Disguised remuneration settlement opportunity

A new measure to tackle disguised remuneration tax avoidance schemes was announced as part of the Autumn Statement 2016. The new measure will introduce a loan charge on disguised remuneration avoidance schemes that remain unpaid on 5 April 2019.

These types of schemes (including contractor loans) are used by employers and individuals and seek to avoid paying income tax and NICs. This is usually done by utilising a loan or other payment from a third-party which is unlikely to be repaid.

HMRC has often stated that the only way to avoid the new loan charge in 2019 is by making a repayment of the loan balance or settling your tax liability with HMRC in advance. A new settlement opportunity has been launched to allow those affected to settle their tax affairs before the loan charge comes into effect.

Any taxpayers that want to settle their tax affairs should register their interest with HMRC by 31 May 2018. This must be followed by the submission of all required information by 30 September 2018 to allow time to settle the taxpayers’ affairs before the new charge starts in April 2019. 

Planning note

The settlement terms vary depending on whether the taxpayer is classed by HMRC as a contractor, employer or employee but in essence any income tax and NICs liabilities that are deemed due will need to be repaid together with interest in some cases. This is a complex area and those affected need to consider their options carefully. Please call if you would like more advice on this issue.

Posted in HMRC notices

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