ACT NOW – Do you have clients that are in a disguised remuneration scheme?
If you have clients with an EBT or EFRBS arrangement where they have outstanding loans then action is required now. HMRC have introduced legislation to treat all loans outstanding on 5 April 2019 as taxable remuneration. The loan charge will apply to any outstanding loan balance. The tax involved is typically significant and advice should be taken on the options available.
Your clients have options. They can:
1. Explore settlement with HMRC – settling will close earlier tax years and prevent the 5 April 2019 loan charge arising. If they wish to take this option, they must register their interest in settling their tax affairs with HMRC before 31 May 2018. Settlement terms depend on the nature of the arrangement and are specific to a clients’ circumstances.
2. Repay the loan to the Trustees – which must be repaid in ‘money/cash’ and thus avoids the 2019 loan charge. Many clients will not be in a position to repay the loans.
3. Suffer the April 2019 loan charge – on any outstanding loan balance that has built up over the last 20 years as at 5 April 2019.
We can assist you in discussing the options with your clients and obtain settlement calculations from HMRC. Specialist representation with HMRC is vital so that an accurate settlement is reached that protects your clients.
Please note that the information given in this publication is for general guidance only and does not constitute advice. You should take no action without consulting your professional advisors.