Tax avoidance – Spotlights
HMRC Spotlights identify specific tax avoidance schemes that HMRC have become aware and which they consider are not likely to have the legal effect desired by those thinking of using them. According to HMRC, the Spotlights series is designed to help taxpayers avoid unwittingly entering into arrangements that HMRC are likely to see as tax avoidance.
In the Spotlights series HMRC:
- Provide some advice on tax planning to be wary of, listing some indicators that HMRC see as suggesting that a scheme may involve tax avoidance and which it is likely to investigate.
- Identify specific schemes which, in HMRC’s view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, they will make a challenge and seek to ensure full payment of the right tax with the right due date.
HMRC has recently added two new Spotlights to its growing list:
- Spotlight 35 – Disguised remuneration: tax avoidance using annuities. This scheme involves using annuities as an alternative method of paying people for their services, in order to avoid paying tax and NICs on their income. HMRC’s view is that this scheme doesn’t work and will challenge all users of this scheme and investigate their tax affairs.
- Spotlight 36 – Disguised remuneration: schemes claiming to avoid the new loan charge. Some promoters claim to have come up with schemes that enable users to get out of existing avoidance schemes and avoid the new loan charge, in return for a fee. HMRC’s view is that this is not possible and only way you can avoid the new loan charge is by making a repayment of the loan balance or settling the tax liability with HMRC in advance.
HMRC is encouraging any taxpayers using these schemes to consider settling their tax affairs relating to this matter. We can help advise you on the underlying issues and where necessary approach HMRC on your behalf.