MTD – discuss and learn, Loans and disguised remuneration, NI numbers validation

Last week we examined how your accountancy practice may be affected by making tax digital, and how you can start to prepare. We also reviewed HMRC’s current position on loans which have been used to replace salary, which tend to be provided through employee benefit trusts (EBTs). Finally, we had news about valid national insurance numbers – a vital cog in the PAYE system.

This is an
extract from our topical tax tips newsletter dated 8 September
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Loans and disguised remuneration 
The Government is using all the means within its power to discourage the use of loans to replace remuneration, and in particular loans made by employee benefit trusts (EBTs). The law has been changed to ensure such loans don’t provide a taxadvantage, and settlement opportunities have been provided for existing schemes.

If your client was drawn into a using an EBT, but didn’t settle with HMRC before 31 July 2015, they still have a chance to make a settlement. However, the taxtreatment will be different for certain aspects, which HMRC helpfully summarised in one table. 

One of the lines within that table refers to investment growth on funds held within the EBT. HMRC’s view is that this investment growth must be taxed, but there is some transitional relief on who bears the tax. To access that transitional relief the taxpayer who set up the EBT (or similar trust) must apply to HMRC before 31 October 2016. 

Taxpayers who used contractor loan schemes can still settle with HMRC, and there doesn’t appear to be an end date to that settlement opportunity.

This is an
extract from our topical tax tips newsletter dated 8 September
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

The
full newsletter contained the remainder of this item plus links to related source material and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week.
You can obtain future issues by registering here>>>