Loan charge recall issue returns, with new demands making UK contractors ‘half-suicidal’

HMRC has updated its ‘Repaying a Disguised Remuneration Loan to a Third Party’ guidance after a new batch of payment demands hit contractors still reeling from the Loan Charge.

Sent by an adviser acting for West 28th Street Ltd, which acquired the EBT loans from Felicitas Solutions, the demands run into the hundreds of thousands of pounds per contractor.

How common is a demand to repay a loan originally from an Employee Benefit Trust (EBT)?

The demands are described in HMRC’s updated guidance as a “rare occurrence.”

But a law firm acting for a group of contractors contesting the claims, Elysium Law, claims to have 650 clients.

ContractorUK was yesterday told by a contractor potentially in receipt of the demands not to disclose these developments until a think-tank has published its “opinion” about the legality of the demands.

How much are the repayment demands that loan charge contractors are being chased for?

However, one ContractorUK reader being chased for £140,000 has warned that they already feel “half-suicidal.”

The severe distress partly appears to owe to the demand letters ‘giving the impression that the loans can be enforced, when they cannot be,’ the think-tank, Tax Policy Associates, is expected to argue in its opinion piece.

Can you ignore third-party demands to repay loans from Employment Benefit Trusts?

In an echo of experts’ advice when Felitcas Solutions (dissolved) issued its loan charge recall demands in 2020, the consensus is that the demands should not be ignored.

Contractors are also being widely advised to seek tailored advice from a tax specialist before they consider repaying anything.

HMRC says: “This is a complex area of tax and you should get independent legal advice from a professional with the relevant experience and knowledge, including of disguised remuneration and commercial law.”

What if I cannot afford the specialist advice which HMRC recommends?

When asked yesterday by ContractorUK, HMRC did not respond to the question of what individuals should do if they cannot afford specialist advice.

As was the case with the Felicitas demands, the mere act of repaying the loans will not stop HMRC’s loan charge from applying.

And it may now fall to a judge to establish whether the demands being sent to contractors are enforceable, as tax dispute advisory WTT Group signalled in 2021.

Is it ok to still follow ‘old’ loan charge recall guidance from 2021?

WTT, which ContractorUK has invited to comment on these new loan recall demands (which contractors started receiving in April 2026), is understood to still stand by its advice.

Last night, the Low Incomes Tax Reform Group (LITRG) said that its guidance from May and December 2021, for those facing demands from businesses calling in disguised remuneration loans, does still apply.

Where are loan charge contractors facing payment requests going for help?

A LITRG spokesperson told ContractorUK: “We are aware of renewed loan recall activity, not only through online forums but also from individuals seeking specific support from tax charities.

“In line with our [original loan charge recall] guidance, if [former loan charge contractors] receive correspondence from an organisation or its solicitors claiming to have acquired their loan and demanding repayment, it is important not to ignore it — particularly where a statutory demand has been issued, as strict time limits may apply.

“Whether a loan is legally enforceable is a matter between the individual and the party seeking repayment, rather than for HMRC.

“However, contractors affected by loan recalls may wish to inform their HMRC loan charge caseworker of any developments, as this helps HMRC understand what is happening in practice.”

What does HMRC say about loan charge recall returning as an issue?

HMRC yesterday confirmed to ContractorUK that it is aware of recent activity by businesses claiming to have acquired loan books, and as a result, such businesses are now seeking the recovery of loans.

Despite being sent links to social media posts outlining the West 28th Street demands, communicated to contractors by its adviser, “Trethowans,” the Revenue declined to talk about specific entities.

Tax officials acknowledge that the activity of loan charge recall can be challenging and distressing for contractors.

What does HMRC say loan charge contractors should do?

However, the Revenue is unable to advise taxpayers how to deal with the demands.

Nevertheless, in its guidance, “Repaying a disguised remuneration loan to a third party,” which it updated on June 3rd 2026, HMRC states:

“The loan will be unenforceable if the original lender was not authorised with the appropriate FCA lending permission.

“Any third party the original lender has transferred the loan to that is seeking to recover the debt from you without the appropriate FCA lending permission or exemption would be acting unlawfully.

“You can check a firm’s authorisation status and regulatory permissions using the Financial Services Register: register.fca.org.uk. If the lender has not complied with the CCA, it is up to the courts (not the government or the FCA), to decide whether to allow enforcement of the loan.”

Has a loan charge recall case ever been decided in court, in a judgment?

The updated HMRC guidance also features a link to a court case where a group of individuals successfully challenged loan recall demands.

But some contractors fear that the case, Adams & Ors v FS Capital & Ors, is too dissimilar.

Other contractors say the updated, online guidance from the taxman is just rehashed HMRC literature from five years ago.

Meredith McCammond, technical tax officer at LITRG, says the revised HMRC guidance is still worth a look.

“We would encourage anyone facing a loan recall to consult HMRC’s guidance on repaying a disguised remuneration loan to a third party, which has been significantly improved since the original version, and recently updated further to increase its prominence at a time when many may need it.”

McCammond continued to ContractorUK: “Contractors should also remain alert to other emerging risks. HMRC has recently published a warning about bills of exchange arrangements. And we understand that some high-volume-repayment-agent type outfits may be seeking to profit from the loan charge by offering to negotiate discounts under new settlement terms, in return for substantial upfront fees.

“Taxpayers should be aware that settlements can be agreed directly with HMRC, free of charge, or with the support of a suitably qualified professional adviser. Caution is strongly advised where anyone claims to have a special route to securing a better deal with HMRC."

What should contractors do if they receive loan charge recall demands?

A ContractorUK Forum moderator, cojak, said last night in a statement for inclusion in this article: “My advice… to [affected contractors is] basically breathe and don’t panic.

“The key point…[to remember] with these [loan charge recall demands] is that they try to panic and rush people into accepting the idea that the loan needs to be repaid. Often this is not the case.

“And yes, get decent legal advice [as HMRC correctly recommends], although this can be tricky to find and will cost money. More than many can afford.

“In addition, do your research and ask a lot of questions of the solicitors who front the company demanding money. Also, go to the ContractorUK Forum [specifically this thread] where you will find other contractors in the same position as yourself. It can be good to know you’re not alone!”