The General Anti-Abuse Rule (GAAR) Advisory Panel have published details of three opinions dated 11 October 2018 and 12 October on contractor and employee rewards using loans, finding the planning used unreasonable.

Under the planning:

HMRC challenged the planning on the basis that there was no reasonable expectation that the loan would ever be repaid and that it was a method of avoiding Disguised Remuneration rules as there was no direct loan from the EFRBS to the individual.

The GAAR panel agreed that some aspects were normal but considered it was abnormal to label the bulk of an employee’s compensation as ‘discretionary’ and it is abnormal for an agency employer to provide the bulk of an employee’s compensation through loans unless it is tax motivated.

The individuals received a much higher percentage of the gross income than they would have done under normal circumstances.

The GAAR panel considered that taken together, the steps were abnormal and contrived and opined that:


General Anti-Abuse Rule – GAAR (subscriber version)

Disguised remuneration

Disguised Remuneration Zone

External link

GAAR Advisory Panel opinion of 11 October 2018: contractor rewards using loans

GAAR Advisory Panel opinions of 12 October 2018: employee rewards using loans (company and Mr B)