Spotlight on Contractor Loan Schemes
Wednesday October 2015
According to recent guidance published by HMRC, contractors and freelancers have been bombarded by promoters who make claims that they can help individuals take home up to 90% of their income using a contractor loan scheme. These arrangements artificially divert the income through a chain of companies, trusts or partnerships and pay the contractor in the form of a ‘loan’.
HMRC are adamant that these schemes do not work and are strongly advising contractors and freelancers to keep well away from them. Individuals who have been using the schemes are being encouraged to withdraw and settle their tax affairs as soon as possible to avoid substantial penalties and interest charges being incurred.
HMRC have added a new module entitled Contractor loan schemes – too good to be true (Spotlight 26) to their Spotlight series, which covers various tax avoidance schemes that HMRC consider to have wide tax implications. The module, which can be found here https://www.gov.uk/government/publications/spotlight-26-contractor-loan-schemes-too-good-to-be-true/spotlight-26-contractor-loan-schemes-too-good-to-be-true, may be of interest to anyone using, or considering using, a contractor loan scheme.
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