HMRC has published 'Spotlight 53', a new guidance bulletin which focuses on tax avoidance schemes that claim to get around the disguised remuneration rules through a combination of capital advances and complex offshore joint or mutual share ownership arrangements.
HMRC's clear advice is that such schemes do not work, and it warns that it will challenge any such schemes and investigate the tax affairs of all users.
The tax avoidance schemes in question involve joint or mutual share ownership agreements, and loans (often labelled as "capital advances") that are made to the employee. The end result is that the employee is only paid a nominal salary (on which little to no income tax and NICs are paid), and the majority of their remuneration is paid in the form of these loans/"capital advances" which are then repaid directly by share dividends and capital gains which have been realised offshore.
Such tax schemes are never approved by HMRC, and HMRC warns that users may be liable not only for the income tax and NICs (and interest) on the value of the loans received, but they may also be liable for a 60% General Anti-Abuse Rule (GAAR) penalty as well.
If you have any concerns that you may have been enrolled in a disguised remuneration scheme, it is therefore vital that you seek urgent specialist advice as soon as possible. If you have any queries about your potential liabilities to HMRC, or the tax advice you have previously been provided with, please get in touch with me at firstname.lastname@example.org.
"HMRC’s strong view is that these and similar arrangements do not work."