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Contractors, or employees settling separately to their employer, must tell HMRC: ● ● their unique taxpayer reference ● ● their National Insurance number ● ● the amount of contractor loans or contributions made in each tax year ● ● whether they want to claim a benefit in kind offset, and if so how much and for which years ● ● the name of their employer. Employers must tell HMRC: ● ● their company name and company reference number ● ● their PAYE reference number ● ● the amounts and dates of funds paid into the scheme ● ● details of any corporation tax relief they claimed on the contributions to the scheme ● ● whether they want to claim a benefit in kind offset and if so the relevant employees’ details, how much and for which years. For contractors, employees and employ- ers, they must also tell HMRC the following if known: ● ● the date any trust, sub-trust or other entity was created ● ● the amount of the contribution paid into it ● ● assets held in that trust, other than cash or the loan agreements. The correct amounts must be reported. If it is later believed by HMRC that incorrect amounts were reported due to careless or deliberate behaviour a further penalty of up to £3,000 may be applied. ...outstanding loan amounts (possibly going back as far as 1999) crystallise as at 5 April 2019... Accelerated payment notices Where an employer has paid an accelerated payment notice (APN) – effectively a payment on account – in respect of a scheme that will be affected by the loan charge, the employer can make an application to have this amount offset against the loan charge. HMRC will need to be informed if an application is made in respect of each APN by providing the following information:
● ● the name and scheme reference number of the avoidance scheme in respect of which an APN was paid ● ● the amount that has been paid in respect of that APN ● ● the date(s) on which payment(s) were made in respect of the APN, and ● ● the amount of the loan relating to that APN outstanding on 5 April 2019. Time to pay arrangements Where the taxpayer will have difficulty paying what they owe, time to pay arrangements can be made. The loan charge will see all outstanding loan amounts (possibly going back as far as 1999) crystallise as at 5 April 2019 in order to subject the amount to tax and NICs. Higher tax payments may impact entitlement to tax-free childcare and the high income child benefit charge. Payment can be spread over a number of years; however, the amount due can be paid over a period of up to seven years without the need to provide any detailed financial information, where: ● ● the expected current year taxable income is less than £30,000 which for employees is the expected gross earnings and for the self- employed this is the expected net profit ● ● the individual is no longer engaged in tax avoidance ● ● the disguised remuneration tax affairs are settled or the information needed to do so is provided before 5 April 2019. For payment arrangements of up to five years, the expected current year taxable income is less than £50,000. There are no defined minimum or maximum time periods for payment arrangements but HMRC will need to ask for more information. Even where someone thinks they have no realistic way of paying what they owe, they should still call HMRC as soon as possible. They will discuss options and work with the individual to resolve their tax matters in the best way. Contact HMRC Contractor loan scheme users can call 03000 534 226 and for all other disguised remuneration scheme users can speak to their usual HMRC contact or email ca.admin@hmrc.gsi.gov.uk. Alternative schemes that suggest there is a way to avoid this charge do exist; however, in Spotlight 36 (https://bit.ly/2iRnElT) HMRC have made clear their view of such schemes – they will not succeed. n
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| Professional in Payroll, Pensions and Reward |
Issue 49 | April 2019
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