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Deadline Looms For HMRC's Contractors Amnesty

Tuesday, September 22, 2015

Accountancy firm Moore Stephens has reminded UK contractors who used "contractor loan" tax planning schemes that they have until September 30 to finalize settlements with HM Revenue and Customs (HMRC) or risk significantly larger bills.

The Contractor Loan Settlement Opportunity has already been extended twice. It was previously scheduled to close in January 2015, and again in June.

Dominic Arnold, Head of Tax Investigations and Disputes at Moore Stephens, said: "This is certainly a settlement opportunity worth strong consideration – a contractor who decides to settle individually later is unlikely to be able to get the same terms. This settlement opportunity certainly seems to have been very heavily subscribed, as the closing date has already been pushed back twice due to the backlog of cases. The feeling is, however, that this really is the final deadline."

According to Moore Stephens, the majority of the contractors involved in the schemes are middle-income workers in the IT, oil and gas, and banking sectors, with an average income of between GBP60,000 (USD92,978) and GBP80,000 per year.

The amnesty is available to anyone who engaged in a Contractor Loans scheme before April 6, 2011. HMRC said that such schemes purport to reduce the amount of tax an individual pays on their income by making payments that claim to be "loans" from a trust or company. These arrangements artificially divert the income through a chain of companies, trusts, or partnerships, and pay the contractor in the form of a "loan."

The loans are alleged to be non-taxable because they do not form part of a contractor's income. HMRC said that in reality the "loans" are not repaid and the money is used by the contractor as if it were their income. It is HMRC's view that these schemes do not work.

The Contractor Loan Settlement Opportunity offers affected contractors the opportunity to settle their tax affairs by paying tax and interest on the value of the loans. Under the amnesty, they do not have to pay National Insurance contributions (NICs) or penalties. HMRC may also consider waiving tax for years where it has failed to take appropriate action.

Arnold added: "While this opportunity is only for contractors who used these loan schemes prior to 2011, we would advise anyone who has used them since that date to consider approaching HMRC through their accountants. HMRC has been taking a balanced approach, and taking into account reasonable requests for payment arrangements, which makes settlement worth investigating for those with exposure to contractor loan schemes."

"The vast majority of those involved in contractor loans did not fully appreciate the risk they were taking when they were sold the schemes – it seems HMRC is taking that into account with the terms on offer."

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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