Contractor loan schemes
In our newsletter on 14 September 2017, we told you about HMRC’s complaint to the Advertising Standards Authority (ASA) about a tax avoidance scheme, which used disguised remuneration trusts to make loans to the business owners. That complaint was upheld.
HMRC has complained again about another tax avoidance scheme concerning contractors’ loans, and the ASA has also upheld that complaint.
It seems incredible that such schemes are still being advertised, and that the only way to get that advertising removed is for HMRC to complain to the ASA. However, it is comforting that the ASA ruling will apply to all advertising of similar schemes, and not just to the promoter named in the complaint.
If you have used a contractor loan scheme in the past, you will need to pay the tax avoided before the contractors’ loan charge comes into effect from 5 April 2019 (see newsletter 31 March 2016 and Spotlight 32). If the loan scheme involved a company located in the Isle of Man, the Channel Islands, or in another offshore financial centre, the requirement to correct (RTC) will apply.
We explained in our newsletter on 8 February 2018 how penalties of 200% of the tax due will be imposed under RTC, if the taxpayer does not make a disclosure of tax related to offshore interests before 30 September 2018. HMRC have produced a useful short summary of the requirement to correct rules.
Written by the Tax Advice Network