With months to go for all ongoing disguised remuneration (DR) settlements to be completed we doubt HMRC has the resource to cope. It's not looking good.
The Loan charge applies to all Disguised Remuneration and Contractor Loans outstanding on 5 April 2019 unless a settlement was reached or in progress before that date.
- Previous HMRC guidance was that settlements in progress on 5 April 2019 must be concluded by 31 August 2019; we cannot see this deadline in HMRC’s latest guidance on settlements issued on 15 April 2019, but assume it still stands, for now at least.
- HMRC has said on numerous occasions that it has resourced up to deal with the high level of interest expected from scheme users in exploring settlement. However, our recent own experience of this begs to differ.
What's going on?
We have cases:
- Which are being dealt with by several individuals at HMRC, none of whom seem to have conferred with each other, resulting in information already provided being requested again.
- Where information is being requested for calculations which not only have already been provided by HMRC, but where the taxpayer has already received and accepted a settlement offer.
- Where information has been requested and then, following submission of the request, we are told that it is no longer wanted.
- Where no information is provided by HMRC to enable the taxpayer to work out who is settling outstanding PAYE and phone advice on settlement is clearly wrong.
All this is aside from the lengthy delays (several months in most cases) in receiving a response from HMRC once information has been sent.
The current auto response on emailing the HMRC contractor loans team is:
“Thank you for contacting HMRC. There has been a high volume of interest in settlement and all contact is being responded to in order of receipt. Repeat contact will not prioritise a response”
It remains to be seen whether those taxpayers who registered for settlement just before the 5 April 2019 will be in a position to conclude their settlement by the 31 August 2019, or whether they will still be waiting to hear back from HMRC.
We wonder whether HMRC will consider extending the deadline by a month to coincide with the loan charge reporting deadline of 1 October, which we would see as a possible final cut-off date for agreeing a settlement.
It is worth remembering that when a settlement offer does arrive the taxpayer has just 30 days to accept it. The cynical amongst us might expect that many settlement offers will not be sent out until late July, just as the schools are breaking up for the long summer holidays.
Advisers dealing with settlements would be wise to ensure that they and their clients are available over the summer to deal with settlement offers quickly or they may find that they miss the31 August deadline and that the loan charge applies as a result. Cancel your summer beach holidays, we think HMRC may be drowning... in DR settlement cases.
Links to our guides:
Disguised Remuneration & Contractor loans
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 final settlement opportunity
A detailed guide to the November 2017 final settlement opportunity for all disguised remunerations schemes.
External links: