HMRC’s latest Spotlight 49 ‘Disguised remuneration: schemes claiming to avoid the loan charge’ has been released ahead of the loan charge deadline of 5 April 2019.

The Loan Charge will apply to all outstanding disguised remuneration, self-employed and contractor loans taken out since 1999, unless loans are repaid or a settlement is in progress with HMRC before 5 April 2019 and completed by 31 August 2019.

HMRC have published several spotlights about disguised remuneration schemes in recent years with this latest document advising that arrangements currently being marketed that claim to avoid the loan charge do not, in HMRC’s strong view, work.

HMRC are warning taxpayers to beware of arrangements or schemes which claim to avoid the loan charge legislation and involve one or more of the following features:

  • They are marketed from an off-shore location such as Cyprus, Malta or Isle of Man
  • They claim that:
    • by entering the scheme, your disguised remuneration loans are paid off
    • the scheme is not disclosable under DOTAS, and benefit from a QC’s opinion
  • They have professional marketing material, including a website
  • They suggest that disguised remuneration loans can be ‘paid off’ or ‘repaid’ without any real economic consequence, meaning that the scheme user will not suffer any material financial cost.

HMRC say ”if it looks too good to be true, it usually is” and those who sign up to such schemes are likely to:

  • Pay administration and promoters fees that cannot be recovered
  • Remain liable for the loan charge

HMRC strongly advises anyone using one of these schemes to withdraw from it and settle their tax affairs.

Comment

We note that we have also seen loan schemes sold from other territories including New Zealand and it is also not uncommon for documentation for the loan charges to be drawn up in multiple jurisdictions.

Links to our guides:

Disguised Remuneration
A guide to everything you need to know about disguised remuneration schemes, the loan charge, and how to reach a settlement with HMRC.

FAQs for disguised remuneration settlement
This guide looks at Frequently Asked Questions for settling Disguised Remuneration schemes. The FAQs relate to EBTs, EFRBS and contractor loan schemes (employed and self-employed).

Disguised remuneration final settlement opportunity
A detailed guide to the November 2017 final settlement opportunity for all disguised remunerations schemes.

External:

Spotlight 49 ‘Disguised remuneration: schemes claiming to avoid the loan charge’

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