If you used a Disguised Remuneration tax planning scheme between April 6 1999 and April 5 2016 which made loans to you and you've settled the tax due with HMRC on or after March 16 2016 but before March 11 2020 you could qualify for a refund of Income Tax and National Insurance contributions paid.

HMRC was aiming to contact all those affected by the end of September  2020 to invite them to make a claim for a refund if their settlement with HMRC included an element of voluntary restitution. If you think you or your clients might fall into this category they can ask to be considered for a refund. A claim then has to be filed before September 30 2021.

To qualify for a refund the claimant has to show that a ‘reasonable disclosure’ was made of use of the scheme either in Income Tax Self Assessment returns, or Corporation Tax Self Assessment returns, for each disguised remuneration loan received.

The information disclosed in the returns must have:

  • made it clear to HMRC that there was a disguised remuneration loan, and who it was made to
  • identified the arrangements or transactions which resulted in the loan being made
  • been sufficient for it to be clear that Income Tax and National Insurance contributions were due in relation to that loan

The information could be included in any accompanying accounts, statements or documents which were provided with the return.

HMRC has a set application process which includes the following steps:

  • they will write to the tax payer inviting them to apply for a refund or waiver
  • the set form should be completed and sent back to HMRC by 30 September 2021
  • HMRC will consider the application and when they have all of the information needed HMRC will send you a repayment decision
  • if you agree with the decision, you must accept within 2 months of  the decision
  • if  you disagree, and would like the decision to be reviewed, you must request a review within 2 months of HMRC’s decision

Only the person (signatory), or people (signatories), who signed the settlement agreement can make an application, regardless of who paid the settlement amount or amounts. If more than one person signed the agreement, then they must all jointly apply.

If HMRC make a favourable decision and all their requirements are met a refund or waiver can be requested by an:

  • individual or contractor who settled personally
  • employee who settled on behalf of their employer
  • employer

If you’re eligible for a refund or waiver HMRC will:

  • confirm the total applicable amount of voluntary restitution included in your settlement and any interest paid on it
  • tell the claimant about any adjustment amounts or other deductions
  • confirm the refund and waiver amount and any further interest due

For more information you can contact HMRC on 03000 534 226 or by email at: ca.loancharge@hmrc.gov.uk.

The guidance is complex as refunds will only be due in very specific circumstances. It’s worth reading the relevant section on the .Gov website here

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