Disguised remuneration settlements

01 December 2016

Speed read

  • New legislation is being introduced to tax outstanding loans and investment growth from disguised remuneration schemes;
  • The legislation will apply from 5 April 2019, capturing arrangements such as EBTs and EFRBS;
  • We are seeing HMRC issue Accelerated Payment Notices in respect of some individual arrangements;
  • Affected taxpayers may still able to settle with HMRC ahead of the changes, but terms may be less favourable after March 2017.

We understand that the UK government intends to introduce legislation next year to ensure that all loans or debts outstanding from certain employee reward arrangements (such as EBTs, EFRBS and contractor loan schemes) will be taxed as earnings if they have not already been taxed or repaid by 5 April 2019. PAYE and NIC will therefore be payable on the value of the loans, as well as any investment growth in the structure.

The changes are part of a continued crackdown on these types of arrangements, which has also included new anti-avoidance legislation being introduced, as well as accelerated payment notices (APNs) being issued in respect of certain individual arrangements; APNs require payment of the disputed tax and NIC within 90 days.

Some HMRC settlement opportunities for these arrangements have already closed; for example, users of disguised remuneration arrangements (such as EBT and EFRBS arrangements), had until 31 October 2016 to register their interest to settle with HMRC if they wanted to benefit from transitional relief on investment growth.

Those who did not register by 31 October 2016 can still seek to settle with HMRC, however those who have not settled by March 2017 can expect to receive less favourable settlement terms. It is therefore important that those affected understand their options as early as possible.

It is important that any approach towards a settlement with HMRC looks to ensure maximum certainty over any past, or potential future, tax liabilities, taking full account of all of the options available and negotiating effectively with HMRC. For example, in certain circumstances it may be possible to agree a payment plan with HMRC to pay any liabilities in a manageable way.  

If you think that the changes outlined will potentially impact any of your clients, or you would simply like to know more about them then please contact a member of the team below who will be happy to provide you with further details and arrange a free consultation meeting.

PwC

If you think that the changes outlined will potentially impact any of your clients, or you would simply like to know more about them then please contact a member of the team below who will be happy to provide you with further details and arrange a free consultation meeting.

 Jessica McLellan on 020 7804 3502 or email: jessica.mclellan@uk.pwc.com
 Andy Olymbios on 020 7212 1238  or emal: andy.olymbios@uk.pwc.com
 Matthew Taylor on 020 7804 3407 or email:  matthew.g.taylor@uk.pwc.com
 Dipan Shah on 020 7804 0685  or email: dipan.shah@uk.pwc.com

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