Contractor Loan Settlement Agreement

HMRC has published updated guidance in relation to disguised remuneration schemes such as contractor loans and employee benefit trusts.

Earlier this year, HMRC extended the deadline by which individuals who have entered into such tax avoidance schemes could register their intent to make a settlement of any unpaid tax. The deadline was changed from May 2018 to 30th September 2018.

HMRC has provided further guidelines around the settlement opportunities for individuals to bring their tax affairs up to date.

The fear for many contractors is the threat of bankruptcy. However, HMRC has issued guidance in relation to ‘time to pay’ arrangements which will allow individuals to settle their unpaid tax liability over a period of up to 5 years.

Contactors looking to settle their tax liabilities following the use of such tax avoidance schemes can look to do so through a time to pay arrangement provided that:

• Their current taxable income does not exceed £50,000.
• They are no longer using a tax avoidance scheme.

HMRC will consider individual cases where individuals may require a longer period by which to pay their unpaid tax, or if their income exceeds £50,000.

The time to pay arrangements must be entered into before the April 2019 cut off date.

By offering these arrangements HMRC is hoping to encourage many contractors and freelance workers to come forward to make a voluntary disclosure of unpaid tax, rather than having to open tax investigations into individuals who have entered into such tax avoidance schemes as contractor loans and employee benefit trusts.

Our team of tax investigations and disclosures professionals have assisted many contractors in bringing their tax affairs up to date. We also provide a free initial phone consultation.

To clarify your tax affairs in complete confidence, talk to our team on 0113 387 5670, email us at enquiries@forthsonline.co.uk or fill out an Enquiry Form and we will contact you directly.