Rebranding loans to avoid a controversial income tax charge scheduled for 2019 on “disguised remuneration” will not work, HMRC has warned, while tax professionals insist the proposed charge is disproportionate. Scheme users are being told they can sign documents saying that the sums they’ve received under loan agreements are not loans at all, HMRC said in an August 10 statement …
The U.K. government announced in the 2016 budget that there would be a new charge on “loans paid through disguised remuneration schemes which have not been taxed and are still outstanding on 5 April 2019” …
The loan charge formed part of the finance bill published in March, but it was one of several measures dropped to make way for the general election in June. A revised draft measure including six clarifying amendments was published July 13.
“We do not condone disguised remuneration schemes but we do feel that the remedy contravenes normal standards of fairness,” said the Tax Faculty of the Institute of Chartered Accountants in England and Wales on its website July 25. Peter Bickley, a technical manager at the Tax Faculty, told Tax Analysts that if the charge is passed into law, its application should be proportionate, perhaps “going back no more than six years before the measure was announced.” Making taxpayers bankrupt would not help the exchequer, he said.
Read more: My news story for Tax Analysts, August 14 (paywall)
See also the Tax Faculty’s updates and representations of July 25 and April 20.
Tax professionals have also noted that HMRC will need to consider, in taking forward the proposed loan charge, the impact of the Supreme Court’s recent decision in the “Rangers case”.