On 8 November, HMRC announced the terms under which a settlement with HMRC may be reached by contractors, employers and employees in respect of tax and national insurance contributions due in  respect of disguised remuneration charges for prior tax years.  The terms are available for disguised remuneration arrangements such as Employment Benefit Trusts (EBTs), contractor loan schemes and employer-financed retirement benefit schemes.

The terms are not lenient. Outstanding income tax, national insurance contributions and inheritance tax on all open years will need to be paid as well as voluntarily paying liabilities where HMRC is strictly out-of-time to assess.  Late payment interest will be due and there may also be tax-related penalties.

Although settlement will be expensive, it will have two main benefits. First it will mean that the planned disguised remuneration loan tax charge to be introduced from 5 April 2019 would not apply. Second, it will avoid the potential issue of follower notices and accelerated payment notices by HMRC for unsettled liabilities where litigation is in prospect.

The deadline for registration of an intention to settle liabilities is 31 May 2018.