Important 30 September 2021 deadline approaching

As readers may recall, in 2019, the UK Government commissioned a review of HMRC’s loan charge (or “disguised remuneration”) policy. This review concluded that HMRC had applied its policy too rigorously in certain respects.

As a result, HMRC announced a package of changes to its policy. Under these new rules, anyone who had entered a “disguised remuneration” scheme before December 2010 (and, in particular circumstances, for later periods) was not liable to the loan charge, meaning some taxpayers who had already paid taxes in relation to these periods were, on application, entitled to a refund.

Pre 9 December 2010

For all arrangements that fall within this period, the loan charge will no longer apply if HMRC has failed to protect its position; i.e. opened an enquiry or raised an assessment within the statutory time limits.

10 December 2010 to 5 April 2016

The loan charge will not apply to arrangements made in this period if a “reasonable disclosure” was made by the taxpayer, and again if HMRC has failed to protect its position.

A “reasonable disclosure” in the taxpayer’s return will likely include the following:

• Relevant DOTAS (Disclosure of Tax Avoidance Schemes) Number
• Documents identifying the loan and to whom the loan was made
• Details of the loan arrangements

Any returns submitted during this period which did not contain a “reasonable disclosure”, regardless of whether they have been protected, will fall within the scope of the loan charge.

6 April 2016 Onwards

There are no taxpayer protections in place for this period, and any arrangements made on or following this date will be subject to the loan charge, regardless of whether HMRC has protected its position.

Deadline for refund application

HMRC should have contacted all of those entitled to a refund and provided them with a form to be completed and returned so that their refund can be processed.

The deadline for returning these forms is 30 September 2021.

However, it is understood that only a small proportion of those entitled to a refund have so far been refunded, and that HMRC has a significant backlog of claims awaiting process, due to the complex nature of the settlements to which they relate.

Those entitled to a refund should ensure that their claims are lodged with HMRC before the above deadline. Further it is suggested that those who have lodged claims but not yet received a refund should contact HMRC for an update.

How can we help?

At Independent Tax, we are all ex-HMRC investigators, and have significant experience of dealing with HMRC loan charge enquiries and refunds.

If you, or a client, have made loan charge payments to HMRC and believe that you are entitled to a refund please do not hesitate to get in touch using our contact information below.

Please do not forget that the deadline for returning completed refund claims to HMRC is 30 September 2021.