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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.
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.
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:
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.