A group of just over 100 MPs have signed an early day motion calling on the government to significantly revise the legislation for the Disguised remuneration (EBT) loan charge, it has been the subject of both a recent debate in parliament and a House of Lords review of HMRC powers.

The loan charge which is due to take effect on 5 April 2019 will apply to all outstanding Disguised Remuneration loans where:

  • If the loan had been made on 5 April 2019 it would have fallen within the disguised remuneration  rules;
  • The loan was made on or after 6 April 1999; and
  • The loan, or part of it, is still outstanding at 5 April 2019.

In July of this year the government estimated that the number of taxpayers who will be affected by the 2019 loan charge will be around 50,000; yet it seems that HMRC has so far only issued loan charge awareness letters to just under half of these individuals.

The MP’s seeking to challenge the charge maintain that:

  • Its 20 year retrospective application undermines the rule of law and is something normally limited to dealing with criminal behaviour.
  • The government should be targeting the promoters of loan schemes and not the individuals who used them.
  • There should be a cross party working group to rewrite the legislation which should, amongst other suggested changes, only take effect from 16 November 2017 (date of royal assent of Finance (No2) Act 2017).

The House of Lords Economic affairs committee is pressing HMRC to urgently review all cases where the only remaining consideration is the individual’s ability to pay and to establish a dedicated helpline to give those affected by the loan charge advice and support.

The committee described the charge as "devastating the lives of middle and lower income individuals, from the private and public sector (including the National Health Service) who used disguised remuneration schemes, in many cases being required to do so by their employers.”

Those affected by the loan charge still have time to reach a Settlement with HMRC ahead of the 5 April 2019 deadline but time is running out. If you need assistance in negotiating a disguised remuneration settlement or a second opinion on settlement terms and calculations, contact the Virtual Tax Partner support team. 

Links to our guides:

Disguised Remuneration

Disguised Remuneration final settlement opportunity 

Disguised Remuneration: applying to postpone your loan charge

External Links:

House of Lords Committee report: The Powers of HMRC: Treating Taxpayers Fairly