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Group Trader

Group Trader

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I have a client who has recently got himself a new management job with a medium sized company.

Part of his salary deal is a card which he can use to "buy" goods and services.  He doesn't pay for these - his employer picks up the tab by some sort of points system, points which they seem to earn by buying goods themselves.

I had a look at the website but the tax position isn't explained.  My client has been told that "his accountant" - that's me - "doesn't need to know about this" but the client is a bit toey about it all.  Just to give an idea of the scale, my client reckons he could buy goods worth £10000+ under this scheme.

I'm thinking it's a P11D thing.  Anyone come across this before ?  Any thoughts ?

Here's the website ....

https://www.grouptrader.com/index.php?route=landing/rewards

Replies (11)

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By richardmeadows
30th May 2014 11:22

Not sure what the answer is, but

Yes, we have a client that is a member of the scheme. It was 'sold' to them on the basis that they would be rewarded for mutual trading with fellow members by being awarded with points which the owner/managers could use for their own benefit. The client was assured that there would be no tax charge on them individually - apparently there are firm's of accountants as members who do not see a problem with it!

Personally, I would like to know what it is about the scheme that prevents the points that are allocated to the owners/managers for their own personal use being classified as earnings under ITEPA that should be subject to PAYE.

Perhaps we may have to wait for HMRC to start an enquiry, which will no doubt be funded through the courts, before we have an answer?

In the meantime, our client is being advised that the position may not be as clear cut as the promoter of the scheme is making out.

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RLI
By lionofludesch
30th May 2014 11:38

Suspicious

I'm advising my client that the position may not be as clear cut as the promoter of the scheme is making out, funnily enough.

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By TimCaprica
09th Jul 2014 12:52

I met a Group Trader sales guy

He came over to excite me about their scheme. It sounded extremely dodgy all round. 

My concerns were:

Bribery Act - The idea seems to be that if an employee pushes expenditure to a particular company that also uses Group Trader then they can be reimbursed via the system. As noted this is almost cash as it comes on a prepaid Mastercard. To me that sounds like a kickback with dubious legality in light of the Bribery Act (I AM NOT A LAWYER).

Benefit taxes - He told me straight up that there would be no tax impact on this. In fact it seemed the main benefit he was guiding me to think about but not explicitly saying was that rather than pay some guy a salary of £30,000 you could pay him a salary of say £20,000 and then another £10,000 of magic vouchers which would not be taxed at all. Similarly an owner manager could buy £100,000 worth, treat it as a company expense and pay no income tax. 

It all sounded extremely dodgy and I didn't do very well hiding my scepticism. 

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RLI
By lionofludesch
09th Jul 2014 13:22

My thoughts entirely

Only a matter of time, imho.........

Come back when you've won in the Supreme Court - those are my thoughts.

Even the client is sceptical - how on earth do I fill in his 2015 tax return ?*

 

*A rhetorical question, I think.....

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By Atlas
01st Sep 2014 00:54

MasterCard charge card points for cash
From looking at the hmrc line on loyalty points (http://www.hmrc.gov.uk/manuals/eimanual/eim21618.htm) if a ltd co buys goods or services and loyalty points are given to the director/employee by the supplier it won't be classed as income. What is strange in this case is these points are on a MasterCard that is prepaid and can be spent anywhere.

Thoughts?

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By finegana
04th Oct 2014 20:14

GroupTrader

I'm currently working with GT & will raise the above with them on Friday as there's some mis-information in the above statements which needs clarifying at both ends.

Looking at the above there's a clear employer/employee relationship which would normally give rise to Benefit in Kind.

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By shawn.adcock
24th Oct 2014 13:48

Grouptrader

We have looked into this and it isn’t anything new or special. Grouptrader is only one of the many loyalty systems that are available. They are all meant to be used to reward customers who buy goods or services from your business and are not for paying employees with. Using points as a method of paying employees is a benefit in kind, the same as giving them a holiday or discount vouchers. However, if the employee accrues them (or any other points) by buying services such as fuel in BP / flights with BA / coffee with Costa then as said these are covered by EIM21618 and should not be classed as income. The trouble with the top point is just that the client is abusing them in the same way giving a £5,000 flight (paid for with air miles) would be, instead of £5,000 in salary.

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By finegana
14th Nov 2014 08:48

Update

Just to let you know I asked Grouptrader about this and they also said that nobody should be recommending this as a tool to pay employees. They said they thought paying someone in points would probably be taxable just like giving them discount vouchers. They also suggested if anyone comes across someone promoting their platform like this would you be kind enough to let them know via their website email at [email protected]

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By zeofiles
10th Mar 2016 20:38

Loyalty rewards and tax avoidance
Has anyone had recent experience of these so called loyalty rewards??

We have become aware of a rapidly expanding firm who are 'asking' their staff to promote such loyalty schemes to clients as a mechanism to save tax.

In essence the client pays £x per month to one of these loyalty firms for advertising (or similar service) and in return directors/staff of the client receive loyalty rewards equating to a significant % of the original invoice value. These loyalty rewards normally take the form of pre-paid mastercards and are provided tax/ni free.

My take on this is similar to the previous commentators and strikes me as a not particular high level tax avoidance scheme. BUT if such a scheme is being so agressively pushed by a leading independent firm am I missing something??

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By KarenJ
29th Mar 2016 21:28

Loyalty rewards
I have a client who has been given advice from someone else to buy 20,000 loyalty points for his company as advertising and says it will reduce his CT. He then has the points to spend tax free personally.
I think I am missing something as well? Any suggestions please

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By gbuckell
04th May 2017 14:05

.

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