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anonguest

Attempts To Pay Salaries In Legal Tender Gold

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I wasn't sure whether to post this in the main forum (since it's more than vaguely economic in nature) but chose not to post it in the precious metals forum since everyone there will be biased (and it has a smaller audience) plus, he says in his best ars* kissing mode, everyone here seems so much more knowledgeable on all manner of things....... ^_^

I vaguely recall a fair few years back there were, very briefly, reports of a handful of would be smarty pants (probably senior figures/high flyers in the banking/finance world) who tried to get away with having their salaries paid in legal tender gold coins (e.g. Sovereigns).

The idea being that the face value of the coins would be pittance, relative to their salaries, and negate the need to pay income tax - whereas of course the real worth of the metal was 10x the face value. As far as I recall this 'scam' was supposedly stamped on very quickly by HMRC and other related powers that be?? and the practice did not catch on or take off.

My questions are......does anyone have any reasonably detailed knowldege or links to documentation of this? Was it all just rumour or actual fact?

Was there any actual case law established preventing this from happening (as an obvious sneaky way to reduce tax paid)? or was it just a ruling by HMRC that was readily accepted as policy but not actually legally challenged? or did said would be smarty pants fall foul for opting to use Sovereigns which by custom and tradition are merely assumed to be £1 but do not actually have an explicitly stated face value (whereas a Brittania coin does) - and so the authorities were able to argue against such a scheme on this sort of technicality? Would it succeed if Brittanias, for example, were used (assuming enough of them could be procured!)

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Yes, it used to happen in some of the banks back in the late 80s and possibly early 90s. Bonuses would be paid in gold to avoid employer's NI from what I recall. There was no direct tax advantage to the employees who still had to declare it as payment in kind and pay the usual rates of income tax. No employee's NI would apply as they would have all been over the employee's NI threshold and the 2% on all income thing hadn't been introduced back then.

I may be misremembering this part, but I think both Deutsche and Goldman's did this.

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