AccountingWeb : 2019 Loan Charge

[eazy]

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How to not pay the 2019 loan charge | AccountingWEB

HMRC director-general Ruth Stanier has written to the loan charge APPG providing further details on how taxpayers can settle existing tax bills to avoid paying the 2019 loan charge

Paying the loan charge

Where a taxpayer misses the 5 April 2019 deadline to start the settlement process, the 2019 loan charge becomes due. In appendix 1 to Stanier’s letter, she sets out the key dates for taxpayers and their employers to report and pay the loan charge.

The individual taxpayer must complete an information return setting out their loan balance by 30 September 2019. They must pay the loan charge by 31 January 2020 and file their 2018/19 tax return by that date, although time to be pay arrangements will be available.

Where the employer who provided the loan still exists, the employer needs to pay PAYE on the outstanding loan by 22 April 2019 and report the amounts due under RTI.

[Fred Bloggs]

Where the employer who provided the loan still exists, the employer needs to pay PAYE on the outstanding loan by 22 April 2019 and report the amounts due under RTI.

Yeah, good luck with that too!

[webberg]

We have started seeing HMRC issue

1. Reg 80's (PAYE assessments) and

2. notices warning of a need to disclose for loan charge purposes,

to a number of AGENCIES.

It's certainly arguable that an agency can be the employer.

[WalterWhite]

We have started seeing HMRC issue

1. Reg 80's (PAYE assessments) and

2. notices warning of a need to disclose for loan charge purposes,

to a number of AGENCIES.

It's certainly arguable that an agency can be the employer.

Agencies used schemes to pay their genuine employees?

[webberg]

Well the inference is that sums passing through an agency were such that the agency should have deducted tax.

As to whether the agency "knew" that upstream or downstream payments were being made without PAYE deductions, clearly I don't know.

[WalterWhite]

Well the inference is that sums passing through an agency were such that the agency should have deducted tax.

As to whether the agency "knew" that upstream or downstream payments were being made without PAYE deductions, clearly I don't know.

I'm confused (apologies)

Unless they were peddling the scheme, an agency would just pay an umbrella or ltd company, they wouldn't see if the contractor was being paid through a loan or scheme?

Apologies if I am missing something, just can't get my head around it

[webberg]

I'm confused (apologies)

Unless they were peddling the scheme, an agency would just pay an umbrella or ltd company, they wouldn't see if the contractor was being paid through a loan or scheme?

Apologies if I am missing something, just can't get my head around it

I suspect that HMRC has looked at the chain of payments as being:

End user > agency > promoter intermediary > promoter > trust/lender > individual.

Where the promoter is not in the UK or is in the UK (perhaps because the promoter intermediary creates a UK presence) then arguably section 684 ITEPA can apply and HMRC can demand that the nearest UK entity deducts PAYE from all payments.

This is the same charging section (often called the hosting section) that HMRC claim to be able to switch "on" and "off" at their own discretion.

If so, then switching it "on" means that the agency is in line of fire as money has passed through their hands.

Why the agency and why not the end user - who knows? Perhaps the end user has also had such notices and we just haven't seen any yet.

More likely HMRC probably guess that an agency has less financial firepower to resist a claim than say Megabank Plc and there is a degree of trying it on here?

Rather begs the question of "why now"?

Why not in 2003 or 2004 or 2011 or 2016?

[Iliketax]

Why the agency and why not the end user - who knows? Perhaps the end user has also had such notices and we just haven't seen any yet.

...

Why not in 2003 or 2004 or 2011 or 2016?

I saw end users getting reg 80s in 2016 for the K2 scheme.

[kryten22uk]

Where a taxpayer misses the 5 April 2019 deadline to start the settlement process, the 2019 loan charge becomes due.

I wonder what this tells us in practice? I thought we had to settle by 5 April (i.e. sign contract) whereas this uses the wording "start the settlement process". What do people think the triggers are for avoiding LC? For example, I got my settlement result late last year but didn't sign and return the contract as I wanted to understand the impact of the treasury review. Arguably in that case it isn't the HMRC delay, it's my delay.

[Pingpong99]

Hi, HMRC slides from Friday indicate that even if the employer does pay the tax that under s222 itepa 2003 the employee has to make good otherwise a benefit arises. Any chance you can comment on this or explain ?