HomeFWJ TakeawayResourcesDisguised remuneration definition

The definition of disguised remuneration is best described as follows

  • income or payments received in reward for employment (or services provided) via an arrangement designed to disguise such remuneration as a non-taxable payment, most popularly as a loan;
  • such payments being made with the object of avoiding the tax liability that would otherwise exist;
  • disguised remuneration schemes encompass Employee Benefit Trusts and contractor loan schemes.

As with all loans, tax is not due on a sum loaned as at all times it will be repayable. However, in recent years abuse of the use of loans first commenced with the use of directors loan accounts where directors loaned monies from their company free of tax (both PAYE and NIC) and then did not repay such sums, either via a write-off of such loans or via some other mechanism.

Legislation introduced in 2010 sought to tax director’s loans unpaid but subsequently the use of loans to disguise remuneration has extended to more complex tax schemes designed to address the tax liability arising on income, including making payments via contractor loan schemes or Employee Benefit Trusts or by use of unapproved employer pension schemes.


At Francis Wilks & Jones we have considerable experience of the tax legislation and defending claims brought by HMRC or liquidators, dealing with any negotiations with HMRC, including Accelerated Payment Notices, Disguised Remuneration schemes, Personal Liability Notices, VAT security and any other claim by HMRC, including appeals to tax tribunals or insolvency claims.

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