Disguised Remunerations: Loan Charge Deadline Fast Approaching

Individuals who owe tax against disguised remuneration loan schemes have time till 30 September 2020 to settle what they owe, else face even bigger tax bill later. HMRC has published guidelines on refunds of voluntary payments. Whatever are the outstanding disguised remuneration loans that are subject to the Loan Charge has to be reported to HMRC by 30 September 2020.

The much-criticised loan charge had to face a lot of negative media last year, with several suicides allegedly linked to it. To summarise, it is applied on a single tax charge to all outstanding employment-related loans that are made through so-called “disguised remuneration” schemes by making the balance appear like income arising in 2018/19. Initially, it was introduced to apply to any loan that was issued on or after 6 April 1999, and would have been payable by 31 January 2020.

After a lot of criticism, review of the scheme was done and changes made, following which, many amendments were made to the loan charge. The most crucial ones were the constraints put on the charges to loans made from 6 April 2010, alongside a partial exclusion to those made before 6 April 2016, that is notification was sent to HMRC about the loan, but it did not open any enquiry about the matter.

Now, if individuals are willing to settle the process with HMRC, the deadline for filing the loan charge is extended to 30 September.

Taxpayer affected by the Loan Charge should seek independent advice from professionals who are experts in this.

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