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2019 Loan Charge: s222 ITEPA 2003 deadline warning

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11962

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If you think the loan charge is bad enough, it's about to get worse for anyone who has not settled (or who will not settle by 31.8.19) and who has not made good the PAYE income tax charge to the employer by Friday 5th July 2019. HMRC take a fairly strict view on what making good means and if you are 1p short they will argue that a full s222 charge applies per the link below, which is ridiculous*. Aweb should do an urgent article on this little known and poorly publicised totally unfair "tax on tax" loan charge problem that will increase loan charge tax liabilities by around 45% in many cases.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11962

* This other archived link used to say that only the shortfall would be subject to a s 222 charge:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim11951

https://webarchive.nationalarchives.gov.uk/20141006140549/http://www.hmr...

 

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19th Jun 2019 17:39

By complete coincidence I note that HMRC's guidance in the link below was updated at the same time as my post yesterday specifically re this potential s222 issue and offers a potentially easy fix if HMRC accept a TTP arrangement re the loan charge by 4.7.19 - which they would do normally of course if the tax was payable by 31.1.20, so I can't see why this would make any difference re HMRC's policy or whatever just because this crucial 4.7.19 payment date to avoid the nasty s222 grossing up charge (the loan charge's ugly sister) is earlier than that.
https://www.gov.uk/guidance/report-and-account-for-your-disguised-remune...

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21st Jun 2019 13:14

Section 222 is PAYE's ugly sibling, full stop. But I'd rather pay tax on tax than pay the tax itself and I'd rather pay the tax itself than repay the loan.

But the coincidences multiply. I hadn't read this post before I made my PAYE comment here: https://www.accountingweb.co.uk/any-answers/loan-charge-direct-loan-from...

In fact, if PAYE on the loan charge has been discussed in this forum before, I've not seen any of those discussions. So this point may have been covered off already (apologies for any replication): if I've changed jobs (ideally before 6 April 2018), do I have to pay any of it?

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