The First-tier Tribunal comprehensively and robustly dismissed all the arguments put forward by an IT contractor to persuade them that his contractor loan tax avoidance scheme worked and the money he received was not taxable. In Philip Boyle v HMRC the tax tribunal judge decided that the money paid over to Mr Boyle as loans was 'in substance and reality income from his employment' and therefore taxable.
This tax tribunal decision means that the contractor has to pay tax on the loans.
Mr Boyle argued that if he had received income from his employment, it should have been taxed under PAYE by the offshore company and that he should not have to pay. The judge dismissed that argument as well. She also decided that even if the money Mr Boyle received under the scheme was not income from employment, he would still have to pay tax as a result of specific rules to prevent tax avoidance known as the 'Transfer of Assets Abroad' rules.
Find more information on the tax tribunal decision
Tax avoidance scheme promoters sold contractor loan schemes with a variety of different features but they all involved individuals signing an employment contract with an offshore company and receiving a large proportion of their income in the form of a 'loan' from their employer - either directly or through an intermediary. In September 2013 we said that we were challenging these schemes. Many people have received tax assessments, or letters opening enquiries, and we are continuing to issue more and to pursue the tax which should be paid. Many contractors who used these schemes have already agreed to pay tax and interest on the money they received. Others have been waiting for this decision before deciding what to do. If you are one of those people who waited for the decision we would encourage you to come forward now to resolve your tax position. You can contact us by email , or by writing or calling the contact shown on the assessments or enquiry notices you have received.
HMRC campaign targets offshore account holders in clamp-down on tax evasion
25 February 2014
The days of hiding money in another country to cheat the UK are coming to an end as HMRC launch a fresh campaign on offshore tax evasion.
Chancellor George Osborne has launched a new campaign targeting taxpayers with money hidden in offshore accounts.
The UK has already entered into new information-sharing agreements with the Crown Dependencies and Overseas Territories which will provide HMRC with access to more data than ever before on offshore accounts held by UK taxpayers. The UK, following an agreement reached last year with France, Germany, Italy and Spain, will also move quickly to implement the new global standard on a multilateral basis. So far 42 countries and jurisdictions have joined this initiative which will lead to the rapid embedding of the new global standard and the removal of hiding places for tax evaders as HMRC uses new information to clamp down on tax evasion. Any taxpayer who has declared all of their income has nothing to fear, but anyone who fails to do so will have to pay the tax itself as well as penalties of up to twice that sum, and could face imprisonment. The new HMRC campaign will run in national newspapers and weekly magazines from Monday 24 February 2014.
Read the full press release from HMRC.
CIPP Policy News Journal
16/04/2014, Page 478 of 519
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