If you’ve ever used a Contractor Loan Scheme to reduce your tax bill then you should watch out for a letter from HMRC dropping through your letterbox.
HMRC is targeting individuals who have entered into a contract of employment with an offshore employer while providing their services in the UK. Schemes like this work by allowing an individual to receive a large portion of their fees as an almost tax-free loan (apart from a small benefit in kind change for unpaid interest).
However, HMRC thinks that this is a little bit naughty and is challenging contractors and other professionals who have entered into such a scheme by opening enquiries into recent tax returns (2008 – 2011) for the periods during which they have used a loan scheme. If it appears that an individual has avoided tax, then the individual will receive a tax bill for the tax owed, plus the appropriate penalties and interest on the avoided tax.
If you receive an assessment you can either:
- accept the assessment and pay the tax due
appeal against the assessments and begin the process to have your case heard by an independent tax tribunal if you can’t reach an agreement with HMRC
Get in touch with us for advice on this issue. We can also tell you how to maximise your tax position without getting on the wrong side of the taxman.