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The simple answer is yes.

The 30 September 2018 deadline has passed and the 5 April 2019 is looming large.  Surely that means if I’m not already in dialogue with HMRC I have to pay the Loan Charge?

No it doesn’t.

HMRC issued updated Guidance on 1 February 2019 that provides a final opportunity to settle.

What HMRC Say

Taxpayers can still come forward now if they did not register their interest to settle by 31 May 2018 and did not send HMRC all the information it needed by 30 September 2018.

If taxpayers want to settle their use of a disguised remuneration tax avoidance scheme so that they do not have to pay the loan charge, they (or their agent) should contact HMRC promptly and send HMRC all the information it requires as quickly as possible, and by 5 April 2019 at the latest.

HMRC will then work with the taxpayer to settle their tax affairs before the loan charge comes into effect.

What Does Guidance Mean

HMRC do not define what they mean by “before the loan charge comes into effect.”.

If information is passed to HMRC on 4 April 2019 (to meet by 5 April 2019) will HMRC be able to evaluate the settlement before 5 April 2019, when loan charge is due to take effect.

The simple answer is no.

Does this mean the loan charge is avoided or circumvented?

Again the simple answer is no.

What Does HMRC Really Mean

Rather than guess we have asked.

The verbal response being:

  • taxpayer must provide HMRC with meaningful information about an arrangement by 5 April 2019
  • HMRC will then provide settlement calculations
  • taxpayer will have 30 days to agree calculations after they are issued by HMRC otherwise loan charge will take effect.

The conclusion being loan charge can be avoided if settlement is reached with HMRC.  Even if the actual settlement is agreed after 5 April 2019.  Provided information about the arrangement is provided to HMRC by 5 April 2019.

The default position being if the terms for settlement are not met the loan charge will take effect.

A Short Settlement Window

Any taxpayer who has not made up their mind to settle needs to do so in the next 6 weeks if they wish to settle.

Information needs to be provided to HMRC by 5 April 2019, otherwise the opportunity will be lost.

Pace is then determined by how quickly HMRC can evaluate the settlement.

If settlement is agreed within 30 days of figures being evaluated loan charge can be avoided.

Anyone seeking to exit any form of tax avoidance can contact me at amaxfield@hwca.com, or Paul at pmalin@hwca.com, to explore their options, while options exist.

If you cannot find the information you need on our website, please contact Paul Malin or Andy Maxfield using our contact form or email directly to pmalin@hwca.com or amaxfield@hwca.com

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Birmingham
B16 8SP

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Haines Watts Leeds
Sterling House
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Meanwood Road
Leeds
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New Derwent House
69 – 73 Theobalds Road
London
WC1X 8TA

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