HMRC are continuing to step up their efforts to recuperate unpaid tax through schemes that they deem as tax avoidance or tax evasion. The 2019 Loan Charge has been introduced by HMRC to recover unpaid taxes as a result of a disguised remuneration tax avoidance scheme, involving loans that were taken out since 6th April 1999. If this applies to you, you will be required to pay back what HMRC deems you to owe by the 31st January 2020.
The most common schemes were Employee Funded Retirement Benefit Schemes (EFRBS) and Employee Benefit Trusts (EBT). When used for tax avoidance, both involved the diversion of employment income to a trust; the trust would then ‘loan’ the employment income to the individual (meaning no PAYE/National Insurance tax was paid) who sought to benefit from the Scheme.
It is the responsibility of the employer/company to pay the 2019 Loan Charge under PAYE legislation. The employer is then expected to pass this cost on to the individual. Whilst the initial liability falls to the employer, it can be passed to the individual beneficiary of the scheme by HMRC if unpaid.
By contacting HMRC to settle your tax affairs now, you can obtain certainty of what you owe and if required, arrange a payment plan.
To learn more or for general tax advice, contact the Elta team today!