HMRC are closing the loop on a loan scheme used by contractors to avoid paying tax in the UK. The scheme involved the contractor signing a contract of employment with an offshore employer enabling them to be paid via a tax-free loan rather than a salary.

HMRC estimates that users of the schemes will owe approximately £11,000 each in unpaid taxes per year that they were involved in the scheme. They also estimate approximately 16,000 people are involved in the schemes.

If you think you may have been involved in one of these schemes you have until January 2015 to get in touch with HMRC under a new Settlement Opportunity. Doing so could save you considerable fines, larger tax bills, interest on the tax you owe and potentially legal fees too.

The contractor loan schemes are particularly complex and aggressive so it is highly advisable that you get in touch with HMRC before they get in touch with you. Generally speaking, if a tax scheme sounds too good to be true it probably is and while you may get away with it for some time, it has the potential to cost you dearly if you do get caught.

Get in touch with us if you would like to ensure that you are not paying more tax than you should be or if you are unsure of the tax status of any of your income or investments.