Review Loan Charge at Autumn Budget 2021, chancellor told

The Loan Charge should be reviewed at Autumn Budget 2021 to unblock the “impasse” that has been reached between contractors and HMRC.

Issuing this recommendation to the chancellor, the Low Incomes Tax Reform Group said a significant number of people have “still not met their obligations” under the charge.

HMRC meanwhile, ‘oversimplifies’ the situation; has issued 17,000 formal enquiry letters to loan charge tax return filers yet repaid or waived the charge for just 440 people, LITRG adds.

'Consider pausing'

Rish Sunak is also told that of those 440, only a “very low” fraction met HMRC’s “too high” bar of ‘reasonable disclosure,’ and that the Residual Tax Concession has had “little impact.”

“We ask the chancellor to consider pausing activity around the loan charge and to review the current loan charge situation,” says the LITRG in its ‘Budget 2021 representation.’

“This should include an opportunity for external bodies/individuals to contribute evidence to the review.”

'Significant intervention'

Solicitor Osita Mba, a former lawyer for HMRC, took to Twitter to say that the tax group’s submission to Mr Sunak could be a “significant intervention”. 

In particular, the LITRG’s four-page document says a critical assessment of the Morse Review’s “implementation and effectiveness” should be carried out.

The assessment is called for because while Sir Amyas Morse’s recommendations of 2019 “had the potential to help”, the group regrets that “they have not achieved their potential”.

'Important message'

A lobbyist for affected taxpayers, the Loan Charge Action Group says Number 11 Downing Street is being sent an “important message” by LITRG.

LCAG's Steve Packham told ContractorUK: “It’s very welcome that the Low Incomes Tax Reform Group has now joined to the calls for an immediate pause and review of the loan charge situation

“The government and HMRC know full well that if they enforce the draconian loan charge, there will be devastating consequences for thousands of UK families and a serious risk of more suicides.

"It cannot make sense to demand huge sums from people that HMRC and the Treasury are well aware that people simply cannot pay with many bankruptcies inevitable."

'Sensible way to help return taxpayer protections'

WTT Consulting, an HMRC dispute advisory which specialises in the loan charge, will write exclusively for ContractorUK tomorrow on the LITRG's submission to the chancellor.

But this morning, ahead of the article, the advisory's tax director Graham Webber described the sought-review of the charge as "a sensible way to ensure the return of taxpayer protections."

Online, a loan charge contractor agreed action is overdue, saying it was time for the government to treat taxpayers fairly; to consider HMRC’s “screw-ups and to address “intransigence” by HM Treasury’s financial secretaries.

“HMRC’s stance (which has driven their approach throughout the loan charge) that ‘individuals are responsible for their own tax affairs’ is an oversimplification,” LITRG writes in its submission.

'Totally disproportionate'

The group adds: “Something of an impasse has been reached…[but] HMRC pausing activity and taking a fresh look at the loan charge by conducting a review, would [deliver the Revenue six advantages].”

For taxpayers, the group indicates that HMRC’s late filing, payment interest and penalty regime on disguised remuneration might need scrutiny, saying its “totally disproportionate" impact on taxpayers may be stopping contractors from achieving resolution.

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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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