HMRC has published details of tax avoidance schemes that are being used by employers, agencies and other intermediaries to avoid payment of income tax and national insurance contributions. These and other types of tax avoidance scheme are published in HMRC’s Spotlights, notifications aiming to publicise avoidance schemes that are considered by HMRC not to work. HMRC believes these tax avoidance schemes could be successfully challenged in the Courts. HMRC summarises the schemes and sets out what users of the schemes should do to bring their tax affairs into order. The Spotlights are available online on the UK government website.
One of the main types of tax avoidance scheme for remuneration is the loan scheme. These schemes involve the employees being paid a small amount of remuneration but the main part of the remuneration is paid in the form of loans from third parties.
On 10 August 2017 the latest Spotlight on contractor avoidance, Spotlight 39, was published with the title Disguised remuneration: re-describing loans. This type of scheme involves the scheme users receiving sums from their disguised remuneration schemes under loan agreements; but they can claim that the money is only held by them in a fiduciary capacity. In the view of HMRC this is just a different name for the transaction that does not change the facts of what has happened, and they consider that re-describing the loans does not change the reality.
