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Loan charge: What advisers must do

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HMRC is allowing more time to file 2018/19 tax returns and pay loan charge liabilities for taxpayers affected by the proposed amendments to the law.

6th Jan 2020
Tax Writer Taxwriter Ltd
Columnist
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The independent loan charge review, conducted by Sir Amyas Morse, was finally published on 20 December, having been delayed from mid-November as no government reports can be published during an election period that could be advantageous to particular candidates.

Morse’s first recommendation is for HMRC to provide appropriate guidance to taxpayers who need to report their liability to the loan charge on their 2018/19 tax returns and pay the tax due by 31 January 2020. This revised HMRC guidance was released on 20 December 2020, and I have summarised the key points below.

The taxpayers affected by this new guidance include those who have already agreed a settled amount to pay to HMRC, those who are in the process of agreeing such a settlement, those who are subject to the loan charge, and employers or employees caught up in loan charge schemes.

Immediate action is required by individuals and their advisers who are preparing 2018/19 self assessment tax returns.

Accountants need to sort their clients into categories according to when the loans were taken out, what disclosure has been made, and when a settlement was reached, if at all.

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Replies (3)

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By AndyC555
06th Jan 2020 10:06

"These fundamental changes to the scope of the loan charge have arrived at the peak of the self assessment filing season, so HMRC is allowing those affected taxpayers eight additional months to submit their 2018/19 tax returns.
As long as the tax return is submitted by 30 September 2020, and either the tax is paid by then or a time to pay arrangement has been fixed, no late filing or late payment penalties will be charged. Late payment interest will also be waived where payment is made by 30 September 2020."

Thanks Rebecca for this useful summary.

Any idea how we go about notifying HMRC that we intend to delay submission of the 2018-19 until 30 September?

Thanks (0)
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By andythelastdj
06th Jan 2020 10:31

You say that "Taxpayers who took loans before 9 December 2010 can breathe easy, as those loans will not be subject to the loan charge." Although the Loan Charge itself will not apply to those loans, any years which HMRC has protected with enquiries or assessments will still need to be resolved, by payment of tax and interest. Anyone with clients involved in schemes up to and including 2010/11 will need to check this. In the Contractor sphere at least, HMRC had pretty comprehensive coverage from 0809 onwards, although many if not most of those affected will likely have settled some time ago, maybe under the original Contractor Loans Settlement Opportunity in 2014/15.

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By Justin Bryant
06th Jan 2020 13:00

A good, accurate summary of the history of all this is here: https://www.taxationweb.co.uk/tax-articles/business-tax/loan-charge-inde...

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