HMRC Spotlight 39 published regarding disguised remuneration

HMRC have published Spotlight 39 ‘Disguised remuneration: re-describing loans’ highlighting that they aware of schemes trying to circumvent the 2019 disguised remuneration charge. Scheme users are being incorrectly told that the loan charge will not apply if they sign documents stating that the remuneration received was not a loan but held by the beneficiary in a fiduciary capacity. This defence will not work as the agreement was initially a loan so changing the name is irrelevant. HMRC are also clamping down other forms of disguised payments including any form of credit or right to a payment regardless of what it is called, as, in their opinion, it needs to be taxed as normal income. If you try to use the scheme you risk having to pay back the tax owed and a possible penalty.

HMRC have made it clear in Spotlight 33 ‘Contractor loan schemes that cost you more’ and Spotlight 36 ‘Schemes claiming to avoid the new loan charge’ that the only way you can avoid the loan charge is by settling your tax liability in full with HMRC before April 2019.  

To view the HMRC Spotlights, click here.

Aspire Comment

HMRC are trying to ensure that all remuneration is subject to tax as earnings as defined in section 62 of the Income Tax (Earnings and Pensions) Act 2003. Provisions were introduced in the Finance Bill 2017 whereby all loans or debts from a disguised remuneration scheme will be taxed as earnings if they haven’t already been repaid on or before 5^th April 2019.

If you think you are involved in a disguised remuneration scheme and need help please contact us at 0121 445 6178 or enquire@aspirepartnership.co.uk