Disguised remuneration and EBTs

FORTHCOMING CHANGE: As announced at Autumn Budget 2024, the government has commissioned an independent review of the loan charge. The review, announced on 23 January 2025, will ‘examine the barriers preventing those who are subject to the loan charge but have not already settled and paid their tax liabilities in full from reaching resolution with HMRC’ and will ‘recommend ways in which they can be encouraged to settle with HMRC’. To assist with the review, a call for evidence, aimed at those who remain subject to the loan charge (and their advisers), was published on 28 March 2025. The outcome of the review, with recommendations, will be reported and presented to the Exchequer Secretary to the Treasury ‘by Summer 2025’. For more on the review, see News Analysis: Autumn Budget 2024—Independent review of the loan charge. HMRC has confirmed the operational activity it will undertake while the independent review is ongoing. This includes sending letters (and a Q&A document) to affected taxpayers setting out whether HMRC believes the disguised remuneration arrangements used by the taxpayer will be of the type considered by

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Latest Tax News

Tax weekly highlights—22 May 2025

This week's edition of Tax weekly highlights includes: (1) the Court of Appeal decision in Impact Contracting Solutions, (2) regulations being made to increase penalties for late payment of tax, (3) an ex-solicitor being given the first individual tax avoidance stop notice, and (4) News Analysis articles being published about the decisions of the First-tier Tax Tribunal (FTT) in Industria Umbrella and Powell.

Court of Appeal—facilitators of VAT fraud can be deregistered even if they make legitimate taxable supplies (Impact Contracting Solutions Limited v HMRC)

Tax analysis: In Impact Contracting Solutions Ltd (ICS), the Court of Appeal upheld the Upper Tribunal (UT) decision that HMRC has the power to deregister a taxable person for reasons related to tax fraud, even if the taxpayer makes other legitimate taxable supplies, provided that the deregistration is a proportionate step in the circumstances.

FTT decides that an income tax charge arose on the novation of a director’s loan account (Powell v HMRC)

Tax analysis: In Powell, the First-tier Tax Tribunal (FTT) dismissed the taxpayer’s appeal against a closure notice charging income tax under section 415 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) in respect of the release of a close company loan to a participator.

FTT imposes maximum £1m DOTAS penalty for failure to notify (HMRC v Industria Umbrella)

Tax analysis: In HMRC v Industria Umbrella, the First-tier Tax Tribunal (FTT) held that, when considering the quantum of a penalty for the failure to notify arrangements under the disclosure of tax avoidance schemes (DOTAS) rules, the amount determined by the daily penalty calculation was insufficient, holding instead that the maximum £1m penalty was necessary. The FTT noted that the fees charged by the promoter were high-level, and given the question of whether the arrangements were notifiable was not complex, there was no reason for non-compliance.