder about their dealing with it in this way.

I am sure they know what they are doing and will have researched all the angles but I can imagine the response I would get from HMRC if my company loaned money to my wee brother, who was known to be trading precariously and then wrote the loan off with no effort to recover it whilst he was buying a new library?

The "loan" hasn't been written off by HMFC, though, which is the important thing. If they went belly-up tomorrow, that money would still be legally due to FOH, regardless of whether they had written it off in their own accounts, and regardless of whether they made a claim to it.

Eventually, it will be converted to shares, which is the ultimate form of loan, albeit worthless in FOH's eyes.

The difference between this situation and the one you use as an example is that, in yours, both companies are (I assume) trading. FOH doesn't trade and is, therefore, not subject to Corporation Tax or Income Tax on written-off loans.

[Peevemor]

It should be remembered that when STF sold ER stadium back to the football club (including, at that time, the 2 new end stands), it was for something like £4m - not even the cost of the stands, let alone the value of the land (including the car park). We weren't crying foul then.

[WhileTheChief..]

^Yup.

Also more recently the deal he did with the bank and us repaying him interest free. The club are benefiting from that.

Aberdeen and Dundee both have wealthy new directors that are putting money into their clubs and no one is batting an eye lid.

Absolutely nothing wrong with someone giving Hearts money. If they want to keep it private that’s entirely up to them too.

A lot of clutching at straws looking for something amiss that isn’t there.

[Joe6-2]

This quote is hidden because you are ignoring this member. Show Quote

^Yup.

Also more recently the deal he did with the bank and us repaying him interest free. The club are benefiting from that.

Aberdeen and Dundee both have wealthy new directors that are putting money into their clubs and no one is batting an eye lid.

Absolutely nothing wrong with someone giving Hearts money. If they want to keep it private that’s entirely up to them too.

A lot of clutching at straws looking for something amiss that isn’t there.

I think we are suspicious because of their track record

[MrSmith]

I wonder if Vlad is still laundering money through HMFC? His son still owns 5% in shares IIRC?

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

I wonder if Vlad is still laundering money through HMFC? His son still owns 5% in shares IIRC?

It's difficult to tell whether young Rodney is still a shareholder. There isn't a current shareholders list available.

However, as for laundering money, not sure how that could be the case......

Unless you're suggesting that Vlad is one of the benefactors

[greenginger]

There is a new shareholder list just published with the latest confirmation statement.

https://s3-eu-west-1.amazonaws.com/d...4og%2Fud0gU%3D

Its mention in part 4, but you've got to buy the CD !

I don't think the Romanov's ever held any Hearts shares personally. They first bought into the club the shares wee held in a company called Heart of Midlothian 2005. Its since been struck off and the share holding fell to the Crown.

Trouble was, the crown didn't want them . Now Budge, or actually Bidco 1874 has a petition at the High Court to have the shares either allocated to herself or dissolved .

[MrSmith]

This quote is hidden because you are ignoring this member. Show Quote

It's difficult to tell whether young Rodney is still a shareholder. There isn't a current shareholders list available.

However, as for laundering money, not sure how that could be the case......

Unless you're suggesting that Vlad is one of the benefactors

Concomitantly speaking

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

Concomitantly speaking

It would be a quantum leap.

Sent from my SM-A510F using Tapatalk

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

Like I say, it hasn't been written off. It's in HMFC's reserves. In time, that reserve will be converted to shares.

If anybody, connected person or not, lends a company money, and that loan is converted to shares, there is no tax charge.

Further, though, the money given by FOH is not a loan. It's a donation. FOH's accounts are explicit in that respect.

But it is written off in FoH's accounts not HMFC's not because it cannot be paid back but because they dont want it paid back because they have an agreement to buy the dodgy diner with the stand attatched. That makes them associated and Hector will probably wait untill that transaction takes place.

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

But it is written off in FoH's accounts not HMFC's not because it cannot be paid back but because they dont want it paid back because they have an agreement to buy the dodgy diner with the stand attatched. That makes them associated and Hector will probably wait untill that transaction takes place.

What's Hector going to do?

Sent from my SM-A510F using Tapatalk

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

It's difficult to tell whether young Rodney is still a shareholder. There isn't a current shareholders list available.

However, as for laundering money, not sure how that could be the case......

