HMRC has added new spotlight 46 to the list of tax avoidance schemes it is investigating, concerning two recent GAAR advisory panel opinions on remunerating employees through contrived loan arrangements.
HMRC has added new spotlight 46 to the list of tax avoidance schemes it is investigating, concerning two recent GAAR advisory panel opinions on remunerating employees through contrived loan arrangements. In both cases, the panel said entering into and carrying out these arrangements was not a reasonable course of action.
One of the schemes involved a contractor, and the other a company and its employee. Both involved loans and transfer of creditor rights into an employer financed retirement benefits scheme (EFRBS).
For the case involving the contractor, the panel stated: ‘a taxpayer bought into a marketed scheme aimed at a potential shortcoming in wide-ranging “keep off the grass” anti-avoidance legislation. By adopting a series of predetermined and contrived steps the taxpayer and the promoter sought to gain an unintended tax “win”.’
For the case involving the company and employee, the panel stated: ‘a tax scheme promoter identified a potential hole in the rules charging employee remuneration to income tax. By adopting a series of contrived steps, the employer and employee taxpayers sought, in an abusive way, to reduce the normal incidence of tax on his continuing reward for services.’
HMRC says it may now issue counteraction notices to taxpayers who have used similar arrangements, as well as accelerated payment notices. Transactions entered into after 14 September 2016 may also be subject to a 60% GAAR penalty.
HMRC has added new spotlight 46 to the list of tax avoidance schemes it is investigating, concerning two recent GAAR advisory panel opinions on remunerating employees through contrived loan arrangements.
HMRC has added new spotlight 46 to the list of tax avoidance schemes it is investigating, concerning two recent GAAR advisory panel opinions on remunerating employees through contrived loan arrangements. In both cases, the panel said entering into and carrying out these arrangements was not a reasonable course of action.
One of the schemes involved a contractor, and the other a company and its employee. Both involved loans and transfer of creditor rights into an employer financed retirement benefits scheme (EFRBS).
For the case involving the contractor, the panel stated: ‘a taxpayer bought into a marketed scheme aimed at a potential shortcoming in wide-ranging “keep off the grass” anti-avoidance legislation. By adopting a series of predetermined and contrived steps the taxpayer and the promoter sought to gain an unintended tax “win”.’
For the case involving the company and employee, the panel stated: ‘a tax scheme promoter identified a potential hole in the rules charging employee remuneration to income tax. By adopting a series of contrived steps, the employer and employee taxpayers sought, in an abusive way, to reduce the normal incidence of tax on his continuing reward for services.’
HMRC says it may now issue counteraction notices to taxpayers who have used similar arrangements, as well as accelerated payment notices. Transactions entered into after 14 September 2016 may also be subject to a 60% GAAR penalty.
