HMRC is challenging certain types of tax avoidance arrangements used by contractors and other professionals. These schemes aim to avoid tax by entering into a contract of employment with an offshore employer, meanwhile the contractor continues to provide their services in the UK. The contractor then receives a large proportion of the fees for their services in payments which are reported as loans. However HMRC argues that these arrangements do not succeed in avoiding tax.
Individuals using these schemes may shortly or already have received letters opening enquiries into their recent returns. HMRC will be sending tax assessments to those who have used these schemes between 2008 and 2011. If your client receives an assessment he can according to HMRC either accept the assessment and pay the tax due, try to reach an agreement with HMRC or appeal against the assessments and begin the tribunal process.
HMRC is urging individuals affected or their advisers to contact HMRC by phone or by email at the following link at http://www.hmrc.gov.uk/news/contractor-loan-schemes.htm.