{"id":19613,"date":"2019-09-12T09:58:59","date_gmt":"2019-09-12T09:58:59","guid":{"rendered":"https:\/\/smh.group\/?p=19613"},"modified":"2023-02-15T13:45:11","modified_gmt":"2023-02-15T13:45:11","slug":"loan-charge-under-review-after-sustained-campaign","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/loan-charge-under-review-after-sustained-campaign\/","title":{"rendered":"Loan charge \u2018under review\u2019 after sustained campaign"},"content":{"rendered":"\n

Prime Minister Boris Johnson has\nannounced a review of the loan charge following pressure from campaign groups.\nThe loan charge is estimated to affect around 50,000 people. <\/strong><\/p>\n\n\n\n

Those who felt HMRC has unfairly penalised\nthousands of people caught under the loan charge welcomed the review, although\nlittle detail has been revealed. Announced in the 2016 Budget, the loan charge\nwas designed to claw back tax lost on so-called \u2018disguised remuneration schemes\u2019\nset up in the 2000s. The charge has brought HMRC under criticism for landing\nsome people with unreasonably high tax bills.<\/p>\n\n\n\n

Disguised remuneration offered workers\nloans instead of salary, designed to avoid both tax and national insurance\npayments. Contractors, employers and, in some cases employees, have been\naffected. Tax was paid on the benefit of having the interest-free loan, but\nmany never expected to repay the loans. Rules against the schemes did not come\ninto effect until 2010.<\/p>\n\n\n\n

HMRC has used the loan tax charge to\ncollect payment from individuals using these schemes by totaling all\noutstanding loans, in some cases going back twenty years, and taxing a lump sum\nof income in one year. A deadline for payment was set for the end of January\n2020, although HMRC has said there are payment plans available to spread the\ncost. <\/p>\n\n\n\n

Of the estimated 50,000 people affected, some\nwere not even aware that they were involved in a disguised remuneration scheme.\nAn inquiry by the House of Lords found that some workers employed through\nagencies in, for example, NHS roles, were working through umbrella companies\nusing disguised remuneration.<\/p>\n\n\n\n

The possibility of mass bankruptcies, and news\nof two suicides allegedly due to receiving high tax bills, has put the loan\ncharge on the front page. While some have little sympathy for the thousands\ncaught in the trap, blaming blatant tax avoidance employed in the schemes,\nothers have highlighted HMRC\u2019s slow response to the problem and its unrealistic\nexpectations placed on individuals.<\/p>\n\n\n\n

A deadline for finalising voluntary\nsettlements passed on 31 August, but there are two more milestones to come \u2013\nloans affected by the loan charge must be disclosed to HMRC through its online\nportal by 30 September and must be included as part of the tax return by 31\nJanuary 2020.<\/p>\n\n\n\n

Whatever the outcome of the review, the loan charge is a salutary lesson in the dangers of attempting tax avoidance in general and around employment tax specifically. If in any doubt about terms of employment or any scheme which sounds too good to be true, erring on the side of caution, and taking professional advice, is the best first defence.<\/p>\n\n\n\n

If you would like to discuss your tax position<\/a><\/span><\/strong> with one of our Accounting & Business Advisory<\/a><\/span><\/strong> please contact us on 0114 266 4432 or info@smhca.co.uk<\/a><\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Prime Minister Boris Johnson has announced a review of the loan charge following pressure from campaign groups. 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