Disguised remuneration: schemes claiming to avoid the new loan charge
07 December 2017
Guidance has been updated to clarify some points and also highlight that promoters claim to have come up with schemes that enable users to get out of the loan arrangements and avoid the loan charge, in return for a fee.
Disguised remuneration: schemes claiming to avoid the new loan charge (Spotlight 36) has been updated with the following:
Schemes claiming to avoid the loan charge
Some promoters claim to have come up with schemes that enable users to get out of the loan arrangements and avoid the loan charge, in return for a fee.
Spotlight 39 sets out details of one of these schemes. Another example is that some promoters say that individuals should enter into a bet with the trust that granted them the loan. The terms of the ‘bet’ mean the individual is almost certain to win, and then able to use the winnings to repay the loan. This scheme will not prevent the loan charge arising as the loan repayment is connected to a new tax avoidance arrangement.
These schemes don’t work. The only way you can avoid the new loan charge is by making a genuine repayment of the loan balance or settling the tax liability with HM Revenue and Customs (HMRC) in advance. Any repayments connected to a new tax avoidance arrangement will be ignored and the loan charge will still apply.