Judicial Review Loan Charge campaign calls for ‘one big final push’

A campaign to judicially review the Loan Charge under EU law has hit 85% of its funding target, in what could be the “last and best hope” of stopping HMRC enforcing the 2019 levy.

In an update, ‘Loan Charge Judicial Review EU’ said after just 10 days of calling for donations, it was now “one big final push” away from its £180,000 goal to start proceedings.

If approved by the High Court, the JR would result in HMRC receiving a ‘letter before action’ “within the next few days,” pending a similar action in Scotland, LCJREU said.

'Better than 50% chance of success'

Explaining its dual attack, the campaign group said EU law is more favourably looked on in Scotland, and said an application to launch a Judicial Review is also cheaper to launch there.

It also said that, in receipt of a QC’s opinion granting a ‘better than 50% chance of success’ of halting the charge using EU law, it would fight the levy on one of the EU’s four fundamental rights.

“The best chance of challenging the Loan Charge in the courts …[is to argue that] enforcement of…it breaches the fundamental right to ‘freedom of movement of capital.”

'Chip in'

The LCJREU’s spokesman Andrew Earnshaw added: “[This] is the last and best hope of challenging the Loan Charge legally and [so we] urge people facing the Loan Charge to chip in and fund it, to make it happen.”

“This is the only Judicial Review that if it succeeds, would stop enforcement of the Loan Charge. Other JRs can only challenge certain decisions made relating to it, but would leave the Loan Charge in place.”

According to the campaign, barrister Richard Clayton of Exchequer Chambers (who co-wrote the opinion granting the 50% success rate), will provide a short opinion to affected HMRC customers.

'Should remove the risk'

Online, LCJREU stated: “This opinion will allow you to go to your accountant and or tax advisor and if he [or she] agrees with the opinion and takes into account the planning which you have used, you will be able to legitimately not enter the details of loans on your Self-Assessment Tax Return.

“This should remove the risk of penalties but not interest should the challenge fail. This step does not have to be taken before [the] 30th September [HMRC declaration deadline].”

A spokesman for HMRC yesterday said that this month’s deadline for Loan Charge contractors remained in place, despite suggestions that the ongoing coronavirus pandemic may be cause enough to delay Autumn Budget 2020.

'Contractors may not have settled'

Last night, former HMRC tax inspector Liz Coleman indicated that all the signs from the Revenue are that it is unwilling to budge, or think again – at least of its own accord.

“The goal posts moved dramatically following the outcome of the [Sir Amyas Morse] review published before Christmas which HMRC adopted [widely],” she began.

“The effect of this was that many settlements had to be rewritten at short notice -- and are still being amended. An additional complication was that contractors...who had settled based on the forthcoming loan charge may not have settled -- had the revised rules been in place.”

'Vigorous opposition from HMRC'

The former inspector also told ContractorUK: “So HMRC are therefore contacting those who are affected and have undertaken to make the appropriate adjustments and make repayments where appropriate.

"For any further amendments to be made would mean extensive rewriting of settlements and frankly, I cannot see that HMRC would be willingly do this.”

Now a consultant at advisory firm Integrated Dispute Resolution, Coleman believes the Revenue’s wide adoption of Morse’s recommendations would likely be grounds for it to “vigorously oppose any suggestion of further amendments.”

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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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