HM Revenue And Customs To Investigate An "Offshore" Contractor Payment Solution
With the increase in scrutiny that various governments are bringing to the fore, as a contractor it’s essential to be extremely careful about any scheme that could modify tax obligations.
Contractors need to be very careful to ensure that they’re in compliance when it comes to their tax affairs at all times. This also means that they need to be careful when choosing tax solution providers, to try to avoid any scrutiny, either now or in the future.
This is perfectly illustrated by a current investigation by HM Revenues and Customs into a particular “offshore” solution offered by Sanzar Solutions between 2008 and 2011. According to ContractorUK, a specialist website, letters are being sent out that include new assessments to some of those who may have set up Employee Benefit Trusts with Sanzar.
In this case the government believes that the EBT focused on providing employee loans, where the contractor received a smaller salary and a balance of revenue in the form of a loan. There is a dispute over how these loans were accounted for and the government maintains the contractors in question did not effectively pay the correct amount of tax.
It is interesting that the government’s position is that many of these EBT loans were mentioned in an original contract and as such would be classified as part of a salary arrangement. This would make the loans subject to normal income tax and national insurance deductions.
Professional Representation Network believes that it’s important to draw attention to these situations so that the contractor can be as educated and as prepared as possible. Here, even though the solutions provider was based in the Isle of Man, the government maintains that the amounts in question were related to contractor work in the UK and as such “taxable.”
We’re likely to see a number of appeals in relation to this particular affair and most likely an increase in the number of disputes on file in London. It’s an illustration of the need to get professional legal advice at every stage, especially when it comes to entering into any arrangement or scheme that could modify a contractor’s tax obligations.
The Professional Representation Network is a complete contracting provider, providing a variety of services to contractors from varying industries around the world. PRN identifies opportunities, negotiates contracts and provides support to contractors at every stage of the relationship. Relying on 40 years of experience in consulting and representation and access to an established network, PRN brings passion to help develop a contractor’s professional life.
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