HMRC has published a new Spotlight about an employee bonuses tax avoidance scheme involving Restricted Securities.

This new Spotlight is based on HMRC successes at tribunals involving an attempt to avoid tax and National Insurance Contributions (NICs) on employee bonuses. For example, in LM Ferro Ltd v HMRC a bonus was paid in the form of an award of shares. The particular scheme in LM Ferro was marketed by a promoter with similar avoidance schemes marketed by other promoters. HMRC considers cash received by beneficiaries of awards in those schemes is chargeable to Income Tax and NICs.

HMRC expects those who used these schemes to make full payment of the tax and NICs due, plus interest. Those companies and employees affected are now advised to contact HMRC to settle their liabilities and prevent additional interest accruing. Penalties may also be charged if reasonable care was not taken when submitting the relevant tax return.

HMRC is also currently writing to taxpayers giving them an opportunity to settle open enquiries into the use of Employee Financed Retirement Benefits Scheme arrangements by agreement and without needing to engage in litigation. This offer is intended to minimise costs for customers and HMR and taxpayers have until 31 December 2013 to consider the proposals made in the letter and indicate whether they wish to take advantage of the options offered. If they do, any settlement between them and HMRC will be concluded by 30 June 2014.

More information is available on the HMRC website.