Paying wages in gold bullion banned in Britain under new law to combat tax evasion

Companies will no longer be able to pay employees their salaries in gold bullion in the first use of a new law designed to combat “morally repugnant” tax avoidance schemes.

An expert tax avoidance panel has ruled that paying employees in gold is a “contrived” tax avoidance scheme designed to “frustrate the intent of parliament” in cracking down on such practices.

It is the first application of the general anti-abuse rule (GAAR) panel since it was introduced by former chancellor George Osborne in 2013 as part of a package of measures to tackle tax evasion.

The ruling means HM Revenue and Customs (HMRC) will be able to take action against companies and employees trying to take advantage of “artificial and abusive” gold bullion schemes.

HMRC said accountants had created schemes designed to “disguise remuneration to individuals through paying them via a series of transactions buying and selling an asset, commonly gold bullion”.

“They have a theoretical obligation to pay the value of the asset to a trust at some point in the future – it is claimed that this obligation makes the payment non-taxable. However, in instances seen by HMRC so far, the individual has actually taken cash, thus supporting the HMRC view this is a payment of earnings.”

HMRC said it was delighted with the ruling. “[We have] already made clear that gold bullion avoidance schemes don’t work and that we will challenge these schemes wherever possible,” it said. “Today’s publication has wide-reaching impacts and reinforces the power of the GAAR in tackling abusive tax avoidance.”

HMRC was unable to say how many people had sought to have their salaries paid in gold.