Disguised remuneration—history of the loan charge


Produced in partnership with Stephen Downie of Francis Wilks & Jones
Practice notes

Disguised remuneration—history of the loan charge


Produced in partnership with Stephen Downie of Francis Wilks & Jones

Practice notes
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The loan charge is one of the very few legislative instruments which acts to pierce the corporate veil behind which its directors, officers and employees sit in respect of the liability for income tax on disguised Remuneration, as a result of Part 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) by Schedule 2 to Finance Act 2011.

Upon the enactment of Finance Act 2011, and following the initial clarification provided by both the Court of Session and, subsequently, the Supreme Court in RFC 2012 plc (in Liquidation) (formerly the Rangers Football Club plc) v Advocate General for Scotland (the Rangers Case), it became apparent that there was a considerable number of outstanding unsettled schemes.

As a result, Budget 2016 proposed measures aimed at encouraging users of such schemes to settle outstanding Liabilities. Those measures were introduced by Finance (No 2) Act 2017 (F(No 2)A 2017). Pursuant to those measures, there is a tax charge on outstanding Loans or quasi loans which come within the amended Part 7A gateway

Stephen Downie
Stephen Downie

Solicitor, Francis Wilks & Jones

Stephen is a dual qualified solicitor and ACCA accountant, and is a partner at Francis Wilks & Jones acting for tax advisors, private clients and Insolvency Practitioners.

Stephen works with FWJ’s tax disputes team dealing with Code 8 and Code 9 enquiries, direct and indirect tax investigations and tribunal proceedings; Stephen’s particular specialism in this area comprises the evolving legal position surrounding tax avoidance schemes in respect of both live and insolvent companies.

Stephen’s person experience over the course of the last 20 years also extends to insolvency, restructuring and contentious insolvency claims, acting on both sides for both liquidators/administrators and defending SMEs, individuals and directors.

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Jurisdiction(s):
United Kingdom
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Key definition:
Remuneration definition
What does Remuneration mean?

In a defined benefit scheme, the amount of pension earned is invariably related to the amount of salary; HMRC calls this remuneration. So far as scheme rules or an employer's policy is concerned, it can include or exclude bonuses, commission and other fluctuating emoluments.

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