Thousands of people facing loan charge are being placed in impossible position, MPs claim

The Loan Charge All Party Parliamentary Group (APPG) is concerned that people facing the loan charge will be unable to access support for self employed people during the coronavirus pandemic.

The letter from the APPG to the Chancellor Rishi Sunak states :"We are writing as a matter of urgency following the announcement of financial assistance for some self-employed people facing the Covid-19 crisis and the lockdown.

"This has a direct and seriously problematic impact for people facing the loan charge and awaiting the final form of the legislation.

"The announcement has suddenly and unexpectedly put many thousands of people facing the loan charge in a very problematic position, as the financial assistance offered is only available to those who have already submitted (or who can now quickly finalise and submit) their 2018/19 tax return by April 23.

"The Government and HMRC have, as you know, told people facing the loan charge that their tax return does not need to be finalised until 30 September 2020, as changes are planned to the loan charge legislation in the forthcoming Finance Bill.

The letter continues: "The requirement for people to finalise their 2018/19 tax returns in the next three weeks is putting people facing the loan charge issue in an impossible position.

"They are unable to finalise their tax returns until the final form of the loan charge legislation is known, which will not happen until the Finance Bill has been debated and passed by Parliament.

"Without finalising their tax return they are not able to access the financial assistance that they are entitled to and which is, in many cases, much needed.

"Previous announcements by the Treasury and HMRC had given people until the end of September 2020 to see the final legislation, to discuss settlements with HMRC and to finalise

their tax returns.

"This was the right, and necessary, approach. But, under the unforeseen circumstances resulting from Covid-19 crisis, this no longer works for those who need to seek assistance from the newly announced self-employment scheme.

"For this reason, the loan charge must now be delayed. We call on you to make an announcement immediately that the loan charge will be deferred by one year and will now fall due on 5th April 2020, in the 2019/20 tax year.

"This will allow such individuals to complete their 2018/19 tax return immediately (without mention of the loan charge) and to access the government support which they so urgently

require."

In a letter to the APPG, Penny Ciniewicz, the director general for customer compliance at HMRC, said: "I can confirm that late filing penalties and interest will be waived, provided customers file their 2018-19 tax return by 30 September 2020, as previously announced.

"HMRC is working hard to support taxpayers affected by the Covid-19 outbreak. You will also be aware of the Chancellor’s announcement on measures to support the self-employed during the outbreak. Special arrangements will be put in place to ensure that those liable to the loan charge can benefit from the self-employed income support scheme where appropriate, even if they have not filed their 2018-19 tax return. Guidance will be published shortly on GOV.UK.

In a Tweet, HMRC's press office said the letter "explains we are putting arrangements in place so disguised remuneration scheme users can access the government’s support for self-employed workers where appropriate. We can confirm HMRC will use their 16-17 and 17-18 tax returns to determine eligibility."

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