Updated loan charge settlement terms

Dec 07, 2020

HMRC has sent the below message about updated loan charge settlement terms.

“The deadline to report and pay the loan charge, or reach a settlement with HMRC, passed on 30 Septe‌‌mber 2020. HMRC have now updated the 2020 settlement terms to include loans subject to the loan charge. These terms can now be used to settle all outstanding tax liabilities resulting from the use of disguised renumeration schemes.

We recommend that you review the latest information and discuss with your clients any actions they may need to take if they are affected by these updates. 

Late elections to spread

We have also published updates on the acceptance of late elections to spread a person’s outstanding disguised remuneration loan balance. Those who wanted to spread their outstanding loan balance over 3 tax years were required to use the loan charge reporting form to make an election by 30‌‌ September 2020.

HMRC is committed to ensuring that people with concerns around the affordability of the loan charge have access to as many payment support options as possible. To reflect this commitment, HMRC is using its statutory discretion to automatically accept late elections to spread the outstanding loan balance made on or before 31‌‌ December 2020.

Voluntary Restitution Guidance Updates 

Guidance for people affected by the changes to the loan charge who wished to apply for a refund of voluntary payments (known as voluntary restitution) was published on GOV‌‌.UK in July ‌‌20‌‌20. You may be aware that this guidance has been updated. The updates are designed to provide clarity in relation to the scheme and reduce complication in the repayment process. The revisions do not change whether a person is eligible for a repayment or waiver. Amounts eligible for repayment or waiver will still be determined based on the applicant’s specific circumstances. The GOV.UK guidance on refunding voluntary restitution has been updated with these changes.

Residual Tax 

Where someone has an open enquiry or assessment relating to loans subject to the loan charge, we have agreed not to collect residual tax in a settlement where certain criteria are met. You can read more about the collection criteria for residual tax in the updated settlement terms.

Where people are struggling with tax liabilities, we want to work with them, and are always ready to help those who want to pay their tax liabilities.

We do not want people to worry and we’re here to make things as straightforward as possible. Anyone with concerns about paying the loan charge should call our helpline on 03000‌‌ ‌‌‌599 110.”