Disguised remuneration—the gateway
Produced in partnership with Pete Miller Miller Partnership for Tolley's Tax Digest and Karen Cooper of Cooper Cavendish LLP
Disguised remuneration—the gateway

The following Tax practice note Produced in partnership with Pete Miller Miller Partnership for Tolley's Tax Digest and Karen Cooper of Cooper Cavendish LLP provides comprehensive and up to date legal information covering:

  • Disguised remuneration—the gateway
  • Main case gateway
  • Close companies gateway
  • Person A (the employee)
  • Person B (the employer)
  • Relevant third person
  • Example 1—payment by employer
  • Example 2—employer acting as a trustee
  • Example 3—group of companies
  • Relevant arrangement
  • More...

Sections 554A–554AA of Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) are referred to by HMRC as the ‘gateway’ to the disguised remuneration legislation (this is not a legislative term). Part 7A applies where the conditions required by these sections are met and the gateway has been passed through.

Main case gateway

Broadly, ITEPA 2003, s 554A requires the following:

  1. an existing employee or a former or prospective employee or a relevant person linked to the employee (A) of another person (B). Employee for these purposes includes office-holders such as company secretaries and non-executive directors)

  2. a relevant arrangement (to which A is party or which otherwise (wholly or partly) covers or relates to A) which it is reasonable to suppose, in essence, is a means of providing, or is otherwise concerned with, the provision of rewards or recognition or loans in connection with A’s employment, or former or prospective employment with B, and

  3. a relevant step is taken by a relevant third person and it is reasonable to suppose that, in essence, such step is taken in pursuance of the relevant arrangement or that there is some direct or indirect connection between the relevant step and the relevant arrangements

Each of these terms, and the way in which they interact, is covered in detail by the legislation.

Close companies gateway

One of the key conditions of the main

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