HM Revenue & Customs (HMRC) has warned large firms to stop swerving tax by paying staff in bullion, after the Government found that numerous businesses were still attempting archaic tax avoidance schemes.
The news has caused a stir amongst experts and officials alike, after HMRC announced that they believe firmly that such ‘disguised remuneration’ schemes, which were once commonplace in the 1990s, ‘do not work’ in modern times.
The schemes, which aim to swerve tax on earnings, recently came under fire from George Osborne in the March 2016 Budget, as part of the Chancellor’s plans to raise £2.5billion by 2021.
Former HMRC Official, Ray McCann, said that the schemes were typically used by “fairly big owner-managed businesses where the owner has a significant tax exposure”.
Experts believe that these businesses are attracted to paying in bullion as a rate of capital gains tax chargeable on receipt of an asset, such as gold, is significantly lower than the 45 per cent rate of income tax applicable over the £150,000 annual income threshold.
HMRC said: “There are a few of these schemes but they have a common feature where individual claims to be paid in the form of an asset, such as gold bullion.
“They have a theoretical obligation to pay the value of the asset to a trust at some point in the future — it is claimed that this obligation makes the payment non-taxable.”
HMRC has announced that it will “challenge these schemes via every route… including litigation through the courts”.