Spotlight targets offshore remuneration trusts

HMRC has published Spotlight 51 highlighting a tax avoidance scheme that attempts to disguise income and other taxable profits as loans or fiduciary receipts.

Marketed by firms offering wealth management strategies, the scheme user contributes to a remuneration trust with trustees based offshore. The trust claims to provide benefits to individuals, other than the scheme user. The alleged beneficiaries are employed in the trade or profession of lending money. A personal management company is set up and controlled either by the scheme user or a connected party supporting the scheme. The money contributed to the trust is paid to that company. This gives the scheme user full access to the funds through unsecured loans or fiduciary receipts. It is claimed to be tax free and on terms not available from high street lenders.

HMRC understands that scheme users are told that they will always remain in control of the funds.

HMRC’s view is that the claims made by scheme promoters about the tax savings are not credible or genuine.