The Treasury has ordered an independent review of the 2019 loan charge, after campaigners successfully pressured Boris Johnson into announcing one.
Does this review, led by Sir Amyas Morse, former Chief Executive of the National Audit Office, present a real prospect of the loan charge being cancelled?
The 2019 loan charge is a retrospective tax targeting contractors who used ‘disguised remuneration’ loan schemes, dating back as far as 1999.
Since the loan charge came into force on 5 April 2019, pressure has been mounting on the government to suspend it, at the very least.
And during Prime Minister’s Questions on 5 September, Boris Johnson finally committed to reviewing the controversial tax. Days later, Chancellor Sajid Javid formally announced an independent review.
Until Sir Amyas Morse delivers the review in November, the loan charge will stay in effect.
While some experts say the review is “better late than never”, The Telegraph reports that 2,000 people have already settled with HMRC and that HMRC has “agreed” a further £1 billion in settlements.
The tax man has told those paying in instalments they should carry on – and that if they’re nearing the end of their agreement, they can finalise their settlement. People who haven’t settled should've supplied information on their outstanding loans to HMRC by 30 September.
Paul Hornby, Managing Director of accountancy firm JF Hornby, says: “Anyone affected should take sound advice as soon as possible and should not rush or be forced into making any decisions.”
The Treasury already published a review of the loan charge in March, only days before it came into effect. That report was denounced as a ‘propaganda document’ by campaigners. As barrister Keith Gordon, of Temple Tax Chambers, said at the time: “Where the report is silent is in relation to HMRC’s own failings”.
As the new review is independent, those asking for the legislation to be changed are hopeful. Iain Duncan-Smith MP has promised Sir Amyas Morse will “be independent and impartial”.
But some critics are suspicious of the ‘terms of reference’ for the review, which say that Morse will be “supported by a team of officials, drawn from HM Treasury (HMT) and Her Majesty’s Revenue and Customs (HMRC).”
As Tom Wallace, Head of Tax at HMRC dispute advisory service WTT Consulting, states: “they will return once the review has concluded to work under their previous departmental line managers, who may not look too fondly on anyone who has helped expose any wrongdoing by officialdom.”
The good news is that Morse will have the final say on what’s published in the report – we’ll bring you more on the review as it develops.
Does this news come too late for contractors? Let us know in the comments below.
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