Loan Charge – an update

If you have been affected by the Loan Charge, whether you have settled to avoid it or face paying the it, you can tell a cross-party group of MPs about your experiences.

Submissions can be completed by anyone who has been personally impacted by the Loan Charge and the deadline is Friday 8th April 2022. The instructions for submitting evidence are available here.    

The APPG will use the submissions to understand the current reality of the Loan Charge and will share the findings.

The call for evidence has been issued as the APPG say there are a number of key facts that haven’t yet been established. The APPG recently wrote to First Permanent Secretary and Chief Executive of HMRC, Jim Harra, asking 12 key questions, that thus far the HMRC and Treasury have not answered.

It also follows the proposal made by some tax professionals for a fair resolution to draw a line under the whole issue.

What else is going on with the Loan Charge?

As set out in our Autumn 2021 Budget Representation, we understand that a significant number of people, still have not met their Loan Charge reporting and paying obligations.

Our Budget Representation request to pause and review the Loan Charge was not accepted by Government. As such, over the coming months, we expect to see:

• HMRC issuing determinations to those who have not yet filed their 2018/19 tax returns containing the Loan Charge.
• HMRC opening enquiries into those people who filed a 2018/19 tax return, but who did not return the loan charge in that tax return or who included a different amount for the loan charge, in comparison to HMRC’s figures.

If you receive a determination or an enquiry letter, we set out some information to help you understand what the situation is and what you need to do in our previous article.

For enquires that have already been opened, we would expect to see:

• HMRC issuing nil closures (for taxpayers who HMRC agree do not owe any more and/or for taxpayers where the residual tax concession applies)
• HMRC issuing formal information requests (where HMRC do not have enough information to determine someone’s position and where a previous informal request not yielded what HMRC require)
• HMRC issuing closure notices (where HMRC will assess how much a customer owes).

To find out more about HMRC’s processes once an enquiry in opened and what to do if you receive a closure notice, see our previous article.  

If you receive an information request and do not know how to respond, please don’t ignore it – instead we recommend you seek some professional advice. If you are on a low income, the charity TaxAid may be able to help.  

For those who have reported the Loan Charge correctly, but have not paid it or reached an agreement with HMRC about paying it, we would expect to see some Debt Management (DM) home visits. These should be from an HMRC staff member and not a debt collection agency.

To discuss your debt and/or payment options you can afford and to prevent a DM visit, call the HMRC dedicated number for taxpayers that have a Loan Charge debt: 0300 322 7857.

Loan recall

We are aware that some people are still receiving loan demands from certain companies asking them to repay loans which they have already settled the tax on or paid the Loan Charge to HMRC.

For the official government guidance on repaying a disguised remuneration loan to a third party, go to GOV.UK.

Our article, recapping on what you need to do to protect yourself from a loan demand can be found on our website.