Unless you're suggesting that Vlad is one of the benefactors

If there is no Shareholders List, aka the Register, held at the Registered Office and available for inspection at 5 days notice they are in breach of the Companies Act 2006 Chapter 2 Section 112 onwards. All you need do is make the request in the proscribe format and pay the appropriate fee ( charged on the basis of the number of lines of entry). They can only deny you by making application to the court.

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

What's Hector going to do?

Sent from my SM-A510F using Tapatalk

We are not talking VAT here but Corporation Tax which is a levy on a Company's profits. FoH declares all its income as turnover and retains c50k per year for running costs. It then makes unsecure loans to HMFC to build a new stand i.e. create an asset. Once it has loaned a specified amount it actually gets to own HMFC, its assets and its liabilities.

FoH makes effectively a profit of 1.4m per year, impairs and then writes off the debt to avoid making a profit but in a few years actually realises the value of the loan through the ownership of HMFC and makes an actual profit.

Now is that Tax Avoidance or Tax Evasion Hector asks himself when that day comes?

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

The difference between this situation and the one you use as an example is that, in yours, both companies are (I assume) trading. FOH doesn't trade and is, therefore, not subject to Corporation Tax or Income Tax on written-off loans.

Ah but FoH is trading. It is a membership organisation and it is making loans available. It trades every day as the dds roll in and it expends money on running costs managing its fundraising and loan activities. It is not a dormant company.

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

Ah but FoH is trading. It is a membership organisation and it is making loans available. It trades every day as the dds roll in and it expends money on running costs managing its fundraising and loan activities. It is not a dormant company.

That's not the definition of trading.

The accounts explicitly state that it isn't trading, and i wouldn't disagree with that. I can't see why HMRC would either.

Sent from my SM-A510F using Tapatalk

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

That's not the definition of trading.

The accounts explicitly state that it isn't trading, and i wouldn't disagree with that. I can't see why HMRC would either.

Sent from my SM-A510F using Tapatalk

Well this is and they quite clearly meet the definition even though they make the declaration in their accounts. The following is quoted directly from HMRC aka Hector

What is active for Corporation Tax purposes
Generally your company or organisation is considered to be active for Corporation Tax purposes when it is, for example:

carrying on a business activity such as a trade or professional activity
buying and selling goods with a view to making a profit or surplus
providing services
earning interest
managing investments
receiving any other income
This definition of being active for Corporation Tax purposes is not necessarily the same as that used by HMRC in relation to other tax areas such as VAT, or by other government agencies such as Companies House.

It may also not match definitions in the various accounting conventions that are used to prepare audited accounts, such as the Financial Reporting Standards issued by the Accounting Standards Board, or the International Financial Reporting Standards issued by the International Accounting Standards Board.

[CropleyWasGod]

This quote is hidden because you are ignoring this member. Show Quote

Well this is and they quite clearly meet the definition even though they make the declaration in their accounts. The following is quoted directly from HMRC aka Hector

What is active for Corporation Tax purposes
Generally your company or organisation is considered to be active for Corporation Tax purposes when it is, for example:

carrying on a business activity such as a trade or professional activity
buying and selling goods with a view to making a profit or surplus
providing services
earning interest
managing investments
receiving any other income
This definition of being active for Corporation Tax purposes is not necessarily the same as that used by HMRC in relation to other tax areas such as VAT, or by other government agencies such as Companies House.

It may also not match definitions in the various accounting conventions that are used to prepare audited accounts, such as the Financial Reporting Standards issued by the Accounting Standards Board, or the International Financial Reporting Standards issued by the International Accounting Standards Board.

It's active, but it's not trading. There is a big difference.

Tax students answer exam questions on this kind of stuff. The better ones can tell the difference between trading, active and dormant. I can too, as I mark the ICAS final tax exams.:)

FOH is not trading.

Sent from my SM-A510F using Tapatalk

[hibbyfraelibby]

This quote is hidden because you are ignoring this member. Show Quote

It's active, but it's not trading. There is a big difference.

Tax students answer exam questions on this kind of stuff. The better ones can tell the difference between trading, active and dormant. I can too, as I mark the ICAS final tax exams.:)

FOH is not trading.

Sent from my SM-A510F using Tapatalk

FoH say they are not trading but HMRC rules consider them to be trading. I am the Company Secretary of such an organisation so I see your exam marking credentials and raise you my legal status.

[Cat Stanton]

Could you two get a room? This is a rubbish spectator sport...