As of writing the most recent changes respect of disguised remuneration tax schemes are the Finance Acts 2017, which comprise the Finance Act 2017 and the Finance Act (Number 2) 2017, and the current worldwide disclosure facility. The very recent legislative changes provide a liability for the loan charge (or the “DR Charge”) for any tax schemes ongoing as at 5 April 2019.
One of the most recent changes is the provision for accelerated payment notices of 50% on such loans which commenced from April 2019 and the provisions governing the requirement to disclose such arrangements if a taxpayer is to avoid such a charge.
- these new legislative changes have further amended provisions of tax legislation (including the Income Tax (Earnings and Pensions) Act 2003 in respect of double taxation relief, the definition of employment income and the liability for payment of an accelerated payment notice where a loan or tax scheme is seen to exist;
- although these changes further complicate what is already a very complicated portfolio of tax legislation designed as part of HMRC’s anti-avoidance strategy in respect of disguised remuneration tax schemes, the use of accelerated payment notices and the associated personal liability of such schemes means that any recipient of benefits from such tax schemes arising and outstanding since 1999 may be liable to this charge (which is likely to be at 50%).
There is of course a disclosure provision as with all tax legislation, allowing recipients to disclose their tax affairs and account for the taxes which may become due on the standard basis (which is likely to be much lower but which will also include penalties and interest) provided they disclosed such arrangements before the end of December 2018. The aim of this was to avoid the rigorous and costly efforts by HMRC in pursuing beneficiaries of disguised remuneration schemes and such disclosure is likely to collect the majority of the income due to HMRC as a result of these legislative changes.
There remains of course the issue of smaller companies run and owned by the same individuals, also known as close companies, which remains an issue for the regulation of such disguised remuneration tax schemes. However HMRC has published guidance on close companies and the transfer of liability where the company is insolvent, dissolved or is overseas.
At Francis Wilks & Jones we have considerable experience of tax legislation and defending claims by HMRC or liquidators appointed over companies which face such difficulties and we can assist you with any negotiations with HMRC, including accelerated payment notices, any disguised remuneration scheme issues, personal liability notices, VAT security or any other claim by HMRC, including appeals to tax tribunals or insolvency claims.