Disguised remuneration schemes claim to avoid the need to pay Income Tax and National Insurance Contributions. They normally involve a loan or other payment from a third-party which is unlikely to ever be repaid. The use of an Employee Benefit Trust (EBT) is an example of a disguised remuneration scheme.
These schemes are used by employers and individuals alike. If they’re used by contractors, they’re often known as ‘contractor loans’.
If you’re in a disguised remuneration scheme, you need to contact HMRC as soon as possible. If you don’t, a new loan charge announced in the 2016 Budget will apply to all disguised remuneration loans outstanding on 5 April 2019. The loan charge means the directors/shareholders becoming liable to pay Income Tax and National Insurance Contributions on any loans made to them individually through a disguised remuneration scheme.
How to settle your tax affairs
To start settling any tax affairs arising from a disguised remuneration scheme, you should register your details with HMRC and provide the required information by 30th September 2018. HMRC have a webpage giving an overview of your responsibilities and a full list of the information you need to provide to settle your tax affairs.
Register your interest
If you’re already speaking to someone in HMRC about you or your company’s use of a disguised remuneration scheme, or if you have a customer compliance manager, you can register your details with them. If you’re not already speaking to someone at HMRC, register your interest by emailing:
email@example.com for contractor loan schemes
firstname.lastname@example.org for all other disguised remuneration schemes.
Crunch does not provide any advice or support regarding disguised remuneration schemes. If HMRC contacts you about a scheme you should seek advice from your financial advisor. You may require specialist legal advice to respond to any questions from HMRC.