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New GAAR Advisory Panel opinion published

The GAAR Advisory Panel has issued an opinion on arrangements which sought to reward a company’s director in a way ‘that would not be any form of remuneration’. This involved creating an obligation to make pension payments to the individual transferring that obligation to a third party and paying the third party for accepting that obligation. In essence the full amount that otherwise would have been paid to the individual was instead routed via the third party. The company claimed a corporation tax deduction for the expense and no PAYE or NICs were paid.

HMRC considered that this was employment income which should be taxed as earnings and that no corporation tax deduction was available. Failing that HMRC also contended that the arrangements would be caught by the GAAR.

The Panel concluded that the entering into and carrying out of the tax arrangements was...

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