Disguised remuneration settlement terms 2020

HMRC has updated its Disguised remuneration settlement terms 2020 for tax agents or advisers guidance to confirm that a charge under ITEPA 2003 s 222 can arise on the loan charge when all of the following apply:

• an individual has used an employment-based scheme;
• their employer was required to account for tax under PAYE on the loan charge income; and
• the individual, as an employee, did not make good the tax within the time allowed.

The guidance also notes that HMRC will not collect any s 222 charge on loan charge income if all the following conditions are met:

• the loan charge arises on an amount subject to an earlier income tax liability and that earlier liability did not give rise to a section 222 charge;
• the loan charge has been paid or included within the settlement;
• the average annual income provided to the individual through a disguised remuneration scheme is £75,000 or less in each tax year; and
• no litigation has been started before a court or tribunal in relation to the residual tax or loan charge.