Loan Charge expert reassures about Budget 2019 pre-dating Sir Amyas’ findings

Autumn Budget 2019 pre-dating the Loan Charge Review does not snooker the latter from recommending changes to the legislation, an adviser specialising in the charge has clarified.

The timing of the chancellor’s unveilings are also more likely to be dictated by higher level events than the April tax -- as important as it is, adds the adviser, WTT Consulting.

The clarifications come after a former tax inspector said a “revocation” of the loan charge was not incoming from Sajid Javid on November 6th, as by then it will still be under review.

'Nothing sinister'

However, “we read nothing sinister into the timing of the Budget,” WTT said in a statement yesterday, responding to questions from ContractorUK.

“We would suggest that the date owes more to bigger political issues such as Brexit and a possible general election, than a date chosen to frustrate the loan charge review.”

Moreover, if legislative changes are required to meet the recommendations of Sir Amyas Morse, “there is time and space available,” says WTT’s tax director Graham Webber.

'Great deal of information'

He pointed out that the debate and amendment process for the Budget would take place “over many months,”  during which time the loan charge review recommendations will emerge (scheduled for mid-November).

Last week, the review signalled it was no longer seeking written submissions, as the deadline for them had well past, and a “great deal” of information now needed careful consideration.  

The Loan Charge Action Group, which got its submissions in on time, confirmed that Sir Amyas let the deadline run over: “The deadline for written evidence was [actually] Sep. 30th.

“But Sir Amyas has accepted follow-up evidence where it’s been mentioned this would be coming or in some cases where he requested it," it said. "October 14th was the last date he said he would meet people.”

'False reasons'

The group caveated that the Loan Charge APPG is the exception, as Sir Amyas has asked MPs on it for certain details, and said he would accept further information from them too.

In fact, the cross-party MP group tweeted yesterday: "We’re collating evidence of HMRC telling people to take bank loans or remortgage to pay disputed demands related to payroll loans and the loan charge.

“[We] especially [want to receive] evidence of HMRC telling people to give false reasons for the loan/remortgage, [so please] email”

'Need to be resolved'

At WTT, Mr Webber reflected: “We continue to believe that Sir Amyas is capable of absorbing the complexity of the situation and the short and long term impacts on people”.

But the specialist tax adviser, who personally gave evidence to the ex-NAO head last month, reminded that the loan charge would not represent settlement of the tax situation for many.

“It should not be forgotten that….if there are enquiries from HMRC that remain outstanding, then these will need to be resolved, regardless of what happens with the loan charge,” he said.

'Glowing write-up'

An ex-tax inspector turned accountant, Carolyn Walsh, doesn’t think much good will happen.

“I fear that the Loan Charge will be given a glowing write-up by Sir Amyas Morse, and tax avoiders will get their fingers publicly rapped.

“Yet I think the requirement for taxpayers to pay tax on their loans in one tax year will be relaxed, which effectively means the loan charge won’t come into force, but people will pay the taxes on the loans they have reported to HMRC over a number of years,” she said.

'Quick, simple, affordable'

Asked what it would like to see the the Loan Charge Review recommend, WTT said it should be a measure that can “bring the whole enquiry process, to a quick, simple and affordable halt.”

Mr Webber explained: “We have in the past opined that a loan charge which was set at a low tax rate – say 10% of loan values – and which would also be accepted as an end to enquiries, would persuade the majority of contractors who used such schemes, to settle without litigation or further substantive costs on either side.

“We put this to him [Sir Amyas] when we met and although non-committal at that time, we hope that it has stayed with him and is something he will consider carefully.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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