Small business group backs 2019 Loan Charge review
The Federation of Small Businesses (FSB) said the review “gives hope to thousands of self-employed people” who, in many cases, were acting on the advice of employers and professional third parties.
Many of those affected -- 50,000 people in total according to official estimates, are not experts in finance or taxation but nonetheless, the federation said, “could lose everything if the loan charge is enforced.”
Mike Cherry, FSB’s chair said: “The loan charge is an unfair, retrospective tax grab on self-employed individuals who were acting within the law when they made use of alternative remuneration schemes many years ago.”
But one mainstream press report at the weekend featured an expert countering the categorisation of Loan Charge 2019 as ‘retrospective,’ in line with the government’s claims.
“On a very narrow technical interpretation, the legislation is not retrospective,” Andrew Hubbard, a tax consultant at RSM told the Financial Times.
“It looks at a situation at a future date -- is there a loan in existence on April 5th 2019? – and imposes a tax liability for 2018-19 based on that situation.”
So it does not impose a tax liability on a previous year -- which would be retrospective, added Mr Hubbard, before he conceded that it “feels” like retrospective legislation because ‘the loans were often taken out a long time ago.’
But the federation’s Mr Cherry maintained: “It’s not fair to change the rule book and throw it at those who played fairly by the old rules in the past.”