HMRC have released details of a letter sent to the Loan Charge All Party Parliamentary Group which includes details of key dates, anonymised case studies and settlement statistics and deadlines.

On 5 April 2019 the Loan Charge  will apply to all outstanding disguised remuneration, self-employed and contractor loans taken out since 1999, unless a settlement is in progress with HMRC before that date.

In the documents HMRC reveal that more than 20 individuals have been convicted for offences relating to the promotion and marketing of tax avoidance schemes since 2016, who have together received over 100 years of custodial sentences.

The documents also include some useful information about the loans charge and about settling with HMRC: 

  • Where settlements are not concluded by 5 April but interest has been registered and initial information provided to HMRC, scheme users have until 31 August 2019 to complete the settlement process before the loan charge will apply.
  • Individuals who choose not to settle with HMRC must:
    • Complete and submit an information return to HMRC, setting out their loan balance, by 30 September 2019.
    • File a 2018-19 self-assessment tax return and pay the loan charge by 31 January 2020.
    • For employment-based schemes only: tell the relevant employer what the outstanding loan balance is, by 15 April 2019. If the employer no longer exists, they do not need to report the loan balance to an employer but must still provide the information to HMRC by 30 September 2019, file a tax return and pay the loan charge by 31 January 2020.
  • For employment related schemes where no settlement has been reached or is in progress the employer must:
    • Manually calculate the PAYE liability on the loan charge income, and make payment either by 19 April 2019 (by post) or 22 April 2019 (online)
    • Report the loan charge amount to HMRC via RTI in April using an Earlier Year Update (EYU) submission. HMRC have stressed that an EYU must be used rather than including the charge in the current period payroll.

Anyone who is uncertain about whether the loan charge applies to their scheme may find the anonymised case studies provided by HMRC useful.

Comment:

We are aware that some individuals have recently received letters from HMRC asking for details about their participation in loan schemes during the current tax year, presumably to ensure that they are in a position where they have sufficient information to allow them to assess the loan charge and penalise those who fail to report their loans. These should not be ignored as in many cases they have been issued as Schedule 36 notices  which come with penalties for failure to provide the information requested within the deadlines set by HMRC.

With penalties for late reporting of the loan charge starting at £300, and with inaccuracies being penalised at up to £3,000 per error, scheme users who are not settling their schemes should start thinking about how they are going to meet the loan charge reporting requirements now.

Links to our guides:

Disguised Remuneration
A guide to everything you need to know about disguised remuneration schemes, the loan charge, and how to reach a settlement with HMRC.

FAQs for disguised remuneration settlement
This guide looks at Frequently Asked Questions for settling Disguised Remuneration schemes. The FAQs relate to EBTs, EFRBS and contractor loan schemes (employed and self-employed).

Disguised remuneration; applying to postpone your loan charge
A step by step guide to how to apply to postpone the loan charge if you meet the requirements to do so.

Disguised remuneration final settlement opportunity
A detailed guide to the November 2017 final settlement opportunity for all disguised remunerations schemes.

External link:

HMRC Correspondence and annexes sent to Sir Edward Davey in respect of disguised remuneration loan schemes and the loan charge.

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