Have you received income in the form of loans?
HMRC has issued a new briefing paper on disguised remuneration charge on loans. Disguised remuneration schemes are tax avoidance arrangements that seek to avoid Income Tax and National Insurance contributions by paying scheme users their income in the form of loans.
HMRC is clear that these loans were never intended to be repaid and are no different to normal income and are therefore taxable. HMRC is encouraging tax-payers affected to come forward and settle their tax affairs before a charge on these outstanding loans comes into effect.
The charge will not arise on outstanding loans if the individual has agreed a qualifying settlement with HMRC before 5 April 2019. HRMC is offering flexible payment arrangements to those having genuine difficulty paying what they owe. For example, HMRC will allow scheme users to spread their payments over 7 years if their current taxable income is less than £30,000, and 5 years if their current taxable income is less than £50,000. This offer only applies if the taxpayer is no longer engaged in tax avoidance and takes sufficient action before 5 April 2019. HMRC will look at other taxpayers on a case-by-case basis.
Although the deadline is fast approaching, HMRC has been clear that you will not be disadvantaged if you provided the relevant information by 5 April but have not been able to settle due to a delay at HMRC.
For more information on Income in the form of loans, Book a Free Consultation