The GAAR Advisory Panel has released an opinion on a complex series of arrangements involving employee reward arrangements with contributions to a trust, a loan agreement under which the employee loans money to the manager of the trust, and loans from the manager of the trust to the employee.
The arrangements were intended to produce a significant deduction in the company’s accounts to reflect the payment of its profits to a trust. Funds were then made available to the individual directors of the company without liability to tax or NICs, allegedly in the form of loans which, in HMRC’s view, were unlikely to be repaid. Concluding that the arrangements were not reasonable, the GAAR Advisory Panel found that the arrangements were intended to circumvent the disguised remuneration rules noting that: ‘we cannot believe that Parliament intended loans to a person from a trust made out of funds deriving from economic value earned by that person’s activities as a director to escape Part 7A [of ITEPA 2003]’.
The GAAR Advisory Panel has released an opinion on a complex series of arrangements involving employee reward arrangements with contributions to a trust, a loan agreement under which the employee loans money to the manager of the trust, and loans from the manager of the trust to the employee.
The arrangements were intended to produce a significant deduction in the company’s accounts to reflect the payment of its profits to a trust. Funds were then made available to the individual directors of the company without liability to tax or NICs, allegedly in the form of loans which, in HMRC’s view, were unlikely to be repaid. Concluding that the arrangements were not reasonable, the GAAR Advisory Panel found that the arrangements were intended to circumvent the disguised remuneration rules noting that: ‘we cannot believe that Parliament intended loans to a person from a trust made out of funds deriving from economic value earned by that person’s activities as a director to escape Part 7A [of ITEPA 2003]’.
