The loan charge has caused much controversy since its introduction in the 2016 Budget and now is the last chance to apply for a refund or waiver under the disguised remuneration repayment scheme, says Chris Etherington, tax partner at RSM
The intention of the loan charge was to ‘capture’ and tax all outstanding disguised remuneration loans which remained outstanding on 5 April 2019. It was the backstop alternative for those recalcitrant taxpayers who had received loans but had chosen not to either repay them or reach settlement with HMRC before the 5 April 2019 deadline.
Its original scope was reduced following the Amyas Morse report in December 2019, after a public outcry that the proposed charge was draconian, but it remained very much the ‘stick’ to the settlement ‘carrot’ which HMRC was then promoting.
The 5 April 2019 deadline date was extended to 30 September 2020 to enable those individuals in discussions with HMRC to finalise their settlements. This was also the extended 2018/19 return filing date for those individuals who had not reached settlement with HMRC to report the loan charge and apply for the concessionary three-year spreading election, if required.
