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Loan Charge help - what do I need to do?

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    Loan Charge help - what do I need to do?

    Hi all, this is my first post, although I am a common reader of these threads as of recently.

    I need some help regarding the loan charge...

    Firstly, a bit of background... I used to contract between 09/15 - 09/18 and was being paid through an umbrella company who I thought sorted all my taxes out.

    in 11/19 I received a letter from HMRC regarding the loan charge, I called them and said I don't think this applies to me as I had a company sort out taxes etc. and the matter was closed. I then received another call around 02/20 regarding the same thing, I informed them I had this conversation with a colleague of theirs a few months back and nothing else was required.

    2 weeks ago I then received another letter, again I called, however this time the agent on the other end of the line said it did apply to me and I had until 30th Sept to get it sorted. This involved completing a loan charge form online and a tax return for 18/19 with the loan charge amounts received since 09/15. I've been unable to complete these forms due to technical difficulties, however, that is now all resolved (or will be in 72 hours according to the agent I called earlier today). He informed me it may be worth getting professional help on this matter.

    The way I got paid when I was contracting, was I got paid minimum wage, and then at the end of the year received a dividend voucher (this was given to me throughout the year in my weekly pay).

    Reading all the information online, I assume it is this dividend voucher which is the loan charge which I need to notify HMRC about? Is that the case, or do I need to try and recalculate everything received by looking at payslips, bank statements, etc? The problem I have is that I only have around 70% of payslips, and I have changed banks a couple of times since then. It is getting a bit too close to deadline and I am stressing out. I just want to get this out the way but I'm unsure exactly what I need to do.

    I have read so many articles online, but honestly, I am not tax-savvy and a lot of the jargon just goes over my head.

    Any help will be much appreciated.

    #2
    So on each pay day what did you receive?

    If you were on minimum wage and the end of year dividend was genuine, then each week you would have received say £100/120 and then nothing until the dividend was paid.

    I'd be confident that instead you had a payslip that said £100/120 plus some form of "advance". I'd also be confident that the total of the "advances" and the annual dividend, magically match.

    HMRC will claim that the advances are subject to the loan charge.

    I'm too busy to cover the four and half years of coverage since the loan charge was first proposed, but HMRC has a point.

    I also assume that you have not registered for settlement which in any event had to be completed by the end of the month?

    Your choices now are limited because you have left this late.

    You can apply for the August 2020 settlement terms, pay the loan charge (which will be a credit against the final settlement) and if necessary try to agree a time to pay with HMRC.

    Or you can decide that HMRC is wrong an litigate. If so, join a group. Many schemes have their own group. In addition some advisers run their own litigation. Search "contractor loan scheme" and you'll find most of them with a little digging.
    Best Forum Adviser & Forum Personality of the Year 2018.

    (No, me neither).

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