Users of disguised remuneration schemes have until September 30 to register to settle their tax affairs with HMRC, to avoid a new tax charge in April 2019.
By contacting HMRC to settle the tax of any disguised remuneration scheme now, users can agree with HMRC what they owe and if required, arrange a payment plan. Settling may also mean that the scheme user:
• Does not have to pay the new loan charge that is being introduced in April 2019;
• Pays a lower rate of tax on disguised remuneration loans – the loan charge will add all loans together and tax them in one year;
• Will settle on the terms in this guide – if a scheme moves to litigation, these terms may no longer be available;
• Does not face extra costs if the scheme moves to litigation.
Disguised remuneration schemes are designed to avoid income tax and national insurance contributions. They do this by providing an employee or contractor with a loan or other payment from a third party, such as an employee benefit trust, which is unlikely to be repaid. HMRC warned for several years that these schemes do not work and has advised against using them.
HMRC has released guidance on how to settle the tax charge on a disguised remuneration tax avoidance scheme for contractors, employers or employees. To start settling these tax affairs, users should register their interest with HMRC as soon as possible and provide all of the required information by 30 September 2018.