15-03-2019

HMRC has issued guidance on disguised remuneration schemes, warning that arrangements that claim to avoid the 2019 loan charge do not work.

In particular, the tax authority has warned against schemes with the following features:

* marketed from an off-shore location such as Cyprus, Malta or Isle of Man, claiming to avoid the 5 April 2019 loan charge legislation

* claiming that by entering the scheme, your disguised remuneration loans are paid off

* claiming that the scheme is not disclosable under the Disclosure Of Tax Avoidance Schemes regime, and may have benefited from a QC opinion

* may have professional marketing material, including a website.

HMRC says: "Beware of any arrangement that suggests a disguised remuneration loan can be ‘paid off’ or ‘repaid’ without a real economic consequence to the transaction – suggesting that the scheme user will not suffer any material financial cost (apart from fees).

"Any scheme or arrangement that claims to avoid the loan charge is tax avoidance. If it looks too good to be true, it usually is."

It adds: "It’s HMRC’s view that the disguised remuneration loan charge legislation addresses attempts such as these to avoid the rules, as it disregards any non-monetary repayments. This means the outstanding loan balance will be subject to the charge. The legislation also excludes any repayments connected to a tax avoidance arrangement."

The tax authority warns that if you sign up to such schemes, you're likely to:

* pay administration and promoters fees that cannot be recovered


"Cintra HR & Payroll Services has a long standing relationship with The Learn Centre – they are an absolutely integral part of the payroll community. Their training courses and annual conference are a must for all payroll professionals and not just for up to the minute technical topics: their training really puts payroll and payroll issues into context, taking into account commercial, economic and political influences."Carsten Staehr - CEO at Cintra HR & Payroll Services

Carsten Staehr
CEO at Cintra HR & Payroll Services

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