Shortly before Christmas I wrote to the Treasury to raise a number of issues relating to the Loan Charge. I know this issue effects many of my constituents and over the last two years a number have contacted me about it, for which I am grateful. At the end of 2018 I led a Westminster Hall debate about the Loan Charge, where I object to retrospective legislation that undermines the rule of law. You can read more about the debate here.
In December I asked the Treasury to publish Sir Amyas Morse’s review of the Loan Charge and to delay the Loan Charge repayment date of 31st January 2020 until the Government had been able to make an assessment Sir Amyas review.
The Treasury responded:
The Government published Sir Amyas Morse’s independent review of the Loan Charge on 20 December, alongside the Government’s response to his recommendations. The Government welcomes Sir Amyas’ recognition that disguised remuneration schemes are a form of tax avoidance and that action was needed to tackle their use. However, the Government recognises concerns raised by the Review about the design of the Loan Charge and the impact on those liable to pay it and is therefore accepting all but one of the Review’s recommendations. The Government will ensure taxpayers have sufficient time to consider the impact of these changes on their tax position and individuals can now defer submitting their tax return and paying their Loan Charge liability until 30 September 2020, without incurring any penalties or interest.
You can read the Review, and the Governments response to it, here.
Following the Review the Government will;
- Make changes so that the Loan Charge will now only apply to loans taken out on or after 9 December 2010. The Review found that legislation announced in 2010 removed any doubt that tax was due
- Not apply the Loan Charge to users of loan schemes between 9 December 2010 and 5 April 2016 who fully disclosed their schemes on their tax return and where HMRC failed to take action
- Allow users to defer filing their returns and paying their Loan Charge liability until September 2020
- Allow taxpayers to split the loan balance over three tax years to make bills more affordable
- Invest in a new HMRC team to collect tax from those who used the avoidance schemes pre-2010