Loan charge to remain in force while new review is underway
Review into controversial loan charge is set to provide independent recommendations by mid-November - but is too late for many.
A review of the government’s controversial loan charge has been announced by the chancellor Sajid Javid, following months of pressure from MPs, taxpayers and campaigners.
The loan charge will remain in force during the independent review of the policy, which will be led by Sir Amyas Morse, former Comptroller and Auditor General of the National Audit office. The review report is due to be published mid-November and will focus on the impact of loan charge on individuals who have directly entered disguised remuneration schemes.
Remaining in force
Despite a new review being drafted, the loan charge remains in force today. George Bull, senior tax partner at RSM commented: “It seems likely that the Treasury were caught on the hop by the Prime Minister’s announcement last week of a review into the loan charge, and they are now racing to play catch-up.
“The Government clearly recognises the urgency of completing this review quickly and has given Sir Amyas Morse a deadline of mid-November in order to provide some clarity to those affected ahead of the January Self-Assessment deadline.”
Bull also suggested individuals subject to the loan charge should follow the published advice: “In essence, those who have already settled should do nothing, those who have settled and are paying by instalments should continue to do so. Those who have provided all the required information by 5 April 2019 and are waiting to finalise a settlement can continue to do so if they wish. However, HMRC has indicated that they may wish to wait for the Government’s response to the review before settling.”
He believes the review will be reflecting on the government’s approach to tackle future tax avoidance: “The outcome of this review will not only impact those subject to the loan charge. It is also likely to inform how HMRC tackles tax avoidance in the future.”
Too late
In response to the news, Clive Gawthorpe, Partner at UHY Hacker Young, the national accountancy group, stated: “This news comes too late for many taxpayers who have had to sell their home and other assets to pay HMRC. But better late than never.
“It is a shame that the Government did not announce this at the end of July when they came into power. That would have made a lot of difference.”
Gawthorpe upheld the review could lead to a potential decrease in interest rate: “The terms of reference for the review suggest that HMRC will pursue underpaid tax but what we could see is less punishing interest charges being levied.”