Independent review into Loan Charge launches
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A review into the Loan Charge has been launched, following concerns over the size of liabilities owed by some people affected and their ability to pay tax owed in a reasonable time frame. First announced in 2016, the Loan Charge was designed to tackle historical use of contrived tax avoidance schemes.
Such schemes sought to avoid charges of income tax and national insurance (NI) by disguising remuneration as a form of non-taxable payment, typically a loan. I was pleased to be asked to help find ways whereby those involved can reach an agreement with HMRC that balances their right to be treated fairly with the expectation of the vast majority of taxpayers who have paid all of the tax and NIC due on their earnings.
The schemes have existed since at least the mid-1990s and have been considered by the courts. In 2017, the Supreme Court agreed with HM Revenue and Customs (HMRC) that schemes that redirect earnings and ultimately pay them in the form of loans do not succeed in avoiding tax.
The Government said it recognises court decisions and believes it is right that those who did not pay the right amount of income tax and NI are required to resolve their affairs with HMRC. But it said ongoing concerns remain about the Loan Charge and the new independent review aims to bring the matter to a close.
