Spotlight 51 Remuneration trust: tax avoidance using loans or fiduciary receipts
Released 10 May 2019
HMRC have issued Spotlight 51 about a tax avoidance scheme that attempts to disguise income and other taxable profits as loans or fiduciary receipts.
The scheme is being marketed as a wealth management strategy and claims to provide remuneration or profits free of tax. The scheme user contributes to a remuneration trust, with trustees based offshore. The remuneration trust is set up in a contrived manner and is claimed to provide benefits to individuals (beneficiaries) other than the scheme user. As part of the arrangements a personal management company is set up and controlled either by the scheme user or connected party supporting the scheme. The money contributed to the remuneration trust is actually paid - often minus the 10% scheme fee - to the personal management company. This allows the scheme user full access to the funds through unsecured loans or fiduciary receipts from the personal management company – it is claimed tax free.
HMRC’s strong view is that this and similar schemes do not work and HMRC will challenge both the promoters and users of this scheme. HMRC strongly advises anyone using this or similar schemes or arrangements to withdraw from it and settle their tax affairs.