HMRC's 2019 Loan Charge: what the Lords recommend

In a wide-ranging enquiry entitled HMRC Powers: Treating Taxpayers Fairly, the 2019 Loan Charge was the most contentious tax. Six recommendations were tabled by the Lords on the loan charge, which was also the most frequently raised issue of the entire enquiry.

Recommendation 1

We recommend that the loan charge legislation is amended to exclude from the charge loans made in years where taxpayers disclosed their participation in these schemes to HMRC or which would otherwise have been “closed”.

Recommendation 2

HMRC should urgently reviews all loan charge cases where the only remaining consideration is the individual’s ability to pay.

Recommendation 3

We recommend that HMRC establishes a dedicated helpline to give those affected by the loan charge advice and support. Such action should take place well in advance of the loan charge coming into effect in April 2019.

Recommendation 4

HMRC should make a declaration, in a clear and accessible public statement, as soon as it begins investigating a potential tax avoidance scheme. Such a declaration should be targeted at those most likely to be affected by the scheme in question. Publishing online guidance, such as through ‘Spotlight’, will not be sufficient.

Recommendation 5

We recommend HMRC also notify a taxpayer that it is investigating an avoidance scheme as soon as possible if that individual declares the scheme on their tax return.

Recommendation 6

HMRC should be encouraged to do more to publicise any actions it is taking against promoters of disguised remuneration schemes. ‘Spotlight’ publications are neither well-known nor well-read, and are therefore insufficient for this purpose.