Settlement opportunity for remuneration trust arrangements

On 11 April 2022 HMRC released a new settlement opportunity (RTSO) for participants in tax avoidance arrangements commonly known as remuneration trusts (RTs) or creditor protection trusts (tinyurl.com/w7twnpht).

We understand these arrangements were chiefly promoted by one prominent adviser and have been implemented by a significant number of companies owner-managed businesses and self-employed sole traders or partnerships. They typically involve a contribution of funds to a trust followed by loans to directors/shareholders or business owners by an administrator or personal management company acting in a fiduciary capacity. The loaned funds are not treated as employment earnings and not subject to PAYE and National Insurance by the taxpayer and a corporation tax deduction is claimed on the contribution.

The new RTSO is HMRC’s latest move to tackle ‘disguised remuneration’ schemes where it believes the arrangements do not work as intended nor achieve the tax advantages which...