HMRC have released Spotlight 50 “Disguised remuneration: asset transfer arrangements set up to avoid the loan charge”.

The Loan Charge applies to all outstanding disguised remuneration, self-employed and contractor loans taken out since 1999, where settlement negotiations did not commence with HMRC before 5 April 2019.

This latest spotlight warns about contractor arrangements being marketed which involve a Personal Service Company (PSC) and a limited liability partnership (LLP) which claim to get around the loan charge, by creating an overdrawn capital account in an LLP (of which the contractor and PSC are members) and then attempting to repay the loan by the contractor transferring ownership of the shares in the PSC to an overseas holding company.

HMRC advises that such arrangements:

  • will not result in an effective repayment of outstanding loans or reduce or eliminate the amount liable to the loan charge.
  • will cause contractors to be tied into further avoidance arrangements for up to 3 years
  • may result in significant penalties in addition to the loan charge and criminal prosecution if taxpayers are found to have deliberately mislead or concealed information from HMRC.

HMRC say they will pursue those who promote or enable tax avoidance including using the enablers of tax avoidance penalty regime which applies to promoters of failed tax avoidance arrangements.

Links to our guides:

Disguised Remuneration loan charge 
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.

Penalties: Enablers of Tax Avoidance (subscriber version)
A guide to the new penalties applying from 2017 to ‘Enablers’ of failed tax avoidance arrangements.

External:

Spotlight 50: Disguised remuneration: asset transfer arrangements set up to avoid the loan charge

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