'Contractor loan scheme' settlement announced
30 Jul 2014
HM Revenue and Customs (HMRC) has announced it is offering a settlement opportunity for the 16,000 individuals who attempted to avoid income tax using the ‘contractor loan scheme’.
The settlement opportunity is open until 9 January 2015, and offers users of the tax avoidance scheme the possibility of paying the tax they owe in order to avoid even bigger tax bills and legal costs.
According to an HMRC report, ‘The schemes, used by a small minority of contractors to avoid paying their fair share, involve complex arrangements with individuals signing a contract of employment with an offshore employer. The contractor then receives their pay through the offshore company or trust as what is claimed to be a non-taxable loan, rather than income’.
The average figure owed by each participant is estimated to be £11,000 per year.
Jennie Granger, Director General for Enforcement and Compliance at HMRC, said: ‘Many people regret ever getting involved with complex aggressive tax avoidance schemes and HMRC is providing an opportunity for contractors to come forward and straighten their tax affairs’.
The full settlement opportunity can be viewed on the HMRC website here.