Loan Charge Planned Changes (Jan 2020)

The public spending expert Sir Amyas Morse led an independent review on the loan charge and I have read through the findings of this review. Having discussed its conclusions with my colleagues, I feel that the recommendations made by Sir Amyas were reasonable.  

It was right that we tackled tax avoidance schemes, including disguised remuneration (DR) schemes. That said, I am glad the Government has endorsed the recommendations made by Sir Amyas and is going to reform its Loan Charge policy. I hope it comes as a reassurance the loan charge will now only affect those who used DR schemes on or after December 9th 2010. It will exclude tax years before 6 April 2016 for those who appropriately disclosed that they were using these schemes to HMRC and HMRC did not take action, as per the recommendations of the review. 

I feel that these steps represent a reasonable reform to a sensible measure that tackles tax avoidance. It would not be fair if the Government gave more favourable payment terms to DR scheme users, for whom mitigating arrangements are already in place. It is right, however, that DR scheme users have been given the opportunity to spread the amount of their outstanding loan balance across three tax years.

More broadly, I welcome that a number of measures are being introduced to tackle tax avoidance and evasion, including a new ‘beefed-up’ Anti-Tax Evasion Unit at HMRC and tougher sentences for those who commit tax fraud.