Disguised Remuneration

This work explains the practical application of a body of tax legislation that was first enacted in 2011, and that has been amended or re-enacted in most subsequent years.

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About this work

This detailed, technical book is aimed squarely at professional advisers.

The legislation has had a devastating impact on many of the more than 50,000 participators in the schemes, who have ended up much worse off than if they had never entered into the scheme in the first place, even though in reality they often had no choice but to do so if they wanted to accept the remunerative work on offer.

Although formally headed “Employment income provided through third parties”, the scope of the rules is in reality much wider and can give rise to charges to tax and NIC even if no employment income is received by the employee. The charge also extends to close company directors and even to self-employed contractors.

Table of contents

• Introduction and background

• The main case

• Relevant steps

• The close companies case

• Exclusions from a DR charge

• Other pension-related exclusions

• Other exclusions

• The charge to income tax imposed by the DR rules [expanded by way of example]
  • Introduction
  • PAYE
  • National Insurance contributions
  • Residence issues
  • Successive charges on the same amount – alternative forms of relief
  • Overlap of amount subject to a DR charge with certain earnings
  • Reduction to reflect exercise price of share option
  • Cases in which consideration is given for the relevant step being taken [expanded by way of example]
    • Consideration given for the transfer of an asset
    • Meaning of “before, at or about”
    • Deferred payment terms
    • Possible alternative structures
    • Sales of shares (or other assets) by an employee to a relevant third person
    • Interaction of a DR charge with the remittance basis of charging income tax

• Death

• Reliefs against double taxation

• Disguised trading income of the self-employed

• Employer undertakings in relation to retirement benefits

• Restrictions on income tax and corporation tax reliefs

• Liabilities to inheritance tax in relation to the use of trusts

• The 2019 loan charge

• After the loan charge

• HMRC powers to curb DR schemes

• Other relevant material