Loan Charge contractors urged to apply ahead of September 30th refunds deadline

Loan Charge contractors must not be deterred from unsurprisingly slow refund process times by HMRC, so must instead apply for their money back now and definitely by September 30th 2021.

Issuing the two-fold recommendation to ContractorUK, tax expert Meredith McCammond said it was actually known back in this year’ first quarter that only 3% of refunds were finalised.

An expert witness to the Lords Select Committee on Economic Affairs in December (where she said HMRC had made obtaining refunds “too hard”), Ms McCammond yesterday pointed out that the low refund rate was actually disclosed in March by Treasury minister Jesse Norman.

'Taken longer than HMRC would have liked'

In a letter at the time to Lord Bridges of Headley, Mr Norman admitted that calculating the refunds had “taken longer than they [HMRC] would have liked,” to justify why out of a reported 1,850 applications, just 54 were set to conclude.

“As we are now in June, we might expect a few more to have trickled through by now,” says Ms McCammond, technical tax officer at the Low Incomes Tax Reform Group (LITRG).

The latest HMRC loan charge refund figures put the total completed at even less than the 54 which Mr Norman cited– just 50 in total, but the former expert witness to the Lords isn’t surprised.

'Not much can be done to speed up repayments'

“By its nature, the process is quite complex and involved, so I’m not sure there is much that can be done to speed up the repayments," Ms McCammond said.

“And we have to remember that some people just won’t get a refund given the high bar that HMRC have set in terms of what ‘reasonable disclosure’ means for those that submitted returns between 2010 and 2016.”

Since the HMRC refund figures for loan charge contractors were released under freedom of information rules, contractor body IPSE has urged HMRC to repay all the reimbursements “automatically”.

'Scandal'

Failing that, IPSE’s policy director Andy Chamberlain says the tax authority should just move as speedily as it can.

“Since the government ultimately accepted the recommendations of the Sir Amyas Morse Review in 2019, it should work to ensure all refund applications from contractors who were negatively affected by the loan charge scandal are processed as quickly as possible,” he said.  

At LITRG, Ms McCammond believes that action is indeed imperative – albeit for out-of-pocket contractors.

'Get the application started'

“The key thing is for people who think they are due a refund to get into the process now – people need to complete and return the application form by September 30th 2021, which really isn’t that far away.”

She continued: “HMRC says that if they receive a form after this date, it won’t be able to refund or waive any of the amounts of voluntary restitution.

“The key message is that taxpayers who haven’t heard from HMRC already, who may be eligible for a refund or waiver, should contact HMRC on 03000 534 226 or email ca.loancharge@hmrc.gov.uk to get the application started.”

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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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