Disguised remuneration loans

HMRC has updated its policy paper Loan schemes and the loan charge – an overview to cover the position individuals find themselves in where they were subject to the loan charge and have since been contacted by a third party asking them to repay their loans.

Original providers of loans under disguised remuneration schemes sometime sell their outstanding loans to a third party. Some of these third parties have been contacting scheme users to demand repayment of their outstanding loans.

The updated guidance highlights the problem this presents for taxpayers. Where loans were outstanding on 5 April 2019 (meaning the loan charge applied) and loans were repaid after that date, the loan charge still applies, and HMRC is not able to refund any loan charge already paid. The guidance also notes that the government is unable to intervene in a dispute between two private parties over loan contracts and advises that any such disputes should be resolved through the courts in the normal way.

The policy paper explains the action users should take, including seeking independent legal advice and checking their paperwork to confirm whether or not there is a legal liability to repay the loan.

HMRC may also be able to help if taxpayers are struggling to pay the tax due, by agreeing a Time to Pay arrangement.