A lot of what I will post here is direct from HMRC's recently published guidance last week (it's here if you really want to read all of it)on the upcoming changes to the loan charge following the review by Sir Amyas Morse late last year. The review was published on 20 December 2019 along with the government’s response to it. The government announced that it would accept all but one of the review’s recommendations. The measures announced will include the following changes to the loan charge:
- it will only apply to outstanding balances of disguised remuneration loans made between 9 December 2010 and 5 April 2019 inclusive;
- it will not apply to loans made in tax years before 2016 to 2017 where a reasonable disclosure of the use of a disguised remuneration tax avoidance scheme was made within the relevant tax return or, where appropriate, associated documents, and HMRC failed to take any action (for example by opening an enquiry);
- those affected by the loan charge will be able to elect to split their loan balance over 3 consecutive years - 2018 to 2019, 2019 to 2020 and 2020 to 2021;
- late payment interest will not be payable for the period 1 February 2020 to 30 September 2020 on any Self Assessment liability as long as a return is filed and the tax paid, or an arrangement made with HMRC to do so, by 30 September 2020;
- moving the date by which the additional information form must be returned to HMRC from 1 October 2019 to 1 October 2020 - the form requires customers to provide full information to HMRC relating to any outstanding disguised remuneration loans which they will need to make tax payments for.
It is important to note that these measures will have effect retrospectively to 5 April 2019, which is the relevant date for the purposes of applying the loan charge.
If you have any questions about these changes please contact HMRC's loan charge review team by email: loanchargeconsultationresponses@hmrc.gov.uk.
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