The panel, set up to adjudicate on the application of the General Anti-Abuse Rule (GAAR) to tax avoidance schemes, issued three 11-page guidance documents, detailing its view of gold bullion schemes for three example taxpayers. They are ‘the Company’, ‘Mr X’, a director and indirect 51% shareholder in the Company and ‘Mrs Y’, the other director and 49% shareholder in the Company.

‘It is abnormal for an employer to reward employees using gold,’ the panel concluded. ‘It is abnormal where parties have a choice as to whether or not to introduce an asset into arrangements, for the asset to be sold immediately after the purchase. In this case we can see no reason for the steps to involve gold, other than for tax purposes.’

It added: ‘Had cash been used, and gold not been involved, other than the saving of fees in relation to the purchase and sale of the gold, neither Mrs Y nor the Company would have been in a substantially different economic or commercial position.’

The same applied to Mr X, it said.

Gold bullion schemes resurfaced in May 2017, when CCH Daily was shown evidence of a marketed scheme aimed at people working through personal service companies.

‘One option is for your company to pay your net of tax wages in “money’s worth”, which means other than cash, for instance, we discussed the examples that you could ask your company to pay you in gold sovereigns,’ the proposal stated at the time.

‘Your company could buy a coin and use it as part payment of your wages, the value would be its cost, and the balance of wages would be paid from the bank account. You could then sell your coin if you wanted to add to the money received from the company,’ the pitch added.

Gold has proven a popular investment asset with prices on the rise and is especially attractive for those looking to essentially minimise tax liability since gains are non-taxable.

Practitioners told CCH Daily that the scheme did not work as it is ‘clearly a scheme to stop you falling into the service company category, rather than tax minimisation within your bracket’, and would like attract an accelerated payment notice (APN).

The GAAR Advisory Panel was formed in 2013 and is chaired by Patrick Mears, the former partner and head of tax at law firm Allen & Overy. Until now, it had not considered any schemes.

HMRC said in a statement: ‘We’re delighted with the opinion of the GAAR Advisory Panel. HMRC has already made clear that gold bullion avoidance schemes don’t work and that we will challenge these schemes wherever possible.

‘Today’s publication has wide-reaching impacts and reinforces the power of the GAAR in tackling abusive tax avoidance.’

The GAAR Adisory Panel’s findings can be read here:

Tax position of Company

Tax position of Mr X

Tax position of Mrs Y