HMRC is encouraging users of disguised remuneration (DR) schemes to come forward to settle their tax debt by 5 April.
The majority of users will pay less by settling now than if they wait until the loan charge comes into force. Anybody who wants to settle their taxes should contact HMRC now and send all the information required by 5 April at the latest.
People affected by the loan charge can still benefit from the published settlement terms if they contact HMRC with a genuine intent to settle before 5 April and provide the relevant information, even if settlement cannot be reached until after that date.
Anyone earning less than £50,000 and no longer involved in tax avoidance, can spread their payments over five years minimum and won’t have to provide detailed supporting information about income and assets. For anyone earning less than £30,000, the spread of these payments can be extended to seven years minimum.
An HRMC spokesperson said, “HMRC wants to do all that it can to help people get out of avoidance for good. We’re appealing to those who haven’t come forward to settle their disguised remuneration debts to do so now and send us the required information by no later than 5 April.
“If you’re concerned about your ability to pay, it’s still better to contact us now – we have a range of flexible payment options to consider, and no option will require you to sell your main home to pay off your debt.”
People affected by the loan charge don’t need to pay the full amount in one go or by 5 April 2019. HMRC can help anybody who thinks they will have difficulty paying what they owe, by spreading payments over a number of years. There is no maximum time period for payment arrangements. HMRC will not force anyone to sell their main home to pay their disguised remuneration debts.
To support loan charge users, HMRC set up a dedicated helpline, complemented by a team to provide extra support to those who need it. It has redeployed staff to support scheme users and announced simplified payment arrangements.
As part of its continued work in this area, HMRC has announced that it is expanding its Needs Extra Support service to vulnerable customers when it looks into their tax affairs.
DR schemes are contrived arrangements that pay loans through a third party, often an off-shore trust, in place of ordinary remuneration with the sole purpose of avoiding income tax and National Insurance contributions. The loans are provided on terms that mean they are unlikely to be repaid, so they are no different to normal income and are, and always have been, taxable. HMRC’s position on DR schemes has always been clear that DR schemes are designed to avoid tax and simply do not work.
By 5 April, scheme users should send through:
- Their name and tax reference numbers (UTR), or National Insurance number;
- The amount of loans received in each tax year;
- Whether you want to claim a benefit in kind offset – if so, how much and for which years;
- The name of the employer who provided the loans.