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Legal Terms -disguised remuneration
Income tax is levied on income, along with certain capital receipts included within the income tax statute, such as payments received upon employment termination. To evade income tax, certain companies established agreements, such as providing an interest-free loan to an employee, without anticipating repayment from the employee. The Finance Act 2011 included laws to subject such arrangements to income tax. It was only with the Finance (No. 2) Act 2017 that the statute designated the arrangements it aimed to counter as providing the employee with “disguised remuneration.” “Disguised remuneration” is broadly defined as: “An arrangement [between A and B for which]...it is reasonable to assume that, fundamentally,...the arrangement serves (wholly or partially) as a means of providing...compensation or acknowledgment or loans related to A’s employment.” This concept has now been incorporated into Section 554A of the Income Tax (Earnings and Pensions) Act 2003.
The issue of whether it is plausible to assume that "disguised remuneration" has been received was examined in Benson v HMRC [2017] UKFTT 707 (TC).
Income tax is levied on income, along with certain capital receipts included within the income tax statute, such as payments received upon employment termination. To evade income tax, certain companies established agreements, such as providing an interest-free loan to an employee, without anticipating repayment from the employee. The Finance Act 2011 included laws to subject such arrangements to income tax. It was only with the Finance (No. 2) Act 2017 that the statute designated the arrangements it aimed to counter as providing the employee with “disguised remuneration.” “Disguised remuneration” is broadly defined as: “An arrangement [between A and B for which]...it is reasonable to assume that, fundamentally,...the arrangement serves (wholly or partially) as a means of providing...compensation or acknowledgment or loans related to A’s employment.” This concept has now been incorporated into Section 554A of the Income Tax (Earnings and Pensions) Act 2003.
The issue of whether it is plausible to assume that "disguised remuneration" has been received was examined in Benson v HMRC [2017] UKFTT 707 (TC).
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