HMRC is offering around 16,000 individuals who made use of contractor loan schemes the chance to settle and pay a total of £430m in tax owed, as an alternative to carrying on with legal action over what it describes as ‘particularly aggressive’ tax avoidance schemes
The settlement opportunity applies to schemes used before the Disguised Remuneration rules were introduced in April 2011. It relates to contractor loan schemes whereby individuals received their remuneration from contracts in the UK through an offshore company or trust in what are claimed to be non-taxable loans, rather than as income.
HMRC says these ‘particularly aggressive schemes’ were used by around 16,000 contractors each of whom, on average, owes £11,000 a year in tax. It will also discuss settlement of all scheme use with anyone who comes forward during the settlement opportunity period.
Scheme users have until January 2015 to take up the settlement opportunity. If they do, they will pay the tax and interest due on the sums they received as loans under the scheme. If they continue to challenge HMRC in the courts, they risk having to pay additional tax charges and penalties, plus the costs of litigation if they lose.
Jennie Granger, HMRC director general for enforcement and compliance, said: ‘This is an important opportunity and we are working hard to encourage users to withdraw from such schemes. We also want to ensure they've understood our position. They can choose to continue to litigate for a better outcome but they risk a worse result. HMRC has a strong track record of winning tax avoidance cases in court, with around 80% of decisions in our favour. The costs for users are high, potentially resulting in penalties, charges and significant legal costs for scheme users.’