LOANS ARRANGERS RISK BEING CORRALLED BY HMRC

DSH Accountants KentWorkers who have avoided tax by being given loans rather than being paid with salaries or fees are the latest group to be targeted by HM Revenue & Customs, DSH Chartered Accountants & Business Advisors has warned.

Steve Carpenter, Director of Taxation at the Maidstone-based company, explained that typically the schemes saw a contractor employed by an organisation based somewhere such as the Isle of Man.

“The contractor will receive a nominal salary but will also be ‘loaned’ a further amount,” said Steve. “The combination of the nominal salary and the loan represent the total fee agreed for the work.

“It may well be that the loans have been declared and taxed as a benefit, but at a lower rate than would have been applicable if the sums had been declared as income.”

Steve added that HMRC believes that such ‘loans’ fall foul of anti-tax avoidance regulations as they are not true loans and are instead employment income. It has launched a campaign aimed at giving those who have used such a system a chance to settle with the taxman.

DSH-Steve-Carpenter“Anyone who has used such a loan scheme has until January 9, 2015 to come to a settlement with HMRC,” said Steve. “That will involve paying unpaid income tax on loans, plus any interest on that unpaid tax, but HMRC will then consider that file to be closed.”

However, Steve added that failure to reach a settlement would see HMRC pursue the case and seek to recover the income tax owed, National Insurance Contributions if the income is taxed as employment/self-employment income, and inheritance tax if the loan arrangements involve a trust fund.

In addition, HMRC will claim more interest on unpaid income tax if it has to pursue a case than if individuals come forward to seek a settlement.

“HMRC is sending letters to all those it believes has benefitted from employer loan schemes,” said Steve.

“If you receive one, or if you know you have used such a scheme, I strongly advise you to talk to your accountant or business advisor about what to do next.”

To find out more about DSH Chartered Accountants & Business Advisors, visit www.dsh.co.uk or call 01622 690666.

 

Add Comment

4 − 1 =