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<p>DR schemes are contrived arrangements that pay loans in place of ordinary remuneration,
usually through an offshore trust, with the sole purpose of avoiding income tax and
National Insurance contributions. The loans are provided on terms that mean they are
not repaid in practice, so they are no different to normal income and are, and always
have been, taxable.</p><p> </p><p>HM Revenue and Customs (HMRC) will always seek payment
of the loan charge from employers in the first instance. It is only where HMRC cannot
reasonably collect from the employer, for example where the employer is no longer
in existence or is based offshore, that the individual will be liable to pay the tax
due. Around 75% of overall yield from the measure is expected to come from employers.</p><p>
</p><p>Only an employer, or umbrella company established for the purpose, can originate
a DR scheme. Recruitment agencies match individuals with engagers who require their
labour. In most cases recruitment agencies do not employ the individual in question.
Where a recruitment agency used a DR scheme to reward their employees they will be
liable to pay the loan charge in the first instance.</p>
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