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Spotlight 52

On 15 May 2019, HMRC issued Spotlight 52 on tax avoidance using offshore trusts.

This follows successes in cases involving Hyrax Resourcing Ltd and Curzon Capital Ltd. In both cases, the first tier tribunal held that these were schemes that came within the scope of DOTAS regulations and should have been notified to HMRC.

The schemes are disguised remuneration schemes. Most of the earnings are paid to an offshore trust in a low taxation jurisdiction. A small salary is paid in the UK to utilise the personal allowance and maintain a person's entitlement to a state pension.

Money is then "lent" from the trust to the individual, though with no expectation that the loan will be repaid. A loan is not regarded as a taxable payment. In reality, the loan is never repaid and is written off. The scheme is intended to avoid both employer's and employees' national insurance and PAYE. These schemes are now caught by disguised remuneration rules.

HMRC now says that it will issue accelerated payment notices (APNs) to bring into immediate charge the income tax and national insurance that is due. [19.05]