The government’s plan to tackle disguised remuneration tax avoidance schemes was first announced as part of the Autumn Statement 2016. These types of schemes (including contractor loans) are used by employers and individuals and seek to avoid paying Income
Tax and National Insurance contributions (NICs). This is usually done by utilising a loan or other payment from a third-party which is unlikely to be repaid.

This resulted in the introduction of a new loan charge on disguised remuneration avoidance schemes that remain unpaid on 5 April 2019. HMRC has stated that the only way to avoid the new loan charge is by making a repayment of the loan balance or settling
your tax liability with HMRC in advance.

A settlement opportunity was launched to allow those affected to settle their tax affairs before the loan charge comes into effect. HMRC advised back in November 2017 that any taxpayers that wanted to settle their tax affairs should register their interest
with HMRC by 31 May 2018. This was to be followed by the submission of all required information by 30 September 2018 to allow time to settle the taxpayers’ affairs before the new charge starts in April 2019.

This has now been changed with the guidance stating that ‘you should register your interest with HMRC as soon as possible and provide all of the required information by 30 September 2018’. This change effectively extends the deadline for registering an interest
by 4 months but note that the final deadline for submitting all the required information remains 30 September 2018.

The settlement terms are different depending on whether the taxpayer is classed by HMRC as a contractor, employer or employee but in essence any Income Tax and NICs liabilities that are deemed due will need to be repaid together with interest in some cases.
This is a complex area and those affected need to consider their options carefully.

Source: New feed