MPs probing HMRC Loan Charge receive 'deeply worrying' evidence

A call for evidence on how HMRC’s 2019 Loan Charge has affected contractors is cautioning that the submissions it has received are “deeply worrying”.

Speaking after its call closed, the Loan Charge & Taxpayer Fairness APPG also said despite not yet having finished “compiling” them, the submissions reveal the “awful situation people are in.”

MPs on the cross-party parliamentary group thanked those who contributed -- contractors and other individuals caught by the HMRC loan charge or those who have settled to avoid it.

'HMRC wants its money back from some contractors who settled'

But ahead of the evidence being published in a report, a tax dispute advisory says HMRC settlors are now being told that refunds they got for Morse-excluded years are too generous.

“HMRC wants that money back,” posted the advisory, WTT Consulting. “HMRC agreed that settlement of years not open to enquiry prior to December 2010 were outside their reach.

“Refunds were offered. [But] it [now] seems that HMRC think…that sufficient disclosure was not made in 2010/11 for a full or partial refund to be due.”

The over-refund notices are not any of the three documents which taxpayers caught by the loan charge have been braced to expect from HMRC in the coming weeks.

'Enough information'

The three foreseen are; nil closure notices (assessment that nothing is owed); closure notices (assessment of how much is owed) and formal information requests, the LITRG has said.

Outlining the latter requests, the tax charity explained HMRC issues them after its informal requests fail to extract “enough information” from the taxpayer to determine liability.

Speaking after the issuing of 10 loan charge questions to the Revenue’s Jim Harra last month, a tax campaigner hinted such formal information requests to find out more could be in vogue.

“There is certainly still uncertainty of what happens next and what loan charge bills HMRC will issue -- when and with what terms or options,” the campaigner told ContractorUK.

'Main beefs with HMRC'

The now-closed call for evidence by MPs also stems from uncertainty, given the campaigner said they too were unclear about HMRC’s current and future activities in terms of taxpayer impacts.

But sounding totally clear about how the taxman’s actions affect individuals is Baroness Kramer.

“One of my main beefs with HMRC is that it issues tax claims with no actual calculations to show how the numbers are derived.

“For years, its treatment of individuals against whom it had claims was brutal and threatening,” the Lib Dem peer said.

A member of the LCTF APPG, the baroness added: “This has improved -- but only after eight suicides. [We have] again been pushing HMRC to set up a suicide-prevention hotline.”

'Painting a picture'

But HMRC has declined to set up such a helpline (“inappropriate”), and the chancellor has declined to reply to a letter from the APPG in November, asking him to reconsider.

On Thursday, the MPs who call the evidence from taxpayers “deeply worrying” said contractors’ submissions were already helping them ‘paint a picture’ of the loan charge’s impacts.

That’s on top of a spokesperson for the parliamentary group describing to ContractorUK the response from contractors, at least at the time of the first stage of the evidence-call as, “really good.”  

'Determinations over the coming months'

But given that it is not just individuals with open enquiries (and who can expect at least three different types of HMRC notices) who are in the taxman’s net, the spread of total individuals who could end up hearing from ‘disguised remuneration’ officials could be extremely wide.

The Low Incomes Tax Reform Group warns: “Over the coming months, we expect to see HMRC issuing determinations to those who have not yet filed their 2018/19 tax returns containing the loan charge.

“[And we expect to see] HMRC opening enquiries into those people who filed a 2018/19 tax return, but who did not return the loan charge in that tax return or who included a different amount for the loan charge, in comparison to HMRC’s figures.”

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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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