Settlement deadline extended by four months for employers, employees and contractors who have used disguised remuneration loan schemes
Typically, disguised remuneration schemes involve employees and contractors being paid through a third-party such as an employee benefit trust (“EBT”) rather than being paid by the employer directly. In order to clamp down on these schemes the government introduced the disguised remuneration legislation in Finance Act 2011. New Legislation in Finance (No 2) Act 2017 went a step further and introduced a new tax charge on loans where a loan made after 6 April 1999 remains outstanding at 5 April 2019. The tax charge is at current rates of tax rather than the historic rate in place at the time the loan was made.
HM Revenue and Customs (“HMRC”) has encouraged users of these schemes to settle their tax affairs before the loan charge comes into effect on 5 April 2019. The settlement opportunity opened in November 2017 and employers, employees and contractors had to register their interest by 31 May 2018 and provide the information required to agree a settlement to HMRC by 30 September 2018.
HMRC has now announced that it is necessary to register 'as soon as possible' thereby extending the registration deadline. However it is still necessary to provide all of the required information by 30 September 2018. As HMRC warns, if all of the required information is not provided by 30 September 2018 you may be unable to reach a settlement prior to the imposition of the loan charge on 5 April 2019.
This is a welcome move extending the opportunity for those who wished to settle but missed the previous 31 May registration deadline, but those interested should now register without further delay and focus on collating and providing the information required to settle at the very latest by 30 September 2018.
The required information is, as follows for:
- the company name and company reference number
- PAYE reference number
- amounts and dates of funds paid into the scheme
- details of any corporation tax relief claimed on the contributions to the scheme
whether you want to claim a benefit in kind offset - if so, the relevant employees’ details, how much and for which years
Employees and contractors (settling separately from the employer/engager)
- your unique taxpayer reference ("UTR")
- your National Insurance number
- the amount of contractor loans or contributions made 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 your employer/engager
The settlement terms need to be agreed and the tax and National Insurance Contributions need to be paid, or a time to pay arrangement put in place by 5 April 2019 before the loan charge takes effect.
How can Blick Rothenberg help?
We have considerable experience of helping clients to settle their tax affairs relating to disguised remuneration schemes and can assist by:
- helping you to understand your options and whether or not you should register your interest to settle with HMRC
- assisting you to collate the information that will be required to settle
- managing the whole process through to settlement with HMRC
agreeing time to pay arrangements with HMRC
For more information, please contact Lynne Pearson
, Gary Gardner
or Jessica McLellan