Disguised remuneration—the gateway
Produced in partnership with Stephen Downie of Francis Wilks & Jones
Practice notesDisguised remuneration—the gateway
Produced in partnership with Stephen Downie of Francis Wilks & Jones
Practice notesSections 554A–554AA of Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) are referred to by HMRC as the ‘gateway’ to the disguised remuneration legislation (this is not a legislative term). Part 7A applies where the conditions required by these sections are met and the gateway has been passed through.
This Practice Note refers specifically to the gateway tests to understand where such rules apply in respect of any schemes or arrangements which may appear to provide for remuneration without any immediate and obvious liability to pay tax on such remuneration. This Practice Note, and indeed the main case and close companies gateways described below, do not apply to circumstances where normal taxation rules apply as regards earnings.
Main case gateway
Broadly, ITEPA 2003, s 554A requires the following as a precondition of the treatment of a ‘relevant step’ for income tax purposes:
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an existing employee or a former or prospective employee (A) of another person (B). Employee for these purposes includes office-holders such as company secretaries and directors)
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a relevant arrangement (to which
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