皇冠体育app

Overview

Spotlights 36, 39 and 49 warned of a number of schemes and arrangements that claim to avoid the disguised remuneration loan charge.

HMRC is also aware of contractor arrangements being marketed, involving a Personal Service Company (PSC) and a limited liability partnership (LLP) which claims to get around the April 2019 loan charge, by transferring ownership of the shares in the PSC.

HMRC鈥檚 strong view is that these arrangements or similar ones do not work and we will tackle the promoters and users of these arrangements.

How the arrangements claim to work

皇冠体育appse arrangements involve a number of steps:

1. 皇冠体育app contractor provides their services to an end user (for example Business ABC) via a PSC in which they are major/sole shareholder. Both the contractor and the PSC become partners of an LLP based offshore.

2. 皇冠体育app PSC bills Business ABC for the services the contractor provides. Business ABC pays the money to the PSC who then pays the contractor a salary at or a little over the National Minimum Wage rate.

3. 皇冠体育app PSC then transfers the balance of the payment, to the LLP. 皇冠体育app PSC tells the contractor how much money they can draw on their capital account with the LLP. Since the contractor has not contributed any capital to the LLP, the amount drawn from their capital account is classed as a loan, for the purposes of the loan charge.

4. 皇冠体育app majority of shares in the PSC are then sold to an overseas holding company linked to the scheme promoter, in an attempt to cancel the overdrawn capital accounts. 皇冠体育app value of the shares is artificially fixed at an amount which will extinguish the balance of the loan.

Contractors entering into arrangements like these may find that they are tied into further avoidance arrangements for up to 3 years. 皇冠体育appse arrangements will not result in an effective repayment of outstanding loans and will not reduce or eliminate the amount liable to the loan charge.

Why you should not use these arrangements

皇冠体育appse arrangements aim to disguise the use of loans by transferring assets rather than actually making a genuine repayment. 皇冠体育appy are deliberately designed to try to avoid the loan charge.

If you use these arrangements the loan charge will still apply and you may face a significant penalty in addition to the tax charge.

Deliberately misleading or concealing information from HMRC may also result in criminal prosecution.

What this means for promoters

HMRC will pursue those who promote or enable tax avoidance.

This includes using the penalty regime for anyone who designs, sells or enables the use of abusive tax avoidance arrangements which are later defeated by HMRC.

皇冠体育app enablers鈥� penalty may apply where any of these arrangements have been enabled and entered into on or after 16 November 2017.

HMRC will also use its powers under the Promoters of Tax Avoidance Schemes regime against those who persist with promoting tax avoidance schemes.

Members of accounting professional bodies are also expected to follow the standards of behaviours set out in the Professional Conduct in Relation to Taxation code.

What to do if you鈥檙e using these or similar arrangements

If you鈥檙e using one of these schemes or arrangements, HMRC strongly advises you to withdraw from it and settle your tax affairs.

If you do, you鈥檒l:

• avoid the costs of investigation and litigation
• minimise interest and, where they apply, penalty charges on the tax you should have paid

Find out more about how to identify tax avoidance schemes.

You can report a scheme that has been set up to avoid tax.