HMRC leaves 37,000 contractors’ nil-liability question in the air

HMRC ducking 10 questions on the McCann Loan Charge Settlement scheme won’t entice the 37,000 contractors it wants to settle their tax bills — which it claims could shrink by £70,000.

Posed by ContractorUK, the ten questions cover the scale and impact of the settlement scheme, which HMRC is ‘pushing’ people to accept despite it relating to a “horribly complex” area, says BDO tax expert Dawn Register.

The ten questions included ‘How many loan charge settlement offers were sent in July?’ and ‘What steps has HMRC taken to ensure it doesn’t repeat the timeframe settling error it made in August?’

Drawn up on the back of an HMRC press officer’s invite (“All the detail should be in the [press] release, but let me know if you have any follow-up questions”), the ten followed a new HMRC video and guidance on settling.

Key Takeaways

• HMRC declined to add anything beyond its press release when ContractorUK put 10 questions to it on the McCann Loan Charge Settlement scheme guidance and video, despite inviting the follow-up questions.
• Among the 10 questions (listed in full further down in paraphrased form): how many settlement offers were issued in July–August, and how long is the most generous timetable to settle a liability?
• HMRC says bills for the 37,000 contractors it wants to settle could shrink by up to £70k, with a third able to settle for nothing — but it declined to say how many will actually see their bill “reduce to zero.”
• The McCann settlement scheme guidance is officially an HMRC “Policy Paper” that never directly addresses “contractors,” despite contractors being HMRC’s target audience for the settlement scheme.
• The McCann settlement video features a taxpayer in a marbled kitchen — at odds with the bankruptcy many affected contractors have suffered.
• LITRG says contractors still have to sign and return an acceptance form to finalise any offer; WTT Consulting warns offers can run to 11 pages; LCAG says the video “will do nothing to rebuild trust” in HMRC; and Professional Passport calls HMRC’s video-and-guidance approach “too little, too late.”

How are HMRC’s loan charge settlement video and guidance being received?

A leading tax group effectively told ContractorUK that it welcomes the two new HMRC materials on loan charge settlement.

The group, LITRG, argues that both “How HMRC will implement the loan charge settlement scheme” and “What is the loan charge settlement scheme?” provide “clear and accessible” guidance to taxpayers.

Meredith McCammond, technical officer at the Low Incomes Tax Reform Group (LITRG), acknowledged, however, that the HMRC guidance is “detailed.”

Indeed, the guidance is actually a “Policy Paper” without the often-used, reader-friendly section “Who should read this” — and despite HMRC wanting 37,000 contractors to settle, it never once addresses “contractors” directly.

And even though it is slickly produced and uses AI, the video appears to show a taxpayer reviewing paperwork on a kitchen island made out of marble — at odds with the bankruptcy that some taxpayers have suffered.

What are the four key areas of HMRC’s settlement guidance?

The four key areas for contractors that the HMRC settlement guidance (published on September 7th) covers are:

1. ‘Settling with employers’ (under disguised remuneration, ‘employer’ may be a Personal Service Company or umbrella company).
2. ‘Calculating the settlement offer’ (see the £70k cap detail — it’s actually a cap on the discount available only to high earners).
3. ‘When settlement offers will be made and how long they’ll be available’ (“at least 90 days” is promised).
4. ‘Settlement process for different situations’ (a must-read for contractors who have ongoing enquiries/ appeals, including to the FTT).

Crawford Temple, CEO of Professional Passport, told ContractorUK that his reaction to an HMRC update this month — that it was “too little, too late” — sums up how he feels about the loan charge settlement video, too.

What are eight key statements in HMRC’s loan charge settlement video?

The eight key statements for contractors in the approx. four-minute video (uploaded by HMRC w/c Monday August 31st) are:

1. The video and settlement scheme are aimed at people who received loans through their employment between 2010 and 2019 — loans which they didn’t repay and didn’t pay tax on.
2. “Most people could see reductions of 50% in what they have to pay.”
3. For individuals who take up the scheme… their final tax liability will “almost certainly be less” than the amount they would pay under the current rules.
4. Around one third of affected people could be able to settle without having to pay HMRC anything at all, so in other words, “many people will see their bills reduce to zero.”
5. HMRC is working hard to give “certainty” on people’s tax positions as “quickly” as it can.
6. HMRC caseworkers can provide “extra support” through the settlement process and “you lose nothing by talking to us.”
7. Tax can be “complex” and HMRC bills “stressful.” If you have a tax adviser, HMRC encourages you to speak to them about the settlement scheme.
8. HMRC’s “priority” is to make sure nobody misses the chance to resolve and significantly reduce “their loan charge liability.”

Why does the Loan Charge Action Group say the video won't rebuild trust?

Trevor Price, a director of the Loan Charge Action Group (LCAG), told ContractorUK that the HMRC video promising “extra support” will “do nothing to rebuild trust.”

Price accused HMRC of continuing to imply that the sums sent to contractors were “proven” and therefore owed to the tax office, when they were not legally established.

And if many contractors will see their bills “reduce to zero,” as HMRC claims, LCAG’s Mr Price questioned why HMRC doesn’t just simply write to this apparent third of the estimated 37,000 affected contractors to say they owe nothing, with a view to closing their cases once and for all.

What ten questions on the McCann Loan Charge Settlement scheme did HMRC just duck?

