BUDGET 2016: HMRC AND IT CONTRACTOR LOAN PAY SCHEMES

WHAT IS CHANGING?

2016 BUDGET CONTRACTOR LOAN PAY SCHEMES

The Government proceeds to introduce legislative changes to deal with the large number of outstanding legacy and the more recent cases involving open appeals and enquiries for individual contractors and scheme providers involving loans as “disguised remuneration” through the use of alleged tax avoidance schemes.

HOW WILL THIS BE ACHIEVED

Through a package of enactments including additional targeted anti avoidance rules in the Finance Bill 2016 and subsequent years.

THE BACKGROUND

There has been a lack of activity by HMRC in litigating cases since the Philip Boyle decision and the Contractor Loans Settlement Opportunity which ended on 30 June 2015.

This may be due to the complexity and diverse nature of the many schemes which does not make litigation a practical possibility to resolve all open disputes many of which have dragged on for years.

HMRC say they will continue to litigate these cases.

HMRC are under pressure to settle these long standing disputes pre 2011 and to introduce measures to curb the use of post 2011 schemes many of which are not DOTAS registered since the scheme providers do not consider the arrangements to be tax avoidance.

WHO IS AFFECTED?

Those who have used or continue to use pay schemes that avoid tax and NIC on remuneration treated as loans.

HOW LONG WILL IT TAKE?

The Government’s objective is to tax as earnings all relevant loans that have not been fully taxed or repaid by 5 April 2019.

There will be a consultation process but the new law is likely to include retrospective action.

 

Any contractors wishing to discuss these proposals should telephone us on 020 8958 2653 to discuss.