All that glitters is not gold in HMRC’s eyes, as it announces an immediate clampdown on disguised remuneration schemes using gold bullion as an asset, saying in its view these are categorised as tax avoidance and warning that it plans to crack down on individuals who continue to use them
Gold has proved a popular investment asset with prices on the rise and is a popular investment for those looking to essentially minimise tax liability since gains are non-taxable.
The gold price has shot up 35% this year to £882 per ounce, although it has taken a battering in recent years and has fallen from its record high of £1,073 in 2011.
The curb on the use of gold is part of a package of changes to tackle the current and historic use of disguised remuneration tax avoidance schemes.
HMRC says this includes action with immediate effect from 16 March 2016 against schemes such as ‘gold bullion’ avoidance schemes, which seek to disguise remuneration to individuals through paying them via a series of transactions buying and selling an asset, commonly gold bullion.
The guidance says there are a few of these schemes, but they have a common feature where an 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, and the scheme promotor claims that this obligation makes the payment non-taxable.
However, HMRC says in instances seen so far, the individual has actually taken cash, thus supporting HMRC’s view this is a payment of earnings.
The taxman is not standing still and it has opened enquiries into users of these schemes and says it will continue to do so as it becomes aware of new users, and has also taken some cases to litigation.
The guidance states: ‘Despite this, promoters have continued to market these schemes. To put the matter beyond doubt, the government announced that legislation will be introduced in Finance Bill 2016 that comes into effect from 16 March 2016.’
HMRC says this means that gold bullion schemes are included in new legislation to ensure that all loans, debts or obligations arising from a disguised remuneration scheme, irrespective of how the scheme claims to work, will be taxed as earnings if they have not already been taxed or repaid by 5 April 2019.
The guidance says it will investigate tax returns where these schemes have been used and seek full settlement of the tax due, plus interest, and penalties where appropriate.
