Users of contractor loan schemes are being given the opportunity to pay back the tax they owe before further action is taken, according to the Shout 99 website, which provides news and information to small businesses and freelancers.
A typical user of these ‘tax avoidance schemes’ is likely to owe £11,000 per year in tax.
The news is expected to affect around 16,000 users, who could face even higher bills as well heavy as legal costs if they ignore the warnings of HM Revenue and Customs (HMRC). A typical user of these ‘tax avoidance schemes’ is likely to owe £11,000 per year in tax.
These schemes, states HMRC, involve “complex arrangements with individuals signing a contract of employment with an offshore employer”. When the contractor is paid, they receive their money via an offshore company trust, which they then claim as a non-taxable loan, as opposed to an income-related payment.
The article quotes Jennie Granger, director general for enforcement and compliance at HMRC, as saying that many contractors “regret getting involved with complex aggressive tax avoidance schemes” such as these, which is why HMRC is giving them the chance to straighten their tax affairs themselves.
The opportunity for settlement relates to schemes that were adopted before the Disguised Remuneration rules were introduced in April 2011. HMRC have stated that they will, however, discuss any settlement of scheme use during this time with anyone who wishes to come forwards.
HMRC is currently contacting those who owe tax to advise them how to resolve their case. With HMRC’s strong track record of success in court, winning around 80% of all tax avoidance cases, Granger advises users against challenging their decision.