[UK] Disguised remuneration: Independent loan charge review

The disguised remuneration loan charge came into effect on the 6th of April 2019 and applied to people that had taken out a loan under a disguised remuneration scheme.  The government and HMRC had previously said that these types of schemes were “avoidance arrangements that seek to avoid Income Tax and National Insurance contributions (NICs) by paying scheme users their income in the form of loans”.

The 45% loan charge applied to all loans made through such schemes where the individual had not agreed to settle with HMRC the tax and NICs that they had previously avoided by the 5^th of April 2019.  Although only 50,000 individuals were believed to have been in such avoidance schemes, the legislation and HMRC actions of this charge had come under intense scrutiny, with some claiming hardship and bankruptcy, not to mention mental stress.

On the 4th of September 2019 during Prime Minister’s Question Time, Boris Johnson said that he would have a “thorough review” of the charge.  On the 11th of September 2019, Chancellor Sajid Javid announced an independent review saying that the focus will be on the impact of the Loan Charge on individuals who have directly entered into disguised remuneration schemes.

The independent review will be led by Sir Amyas Morse, former Chief Executive and Comptroller and Auditor General of the National Audit Office.  It will provide independent recommendations to the government by mid-November 2019 and the government will respond to these.

The terms of reference have been published that outline the scope and objectives of the review, detailing that Sir Morse will be supported by officials from HM Treasury (HMT) and Her Majesty’s Revenue and Customs (HMRC).

The disguised remuneration loan charge came into effect on the 6th of April 2019 and applied to people that had taken out a loan under a disguised remuneration scheme.  The government and HMRC had previously said that these types of schemes were “avoidance arrangements that seek to avoid Income Tax and National Insurance contributions (NICs) by paying scheme users their income in the form of loans”.

The 45% loan charge applied to all loans made through such schemes where the individual had not agreed to settle with HMRC the tax and NICs that they had previously avoided by the 5^th of April 2019.  Although only 50,000 individuals were believed to have been in such avoidance schemes, the legislation and HMRC actions of this charge had come under intense scrutiny, with some claiming hardship and bankruptcy, not to mention mental stress.

On the 4th of September 2019 during Prime Minister’s Question Time, Boris Johnson said that he would have a “thorough review” of the charge.  On the 11th of September 2019, Chancellor Sajid Javid announced an independent review saying that the focus will be on the impact of the Loan Charge on individuals who have directly entered into disguised remuneration schemes.

The independent review will be led by Sir Amyas Morse, former Chief Executive and Comptroller and Auditor General of the National Audit Office.  It will provide independent recommendations to the government by mid-November 2019 and the government will respond to these.

The terms of reference have been published that outline the scope and objectives of the review, detailing that Sir Morse will be supported by officials from HM Treasury (HMT) and Her Majesty’s Revenue and Customs (HMRC).