These complex rules were introduced in 2011 to counter what was seen as abuse of the tax system allowing people to take cash out of their businesses without paying income tax or National Insurance Contributions.
Pete Miller has studied the new rules since they were first published, and has just published Tolley’s Tax Digest 114 on Disguised Remuneration, to guide practitioners through this extensive and widely-drawn legislation.
The Miller Partnership is currently advising a business owner wanting to sell his business to two key employees. The Disguised Remuneration rules could potentially treat this simple transaction as chargeable to income tax on the employees buying the shares, which was clearly not intended by the new rules.
In another case, we are assisting a business owner who wants to pass shares to an employee under his will. Under the Disguised Remuneration rules, this could generate a tax charge when the will is written, generating a tax charge that the employer and employee might not even know about.