Bankruptcy: Tax Avoidance

(asked on 5th December 2018) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the number of people (a) affected and (b) made bankrupt by the 2019 disguised remuneration Loan Charge.


Answered by
Mel Stride Portrait
Mel Stride
Shadow Secretary of State for Work and Pensions
This question was answered on 14th December 2018

The charge on disguised remuneration (DR) loans is targeted at artificial tax avoidance schemes where earnings were paid via a third party in the form of ‘loans’. These loans were paid in place of ordinary remuneration, with the sole purpose of avoiding income tax and National Insurance contributions. In reality these loans were never repaid. When taking into account the loan they received, loan scheme users have on average twice as much income as the average UK taxpayer.

The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. HMRC has published a breakdown of individuals affected by industry. HMRC data indicates that fewer than 3% of those affected work in medical services (doctors and nurses) and teaching. Further information can be found at the following link: https://www.gov.uk/government/publications/loan-schemes-and-the-loan-charge-an-overview/tax-avoidance-loan-schemes-and-the-loan-charge#who-affected

HMRC has simplified the process for those who choose to settle their use of avoidance schemes before the charge arises, so that those earning less than £50,000 a year and no longer engaging in tax avoidance can agree a payment plan of up to five years without the need for detailed supporting information. There is no maximum period within which an overall settlement can be agreed, and HMRC will deal with individual cases appropriately and sympathetically.

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