To ask the Chancellor of the Exchequer, how much of the £650 million that HMRC has collected from employers since 2016 in relation to disguised remuneration schemes has come from (a) PAYE and national insurance contributions on loans made to employees under an employment benefit trust scheme and (b) penalties and fines due to the failure of employers to register those schemes under the disclosure of tax avoidance schemes process.
To ask the Chancellor of the Exchequer, with reference to the Loan Charge 2019, what safeguards his Department has put in place to prevent double taxation in cases where the taxes now due on employment benefit trust loans have already been collected from scheme providers.
HMRC is working hard to help individuals get out of tax avoidance for good and is encouraging anyone who is concerned about their ability to pay what they owe, to contact them as soon as possible to discuss their position. In November 2017, HMRC set up a dedicated helpline for those wanting to settle their avoidance scheme use, and discuss payment options. HMRC will work with all individuals to reach a manageable and sustainable payment plan wherever possible.
Since the announcement of the 2019 loan charge at Budget 2016, HMRC has now agreed settlements on disguised remuneration schemes with employers and individuals totalling over £1 billion. Pay As You Earn (PAYE) liabilities fall on the employer in the first instance. The charge on DR loans does not change this principle and the employee will only be liable where the amount cannot reasonably be collected from the employer, such as where the employer is offshore or no longer exists. Around 85% of the settlement yield since 2016 is from employers, with less than 15% from individuals.
HMRC has also introduced a simplified process for those who choose to settle their use of DR avoidance schemes before the loan charge arises. DR scheme users who currently have an income of less than £50,000 and are no longer engaging in tax avoidance can automatically agree a payment plan of up to five years without the need to give HMRC any information about their income and assets. This arrangement has been extended to 7 years for scheme users who have an income of less than £30,000.
Those who consider they need more than five (or seven) years to pay what they owe or who earn £50,000 or more should still come forward and talk to HMRC about payment terms. There are no defined minimum or maximum time periods for payment arrangements and HMRC can tailor any payment plan to their individual financial circumstances.
The Government has introduced comprehensive double taxation provisions to ensure that no individual will pay income tax twice on the same income. More information is included in the DR Technical Note published by HMRC on 5 December 2016. Where employers have paid the income tax and NICs due on loans made through these schemes, the individual will not be liable to the loan charge.
Information on the proportion of employers who paid their employees through an Employer Benefit Trust (EBT) arrangements and have paid the PAYE and NICs due is not readily available and could only be provided at disproportionate cost.
A list of scheme providers that have paid taxes on loans given to individuals through an EBT scheme cannot be released because of HMRC’s duty of confidentiality.