HMRC publishes guidance for refund of loan charge voluntary payments

HMRC has published guidance for people affected by a review into the controversial loan charge policy who wish to apply for a refund of their voluntary payments.
HMRC has published guidance for customers affected by the Loan Charge Review who wish to apply for a refund of their voluntary payments.HMRC has published guidance for customers affected by the Loan Charge Review who wish to apply for a refund of their voluntary payments.
HMRC has published guidance for customers affected by the Loan Charge Review who wish to apply for a refund of their voluntary payments.

Sir Amyas Morse’s review into the loan charge recommended a series of reforms to ensure fairer treatment of those affected, including better protection for the most vulnerable.

In his review, Sir Amyas said: “As my review makes clear, the design and delivery of the loan charge didn’t get the balance right between tackling tax avoidance and protecting the rights of taxpayers and, in some cases, has caused serious distress to the individuals affected.”

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“I’m pleased to see Government commit to act on the recommendations of my review, bringing the Loan Charge back into line with the wider tax system, better protecting those who are least able to repay and providing certainty for all those affected."

Seven suicides of people facing the loan charge were reported to the All Party Parliamentary Loan Charge Group in the last Parliament.

Sir Amyas recommended that HMRC should refund the voluntary restitution elements of settlements made since 2016 that were paid to settle unprotected years when the relevant loans were entered into before December 9 2010 or between December 9 2010 and the start of the 2016-17 tax year, where the scheme user made reasonable disclosure of their scheme usage in their tax return

HMRC said its new guidance is for those who used disguised remuneration avoidance schemes between April 6 1999 and April 5 2016, from which disguised remuneration loans were made, and settled the tax due with HMRC on or after March 16 2016 and before March 11 2020. HMRC said it would write to those eligible for a refund or waiver as soon as possible, to invite them to apply.

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On social media, some opponents of the loan charge questioned why "voluntary restitution" was needed for a tax which critics claim was never proved to be owed.

The loan charge, announced by the Government in 2016, was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid to avoid income tax.

Sir Amyas was commissioned to undertake a review into the loan charge in September 2019 by the then Chancellor Sajid Javid, following a long-running campaign from MPs and the Loan Charge Action Group.

Speaking in December, Financial Secretary to the Treasury Jesse Norman said: “We welcome this careful and considered report, and I thank Sir Amyas and his team for their work.

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“There have been important public concerns about this policy, and that is why we commissioned this report and have responded so quickly to it.

“The changes we are making go to the heart of Sir Amyas’ concerns about the fairness and application of the Loan Charge, which he accepts in principle.

“We also have plans under way to crack down further on the promoters of these avoidance schemes.”

The Government said it recognised the concerns raised in the review about the impact on individuals and fairness of some aspects of the loan charge. To address them, all but one of the recommendations have been accepted, the Government said.

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Among other recommendations in the review, the Government said HMRC would repay parts of some settlements reached with taxpayers where they had voluntarily paid amounts due for earlier years.

The package of measures announced by the Government in December were estimated to reduce bills for more than 30,000 people subject to the loan charge, more than 60 per cent of the total number of users, according to the Treasury.

That includes an estimated 11,000 who will be taken out of it altogether, the Treasury added.

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