Beware of 30th September 2019
In Finance Act (no 2) 2017 HMRc introduced a charge on “disguised remuneration”.
It is conveniently known as the “loan charge”.
Martin Redfern of ASE Plc commented that the loan charge “it is an attempt to impose an Income Tax and NIC liability upon both employers and individuals where a loan was made available to an individual after 6 April 1999 that is still outstanding on 5 April 2019”.
Much has been written in the press about pressures put upon the Government to abandon this charge and indeed, on 4 September 2019, Boris Johnson vowed to have a thorough review of the matter. Martin continues to advise that “unless you are certain that you believe that the Government will back down (and in this regard you should note HMRC expected to raise £3.2bn from the tax charged), you have until 30 September 2019 to act if you want to avoid additional penalties in addition to the tax and NIC”.
So what do you need to do?
Martin Redfern recommends that provide HMRC with;
- The loan tax arrangement / scheme
- A DOTAS number if one exists
- The loan value
- The start date of the loan
HMRC are confirmed that they are willing to offer help for taxpayers who are genuinely seeking to resolve the tax and NIC charges on loan arrangements if they are not able to make good all of the tax due by 31 January 2020.
Specifically HMRC insist they will not force anyone to sell their main homes or make individuals bankrupt if the individual enters into some form of payment arrangement to settle the liability in full over time.
Moreover, HMRC have confirmed that there are no fixed time limits over which to pay outstanding liabilities if full information and evidence of income, expenditure, assets and liabilities are disclosed.
If you have a loan arrangement / EBT or similar and a loan which remains unpaid, the deadline of 30 September gives you 11 working days in which to discuss what to do and to act before the deadline.
Martin concludes by noting that he is aware that “many fellow tax professionals have criticised the Government for seeking to charge to tax and NIC such arrangements. Given that the government have not “prorogued HMRC”, at least there are more days available to sort out your tax affairs than there are days in parliament to resolve Brexit”.
In case of any questions please contact at Chris.Cummings@ase-global.com
Tel: +44 (0)161 493 1930