contractor borrowing

Dressing up loans won’t work

HMRC warns loan scheme window dressing is futile

HMRC is aware of claims to avoid the 2019 loan charge on disguised remuneration being made by promoters of tax avoidance schemes, and warns that these do not work. Last month the Revenue published Spotlight 39 to explain its rationale.

How re-describing loans is claimed to work

Participants of tax avoidance schemes that employ the use of loans are being told that they can sign documents saying that the sums they have received from their disguised remuneration scheme under loan arrangements are not loans at all. Instead, these sums of money are merely held by them in a ‘fiduciary capacity’; for example, an individual acts in a fiduciary capacity if they hold money, or assets, for the benefit of someone else and not themselves.

Give the scheme a wide berth

HMRC state that renaming something now doesn’t change what happened in the past. Attempting to describe a loan as something else doesn’t mean it is not a loan.

The loan charge will apply to more than just loans, including any form of credit or other right to a payment regardless of what it’s called. Anyone adopting this approach and choose not to reflect the loan charge on their tax return may face a significant penalty in addition to the tax charge.

Deliberately misleading, or concealing information from HMRC may result in criminal prosecution.

Existing scheme users

Reflecting the legislation, the only way to avoid the loan charge in 2019 is by making a repayment of the loan balance, or settling their liability with HMRC in advance.

If you are already speaking to someone at HMRC about your use of a disguised remuneration scheme, you should contact them. Alternatively, if you are not in contact with anyone at HMRC, you can e-mail

Information on how to identify tax avoidance schemes can be found by visiting – Tax avoidance: an introduction.


  • Brillo Pad says:

    “HMRC state that renaming something now doesn’t change what happened in the past.”

    Of course that was exactly what HMRC did with DTA and their “retrospective clarification”.

    HMRC are bullys, liars and cheats. If they make a mistake its okay. If a taxpayer makes a mistake its fraud.

    They lie to parliament and get away with it.

  • rocket says:

    AS Brillo Pad said its ok for them to change the rules and go after people

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