Taxpayers entitled to a refund of amounts paid to settle a Disguised Remuneration (DR) scheme which fell out of the loan charge following the December 2019 independent review, must ensure their claims are with HMRC by 30 September 2021.
The Loan charge was introduced in April 2019 and initially applied to all outstanding DR loans at that date. Following the independent review of the charge, taxpayers are no longer subject to the loan charge if they:
- Took loans before 9 December 2010 where HMRC did not open an enquiry or raise an assessment within the time limits.
- Had loans between December 2010 and April 2016, made a reasonable disclosure of the loans to HMRC, but HMRC did not take action.
This means that anyone who Settled their scheme, under the 2017 settlement terms before the review was concluded and have paid some or all of the tax and National Insurance due, are treated as having made voluntary payments and are now entitled to a refund.
HMRC should have invited these taxpayers to make a refund claim. Anyone who wishes to take that refund and effectively unwind their settlement must have made the necessary claim by 30 September 2021. It is possible that not all those entitled to a refund will have received an invite from HMRC. Anyone who thinks they may be due a refund should contact HMRC accordingly over the next few weeks. Likewise, anyone who has already made a claim and not received their refund is advised to contact HMRC to ensure their claim has been received and is being processed ahead of the September deadline.
Taxpayers affected by this are advised to review their position carefully and take advice before applying for a refund as, whilst this may seem an attractive proposition, it may not necessarily be the best option for them depending on their individual circumstances. Unwinding an HMRC settlement will reopen their position with HMRC and may ultimately lead to their case being listed before the tribunal.
Useful guides on this topic
Disguised remuneration loan charge
What is disguised remuneration? What is the loan charge? When does the loan charge apply? Will the loan charge affect me?
Disguised remuneration 2020 settlement opportunity
What is HMRC's position on disguised remuneration loans where settlement was not reached by 30 September 2020? Can a settlement still be reached?
FAQs for Disguised Remuneration Settlements
Can I just repay my loans? Which is cheaper: the loan charge or settling? How much will it cost to settle? And many other FAQs.
Statement of Practice 1 (2020): Disguised remuneration loan charge election
An 'At a glance' guide to Statement of Practice 1 (2020) (SP1/2020) and HMRC's approach to the loan charge and spreading elections.