HMRC have added Spotlight 68 to their collection summarising a marketed scheme which aims to reduce corporation tax liabilities by including ‘advertising’ expenses in the company’s profit and loss account. Under the arrangements the company deducts the expenses for tax purposes but at least 80% of the amount is returned to directors or employees as ‘loyalty points’ which are immediately converted to cash on prepaid cards which are issued in the names of the directors. These amounts are claimed to be non-taxable income. In essence the scheme purports to enable profit extraction without payment of income tax. HMRC believe that this scheme is ineffective and will challenge its promoters noting that additional tax liabilities interest penalties and fees could apply.
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HMRC have added Spotlight 68 to their collection summarising a marketed scheme which aims to reduce corporation tax liabilities by including ‘advertising’ expenses in the company’s profit and loss account. Under the arrangements the company deducts the expenses for tax purposes but at least 80% of the amount is returned to directors or employees as ‘loyalty points’ which are immediately converted to cash on prepaid cards which are issued in the names of the directors. These amounts are claimed to be non-taxable income. In essence the scheme purports to enable profit extraction without payment of income tax. HMRC believe that this scheme is ineffective and will challenge its promoters noting that additional tax liabilities interest penalties and fees could apply.
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