Hammond told to get reasonable about 2019 Loan Charge

The creators, enablers and profit-makers of Employment Benefit Trusts should be HMRC’s focus, not the distressed hit by the backdated 2019 Loan Charge, the chancellor has been told.

So scheme providers and “barristers who signed them off” must become the target of HMRC, as opposed to individuals often roped in by their claims, IPSE explained to Philip Hammond.  

In a letter to him ahead of Budget 2018, the contractor body asks for “a more reasonable approach” than retrospection for people who were taken in by either party's claims.

“For these individuals there are at the very least extenuating circumstances which must be taken into consideration,” IPSE’s Andy Chamberlain writes in his letter to Mr Hammond.

“There are examples of scheme providers being penalised…[but] we are not aware of any barristers being retrospectively prosecuted, which seems inconsistent with the retrospective approach taken with taxpayers.”

That retrospective approach – disputed by a Treasury minister who claims HMRC is not “reaching back in time” for tax, as IPSE puts it, is putting “tremendous strain” on families.

But on top of the effort to get ministers to acknowledge that the loan charge is backdated (it is levied from April 2019 on loans dating back to 1999), a potential rerun of the problem looms.

“There is significant anecdotal evidence that nurses caught up in the changes to IR35 in the public sector, brought in in 2017, are again being encouraged into dubious umbrella arrangements,” the Association of Independent Professionals and the Self-employed (IPSE) says.

“Many of these appear to be offshore avoidance schemes that will cause significant problems for those individuals further down the line. Until a solution to the IR35 problem is found, we will continue to see these schemes cropping up.”

Editor's Note: Related --

2019 Loan Charge: HMRC answers ContractorUK readers' questions

Tax charity issues 2019 Loan Charge helpsheets

Disguised remuneration contractors hit for not caving in