Disguised remuneration arrangements typically involve an individual’s income being funnelled through a third party, with the money often then being paid to the individual as a ‘loan’ that is never repaid.

HMRC estimates the proposed measures, which target both historic and ongoing schemes, will help it yield an additional £2bn over the course of the current parliament.

Steps to prevent loan transfers, where employees become indebted to a third party instead of their employer who made the loan, are outlined in the consultation. As a result, amendments are to be made to make clear that arrangements which result in the employee being indebted to the third party are ‘treated in the same way as if the third party made the loan directly’.

The ‘release’ of disguised remuneration loans is also in the crosshairs, and as such mechanisms to prevent the loss of tax through the write-off, or release, of loans made under the schemes. The government believes that when such loans are written off they become liable for income tax.

Among the raft of further targeted measures are the transfer of liability for income tax and national insurance contributions (NICs) liabilities from employers to employees where a DR scheme is used.

It is often the employee who benefits from a disguised remuneration schemes because they will have received the money, or asset, without tax having been deducted. Therefore, the government hopes broadening these powers will help eliminate the tax benefit.

The Tackling disguised remeration consultation runs until 5 October 2016 and can be found here.