HMRC have published revised guidance on settling tax liabilities in relation to the use of disguised remuneration schemes involving Employee Benefit Trusts
(EBTs) and similar arrangements.
In order to settle on preferential terms before the outstanding loan charge arises on 5 April 2019, taxpayers must register with HMRC and provide all of
the required information by 30 September 2018.
For employers the required information is as follows:
The company name and company reference number;
PAYE reference number;
Amounts and dates of funds paid into the scheme;
Details of any corporation tax relief claimed on the contributions to the scheme; and
If you want to claim a benefit in kind offset, the relevant employees’ details, how much and for which years.
What is the 2019 loan charge?
This is a tax charge on any outstanding loans that exist as a result of a disguised remuneration tax avoidance scheme. It applies to any loans that were
taken out under a disguised remuneration scheme since 6 April1999.
The most common schemes were Employee Funded Retirement Benefit Schemes (EFRBS) and Employee Benefit Trusts (EBT). When used for tax avoidance, both involved
the diversion of employment income to a trust; the trust would then ‘loan’ the employment income to the individual (meaning no PAYE/National Insurance
tax was paid) who sought to benefit from the Scheme.
It is the responsibility of the employer/company to pay the 2019 Loan Charge under PAYE legislation. The employer is then expected to pass this cost on
to the individual. Whilst the initial liability falls to the employer, it can be passed to the individual beneficiary of the scheme by HMRC if unpaid.
By contacting HMRC to settle your tax affairs now, you can obtain certainty of what you owe and if required, arrange a payment plan.
If you would like more information or would like to discuss your tax affairs in general, please contact our tax partners on the details below: