The Morse review of the loan charge needs to resolve the problem of disguised remuneration loan schemes effectively, particularly for those facing lower tax bills who entered the shemes without grasping the full tax implications, warns Bill Dodwell CTA (Fellow), head of the Office of Tax Simplification
Sir Amyas Morse has an unenviable task as he conducts his independent review into the loan charge. He has been asked to ‘consider whether the policy is an appropriate way of dealing with disguised remuneration loan schemes used by individuals who entered directly into these schemes to avoid paying tax’.
The loan charge was announced in 2016 to charge income tax on disguised remuneration schemes, where the worker received a loan in place of salary. The ambition of the scheme designers was that the advance – which typically ended up in an employee benefit trust – should not amount to taxable remuneration.
HMRC rather dryly puts it on its website ‘[schemes] normally involve a loan…which is unlikely to ever be repaid’. There can be little doubt that scheme participants would be massively surprised if genuine repayment was ever sought.
Bef
