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Budget 2014 & Topical Anti Tax Avoidance Measures


The following are some sample extracts of worrying signs for “participators” of schemes and exposure involving vendors promoting disguised arrangements in a variety of forms.

The usual suspects such as use of intermediaries, dual contracts, LLPs, deferred remuneration, BPRA, Capital Allowances and Films are of particular concern with growing sharks teeth in the jaws of HMRC Counter Avoidance Directorate.

Firstly, let me say this. If the cliché about it looks too good to be true is applicable then it probably is.

So if you want arrow like tax advice whereby you are a high net worth earner, an offshore worker, director of an owner manager business, under an HMRC Enquiry of any sort, etc and need practical tax advice then please contact Tax Networks Ltd and give me a call.

Onshore employment and Employment Intermediaries

First, I believe following the introduction of the Statutory Residency Test and criteria for Non Residence from 6th April 2013, the 90 rule still applies but there are new criteria and there is no substitute for careful record keeping if a person wants to qualify for non-resident purpose when UK residence is still retained. A genuine non-residence status will ensure there is no UK tax liability arising for the year ended 5th April 2014 and so on.

So why take a risk with something dressed up with the intention to take a contrived tax advantage, especially when a look at current HMRC Counter Avoidance activity and parliamentary intentions?

For instance, from 6 April 2014 legislation will be introduced with effect to prevent onshore employment intermediaries being used to avoid employment taxes and obligations by disguising employment as self-employment.

The latest Budget announced that the legislation will be introduced in Finance Act 2014 to ensure that from 6 April 2014 the correct amount of tax and NICs is paid when UK and UK Continental Shelf workers are employed by offshore companies or engaged by or through offshore employment intermediaries. Part of the measures place a record keeping requirement and return obligation on intermediaries placing workers with end clients but not deducting income tax and NICs at source.

Artificial Use of Dual Contracts by Non-domiciles

Certain income which currently constitutes general earnings from an overseas employment, income from overseas employment-related securities or overseas income provided through third parties which is subject to the remittance basis will in future be taxed on the arising basis.

This will apply to income associated with an overseas employment where:

  1. the individual has both UK and overseas employment with the same or associated employers;
  2. the UK and overseas employments are ‘related’ to each other; and Budget Summary 2014 4;
  3. the foreign tax rate applying is less than 65% of the UK additional rate of tax (which is currently 45%).

This will not apply to income that falls within the three-year period for Overseas Workday Relief. The measure will not apply to nominal directorships (owning or controlling less than 5% of ordinary share capital) nor to employments held for legal or regulatory reasons.

This measure will apply to income arising from 6 April 2014, but not if such income relates to duties performed before that date.

Limited Liability Partnerships (LLPs): Treatment of Salaried Members

New rules (the ‘salaried member rules’) taking effect on 6 April 2014 will change the treatment of a salari