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The loan charge

The Loan Charge – Do not put your head in the sand

If you were one of the estimated 24,000 people induced into entering into a scheme to avoid tax by utilising a loan scheme who haven’t yet settled your tax liabilities you should be aware of the subject matter of this article.

In essence if you were paid by loan at any time after 6th April 1999 and the loan wasn’t repaid by 5th April 2019 the loan charge will be levied and you will have to pay it. This is provided your employer (at the time) hasn’t repaid it.

The Loan Charge will be levied in addition to any existing tax liability and interest and you will be required to pay it by 31st January 2020.

That is the LAW however . . . 

If you haven’t yet resolved your position with HMRC you will have been heartened that the Government has opened the 2019 “Loan Charge Review” headed by Sir Amyas Morse.

That review is expected to report by mid-November 2019.

If you have evidence you want the Review to take into account it is interested in hearing from a wide range of people and understanding their different perspectives. If you would like to provide evidence then please email it to: before 30th September 2019.

The latest from HMRC

The latest information from HMRC explaining what the Review means for individuals can be found on GOV.UK.

“If you provided all the required information by 5 April 2019 and are waiting to finalise your settlement with HMRC

You can continue to finalise your settlement with HMRC if you wish to do so, which will allow you certainty in your tax affairs.

HMRC recognise that you may want to wait for the government’s response to the review before finalising your settlement.

If you decide to wait interest will not accrue provided HMRC have all the information they require from you to finalise your settlement and you will not need to complete the additional information return by 30 September 2019.

HMRC will update their guidance setting out details of what the next steps are for you if your tax position changes as a result of the government response to the review. 

If you are not settling your disguised remuneration scheme use

You will still need to complete an additional information return by 30 September 2019. You can find further information about the additional information requirements on GOV.UK”

This document should be completed and submitted within the next 7 days despite the review-taking place.

The advice provided by HMRC also closes on a sobering note:-

Accelerated Payment Notices, compliance activity and litigation

HMRC is committed to tackling the use of disguised remuneration schemes. The review of the loan charge does not affect routine HMRC compliance activity related to disguised remuneration schemes, including Accelerated Payment Notices and ongoing litigation.

Unless you are in the process of settling, statutory late payment interest will continue to accrue on any unpaid tax during this period. You can stop this accruing by making a payment on account.”

This is a hiatus rather than the end.

Should you wish to discuss how to deal with a tax liability of this nature please either email or telephone me on 0113 320 5000.

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