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<p>Disguised Remuneration (DR) schemes are contrived arrangements that pay loans in
place of ordinary remuneration with the sole purpose of avoiding income tax and National
Insurance contributions.</p><p> </p><p>HMRC is working hard to help individuals get
out of tax avoidance for good and is encouraging anyone who is concerned about their
ability to pay what they owe, to contact them as soon as possible to discuss their
position. In November 2017, HMRC set up a dedicated helpline for those wanting to
settle their avoidance scheme use, and discuss payment options. HMRC will work with
all individuals to reach a manageable and sustainable payment plan wherever possible.</p><p>
</p><p>Since the announcement of the 2019 loan charge at Budget 2016, HMRC has now
agreed settlements on disguised remuneration schemes with employers and individuals
totalling over £1 billion. Pay As You Earn (PAYE) liabilities fall on the employer
in the first instance. The charge on DR loans does not change this principle and the
employee will only be liable where the amount cannot reasonably be collected from
the employer, such as where the employer is offshore or no longer exists. Around 85%
of the settlement yield since 2016 is from employers, with less than 15% from individuals.</p><p>
</p><p>HMRC has also introduced a simplified process for those who choose to settle
their use of DR avoidance schemes before the loan charge arises. DR scheme users who
currently have an income of less than £50,000 and are no longer engaging in tax avoidance
can automatically agree a payment plan of up to five years without the need to give
HMRC any information about their income and assets. This arrangement has been extended
to 7 years for scheme users who have an income of less than £30,000.</p><p> </p><p>Those
who consider they need more than five (or seven) years to pay what they owe or who
earn £50,000 or more should still come forward and talk to HMRC about payment terms.
There are no defined minimum or maximum time periods for payment arrangements and
HMRC can tailor any payment plan to their individual financial circumstances.</p><p>
</p><p>The Government has introduced comprehensive double taxation provisions to ensure
that no individual will pay income tax twice on the same income. More information
is included in the DR Technical Note published by HMRC on 5 December 2016. Where employers
have paid the income tax and NICs due on loans made through these schemes, the individual
will not be liable to the loan charge.</p><p> </p><p>Information on the proportion
of employers who paid their employees through an Employer Benefit Trust (EBT) arrangements
and have paid the PAYE and NICs due is not readily available and could only be provided
at disproportionate cost.</p><p> </p><p>A list of scheme providers that have paid
taxes on loans given to individuals through an EBT scheme cannot be released because
of HMRC’s duty of confidentiality.</p>
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