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Draft legislation for loan charge refund scheme

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The government has published draft Finance Bill legislation requiring HMRC to introduce an administrative scheme to make refunds to taxpayers who have already settled their disguised remuneration liabilities since the loan charge was announced at Budget 2016, in respect of tax years no longer subject to the charge. This complements the draft legislation published on 20 January to implement the main changes following recommendations made by the independent loan charge review in December 2019.

These refunds of ‘voluntary restitution’ will cover payments in relation to loans made:

  • prior to 9 December 2010; and
  • between 9 December 2010 and 5 April 2016, where the taxpayer made reasonable disclosure of the scheme but HMRC took no action to protect the year by opening an enquiry or issuing an assessment.

HMRC has published a tax information and impact note and a draft scheme document, which sets out the eligibility criteria for claiming a refund, the claims process and how refunds will be calculated.

HMRC will only be able to issue refunds after the Finance Bill has received Royal Assent. Further guidance for taxpayers will be published before Royal Assent.

HMRC has also updated its guides on Report and account for your disguised remuneration loan charge and Find out how the changes to the loan charge affect you, to reflect the outcome of the review and provide more information on how to report disguised remuneration loans. An updated online form and a new paper version of the form will be available in April 2020. The original online form will continue to be available until April 2020 for taxpayers who do not intend to make an election to spread outstanding loan balances over three years.

Issue: 1478
Categories: News