Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps he is taking to ensure that the review of the loan charge is undertaken (a) independently and (b) rigorously.

Disguised Remuneration (DR) schemes are contrived arrangements that pay loans in place of ordinary remuneration with the sole purpose of avoiding income tax and National Insurance contributions. The loans are provided on terms that mean they are not repaid in practice, so they are no different to normal income and are, and always have been, taxable.

The Government chose to accept Section 95 and will lay a report by 30 March which will review the effect of changes made to the time limits for recovery or assessment where tax loss arises in relation to offshore tax, and compare these with other legislation including the charge on DR loans. The Government will consider all the relevant evidence available in the timeframe legislated by Finance Act 2019. The charge on DR loans is unchanged as a result of the new clause and will apply to DR loan balances on 5 April 2019.

HM Revenue and Customs (HMRC) has also widely publicised a simplification to the process for those who want to settle their use of DR schemes before the loan charge arises on 5 April 2019. DR scheme users who currently have an income of less than £50,000 and are no longer engaging in tax avoidance can agree a payment plan of up to five years without the need to give HMRC detailed information about their income and assets. This arrangement has been extended to seven years for scheme users who have an income of less than £30,000.

Those who consider they need more than five (or seven) years to pay what they owe or who earn £50,000 or more should still come forward and talk to HMRC about payment terms. There are no defined minimum or maximum time periods for payment arrangements but HMRC will ask for more information including details of their income and assets so that they can tailor any payment plan to their individual financial circumstances.

Anyone who is worried about being able to pay what they owe should get in touch with HMRC as soon as possible.

Since the announcement of the 2019 loan charge at Budget 2016, HMRC has now agreed settlements on disguised remuneration schemes with employers and individuals totalling over £1 billion. Around 85% of the settlement yield since 2016 is from employers, with less than 15% from individuals.