HMRC published a new Spotlight (see Spotlight 53) on 22nd July 2019.

Spotlight articles highlight plans which HMRC believe constitute ineffective tax avoidance. This Spotlight focusses on “tax avoidance using capital advances, joint and mutual share ownership agreements”. The planning involves the use of an offshore company with pay being received in two portions, one being a relatively small amount of taxable salary and one being a loan or advance. In addition, there are various share transactions involving an “offshore joint (or mutual) share ownership trust”.

HMRC assert that they believe that the planning is not effective to achieve its intended purpose.

This announcement has no effect on any of the employee share schemes which Pett Franklin advises on. In particular, the Spotlight is not referred to the Joint Share Ownership Plan (JSOP). The JSOP is a plan which has been established and discussed with HMRC for over a decade and is recognised as an appropriate structure for providing share incentives linked to capital growth with income tax and NICs on the market value of the interest at the date of award and capital gains tax on profits made on the disposal of the interest.

Pett, Franklin & Co. LLP are experts in employee share schemes, executive incentives and share valuation. To find out more about how we can help you or your client, please call 0121 281 5798.