In the agent update 87, the HMRC remind agents about an arrangement where a company creates an unfunded pension obligation to pay a director of the company a pension.
The company may then transfer their obligation to pay the director a pension to a relative or another individual closely associated with the director. The arrangements are designed to avoid Corporation Tax, Income Tax and National Insurance contributions. HMRC views this as tax avoidance.
HMRC have published Spotlight 58 in June 2021 to explain why these arrangement should not be used, and strongly advise against using them. They indicate that they want to help them get out of it as soon as possible.
HMRC state that they want to help everyone get their tax affairs right the first time.
To find out more about tax avoidance and spot the warning signs use the buttons that follow:
PAYadvice.UK 19/8/2021
