Summary of HMRC’s Spotlight 49:

2 months ago

Disguised remuneration schemes claiming to avoid the loan charge

Spotlight 49: HMRC warns about arrangements that claim to avoid the 2019 loan charge on disguised remuneration. 

Despite previous HMRC spotlights warning that schemes claiming to avoid the loan charge do not work, there are more arrangements being marketed making such claims.

Features to look out for:

  • Schemes or arrangements marketed from an offshore location such as Cyprus, Malta or Isle of Man.
  • Arrangements that claim your disguised remuneration loans are paid of by entering the scheme.
  • Schemes such as these may even have professional marketing material such as a website.
  • Schemes that may have benefited from a QC opinion and claim they are not disclosable under the Disclosure of Tax Avoidance Schemes regime.
  • Schemes or arrangements that suggest a disguised remuneration loan can be ‘paid off’ or ‘repaid’and that the individual will not suffer any economic consequences (except for fees).

Why these schemes and arrangements should not be used:

  • Fees paid towards the pay administration and promoters cannot be recovered.
  • Any outstanding loan balance will be subject to charge, therefore you are still liable for these loan charges.

Are you using a scheme like this or an arrangement that is similar?

If you are using a scheme like this, HMRC heavily recommends that you withdraw from the arrangement and settle your tax affairs.

Doing this will help you to avoid the costs of litigation and investigation as well as reducing the interest and penalty charges (where applicable) from the tax you should have been paying.

For more information on Spotlight 49 , please follow the link here.

Theo Parkinson

Theo Parkinson

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