The loan charge has has stirred up considerable controversy. Many people were hopeful that the review would, if not reverse, then at least restrain HMRC’s actions in implementing it.
Rather than this being the outcome the review has been published early. This clearly signals the government’s endorsement of the loan charge and the actions being taken by HMRC.
The Treasury carried out a narrow review of the issue of time limits for tax assessments, as part of an amendment to the 2019 Finance Act. This followed on from demands from MPs for more analysis of the impact of the loan charge. Concerns included substantial demands upon some taxpayers for payment when they have no means of payment.
Following its research the Treasury review states:
Overall the government’s view is that the charge on disguised remuneration loans is the right approach to ensure fairness for the vast majority of UK taxpayers who pay the right amount of tax at the right time and draw a line under this form of tax avoidance.
However, the government recognises the difficulties that some people are facing and is working to ensure that all cases are treated sympathetically, with payment terms that reflect the circumstances of each individual case, and appropriate support wherever needed.
Through the review process HMRC has accepted that there are individuals who want to settle with HMRC but who have not yet received detailed calculations of the amounts due. HMRC acknowledges that as a result of the large numbers of scheme users looking to settle some have had to wait longer for a response than they would want. In response, HMRC has increased the number of people to the equivalent of over 500 HMRC full-time staff working directly or indirectly on work related to disguised remuneration.
Even with HMRC struggling to manage the number of cases if you or your clients have held off settling with HMRC in the hope that the loan charge would be abandoned you need to take action quickly in order to avoid its impact.
It’s worth noting that the loan charge will not apply provided that a settlement pack is submitted to HMRC by 5 April and settlement is concluded shortly after (before the loan charge reporting dates). We can assist with preparing this information for submission as the Bedrock team have helped hundreds of clients reach settlement with HMRC. We have made a real difference to the final amount many of those clients have had to pay as in our experience 95% of the calculations provided by HMRC contain errors.
Get in touch today to discuss how we can work with you to assist your clients 0115 778 8533