ContractorUK asked HMRC the following 10 questions:

1. How many of those being written to in this latest tranche does HMRC estimate actually could have “nothing to pay” under the terms?
2. How many loan charge settlement offers were made in July-August (in total), and how many [HMRC] letters have now been dispatched?
3. Why is this happening now; did Ray McCann recommend such a formal letter-writing campaign [from HMRC to encourage settlement]?
4. How do these letters relate to the August batch, which HMRC had to reportedly apologise for because they contained the wrong dates/timeline [to settle], and what steps were taken to ensure the same mistake didn’t happen on these letters?
5. How many of the July-Aug settlement offers saw the taxpayer’s demand [from HMRC] reduce by the £70k quoted in the press release?
6. What’s the main thing contractors still don't ‘get’ about the loan charge, or the McCann Settlement terms?
7. How many named HMRC caseworkers are there in total covering the outstanding/unsettled loan charge population (reported to be almost 40,000 taxpayers)? And how many individual contacts from individual loan charge customers have those dedicated loan charge caseworkers had before these latest letters went out?
8. What’s the most generous Time To Pay or other payment arrangement currently being offered by HMRC to a loan charge taxpayer?
9. Has HMRC received reports of affected taxpayers feeling suicidal, from their families or representatives, since the McCann Review confirmed 11 self-inflicted deaths related to the loan charge? If so, how many reports/cases, and what steps did HMRC take?  
10. Is HMRC preparing for further announcements relating to the loan charge at Autumn Budget 2026; what are those announcements; and is new guidance [for loan charge contractors] expected?

How did HMRC respond to ContractorUK’s questions?

On receipt of the questions, an HMRC spokesperson told ContractorUK that they had ‘nothing to add beyond the issued press release’ — the release on which it invited the follow-up questions.

However, HMRC originally said in an email introducing the release that flags up both the guidance and video:

“The [McCann settlement] scheme could reduce bills by up to £70,000 and around a third [of those affected may be] able to settle without paying anything at all. Our aim is to help people reach a resolution and draw a line under long-running cases and we’re encouraging anyone with an outstanding liability to contact their named caseworker to discuss their options.”

Does LITRG agree with HMRC’s figures on loan charge settlement?

LITRG’s Meredith McCammond says HMRC’s financial claims about the McCann settlement scheme stack up.

“[Similar to HMRC’s, our] analysis shows that a significant number of eligible taxpayers will [indeed] pay less, or will have nothing further to pay, once the discounts under the new terms are applied,” she said.

What do loan charge settlement letter recipients need to do?

The chartered tax adviser quickly emphasised that individuals will “still need to sign and return the acceptance form included with the settlement offer, in order to finalise their position under the scheme, as this formal acceptance is what removes remaining loan charge and connected liabilities.”

In line with the new HMRC guidance/policy paper, McCammond said the McCann settlement terms were designed to “support people with unresolved loan charge liabilities.”

She added that there was indeed “no cost to engaging with HMRC to consider an offer” (as HMRC claims in the video), although she warned ContractorUK readers:

“It is [still] important to make sure you fully understand the implications before deciding whether to settle.”

In the video, HMRC says the settlement terms offer a “clear and straightforward” way of sorting out historical tax liabilities.

How long is a loan charge settlement offer?

Tom Wallace, head of tax investigations at HMRC dispute advisory WTT Consulting, indicates that up to “11 pages” doesn’t quite square with ‘straightforward.’

“An offer can run to 11 pages and set out the schemes HMRC says are covered, the information it has used, the loan values, promoter fees and the proposed settlement figure — none of which means the calculation should be accepted at face value.”

What parts of a loan charge settlement offer need reviewing?

In an online post, WTT added: “Several points may need reviewing, including

• whether the right years have been included
• whether payments already made have been reflected
• whether estimates have been used, and
• what accepting the offer means for any open enquiries, assessments, appeals or litigation."

Is 90 days to respond to a loan charge settlement offer fixed?

A former tax inspector, WTT’s Mr Wallace believes timing is important as well, given that “once the [settlement] offer is issued [by HMRC], there is a 90-day window to deal with it.”

Wallace believes questions remain over what happens if HMRC needs to amend the figures or reconsider payment terms, “so leaving it until late in the process creates avoidable risk,” he warned.

Where does LCAG want answers from HMRC?

According to LCAG, questions also remain as to who HMRC means by “employer,” and how accurate its settlement figures are.

“It is still unclear what HMRC deems to be an employer, and why it continues to ignore the role and responsibility of UK-based [recruitment] agencies that under UK law are liable,” LCAG’s Trevor Price began in his statement to ContractorUK.

“HMRC are giving simple estimates and, knowing the way HMRC has failed to give accurate and credible figures throughout this scandal, it is impossible to know what the new terms will actually mean in practice and how people will really be affected.”

What does Professional Passport say about HMRC’s approach to loan charge contractors?

Professional Passport says HMRC’s enforcement has “for too long” targeted the wrong people — contractors, rather than the promoters who sold them disguised remuneration schemes.

Chief executive Mr Temple said: “Individuals and families have seen their lives, livelihoods and financial security badly damaged, while the architects and promoters of these schemes appear to have escaped with comparatively little consequence.

“That should be a warning to our sector. Disguised remuneration schemes have not disappeared; they continue to operate and create significant risks for workers, agencies and businesses. The damage is still being done, while enforcement often appears to come after the event.”

What should HMRC do next on the loan charge?

A specialist in PAYE compliance, Mr Temple believes HMRC “needs to get ahead of the problem,” by ‘disrupting the promoters and schemes at source.’

He called on the tax authority to protect workers from becoming caught up in future costly tax disputes, and — with HMRC currently pushing 37,000 contractors to settle — warned: “Simply chasing the casualties of these [historic loan charge] schemes is not an effective enforcement strategy.”