Referring to the decision in LM Ferro Ltd [2013] TC 02853, HMRC's new Spotlight confirms the view of the tax authority that such schemes to avoid tax do not work because if an employer pays what is really a bonus, tax and NICs are due no matter how it is dressed it up. The First-tier Tribunal found that the tax avoidance scheme entered into by the taxpayer amounted to a bonus in ‘money’ liable to income tax under PAYE and National Insurance contributions (NICs), rather than a bonus in shares.
HMRC is looking at similar avoidance schemes marketed by other promoters and has indicated that cash received by beneficiaries of awards in those schemes is also chargeable to income tax and NICs.
Those that make use of such schemes are expected to make full payment of the tax and NICs due, plus interest.
Those companies and employees affected should contact HMRC to settle their liabilities and prevent additional interest accruing. You can contact HMRC on Telephone 03000 532624.
HMRC has also pointed out that failure to take reasonable care when making returns may result in penalties.
HMRC's exact position can be read here... http://www.hmrc.gov.uk/avoidance/spotlights.htm
