Policy News Journal - 2017-18

Disguised remuneration: transfer of liability 6 December 2017

Guidance has been published which sets out how HMRC will collect outstanding tax liabilities from the appropriate person where it can't reasonably collect the liability from the employer.

The government is introducing legislation to tackle existing, and prevent future use, of disguised remuneration (DR) avoidance schemes.

The majority of this legislation has already been enacted. The remaining primary tax legislation was published in draft on 13 September 2017.

This technical note details the changes made to the draft legislation in response to stakeholder comments as well as a further clarification of when Part 7A applies. It also includes information on the changes to ensure the tax and NICs from a DR employment income charge are collected from the appropriate person It details the process for the transfer in three separate scenarios; where the employer no longer exists, is offshore, or can’t pay the liability. The note also contains the primary and secondary legislation that will be introduced to allow HMRC to transfer the liability from employer to employee.

Tackling disguised remuneration

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Disguised remuneration: schemes claiming to avoid the new loan charge 7 December 2017

Guidance has been updated to clarify some points and also highlight that promoters claim to have come up with schemes that enable users to get out of the loan arrangements and avoid the loan charge, in return for a fee.

Disguised remuneration: schemes claiming to avoid the new loan charge (Spotlight 36) has been updated with the following:

Schemes claiming to avoid the loan charge

Some promoters claim to have come up with schemes that enable users to get out of the loan arrangements and avoid the loan charge, in return for a fee.

Spotlight 39 sets out details of one of these schemes. Another example is that some promoters say that individuals should enter into a bet with the trust that granted them the loan. The terms of the ‘bet’ mean the individual is almost certain to win, and then able to use the winnings to repay the loan. This scheme will not prevent the loan charge arising as the loan repayment is connected to a new tax avoidance arrangement. These schemes don’t work. The only way you can avoid the new loan charge is by making a genuine repayment of the loan balance or settling the tax liability with HM Revenue and Customs (HMRC) in advance. Any repayments connected to a new tax avoidance arrangement will be ignored and the loan charge will still apply.

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The Chartered Institute of Payroll Professionals

Policy News Journal

cipp.org.uk

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