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bigduckontax, Accountant
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I had an arrangement with an Isle of Man company where my "salary"

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I had an arrangement with an Isle of Man company where my "salary" was paid as a loan and a small salary. HMRC has now sent me a tax demand saying that the loan is income and therefore subject to tax. Any ideas on how I respond to this awould be appreciated.
Hello, I'm Keith and happy to help you with your question. The news I impart is not good, I regret.

Unless you have cast iron documentation from the Isle of Man company showing that the loan is a genuine loan then you are on a hiding to nothing and must meet HMRC's assessment. If you have such documentation then it can be presented to HMRC to counter their contention.

It is clear that HMRC feel that at the best tax avoidance (legal) is involved or at the worst tax evasion (illegal). You may be in a most unfortunate situation. Even if the loan can be supported then HMRC may still view the arrangements with a very jaundiced eye.
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