Parliamentary group asks for impact assessment on Loan Charge

The Loan Charge and Taxpayer Fairness APPG has launched a call for evidence about the impact of the Loan Charge, whether respondents face the charge now or have settled with HM Revenue & Customs to avoid it.

In a statement on Monday [14 March 2022], the All-Party Parliamentary Loan Charge Group said: “The call for evidence is being done because it remains unclear what the reality is for people or what the real impact of the Loan Charge is likely to be – and because HMRC and the Treasury have sought to gloss over the reality… despite privately admitting that there will be bankruptcies.”

The APPG went on to say: “No proper impact assessment was done for the Loan Charge. The government only assessed the impact on the UK population as a whole instead of the impact on the people who would actually be hit by the draconian retrospective charge.”

The APPG’s call for evidence follows the proposal made by tax sector professionals for “a fair resolution… without the devastating consequences that will happen if HMRC enforce the Loan Charge as is currently the intention”, the group said.

Submissions can be completed by anyone who is either facing the Loan Charge or has settled to avoid it. The deadline is Friday 8 April 2022. To learn how to make a submission of evidence, visit here.

HMRC has explained that these schemes see workers, often contractors or temporary workers, have their salary paid in loans, instead of being paid in the usual way.

“Normally when you’re given a loan, you have to pay it back, often with interest added,” HMRC have said.

“But these loans are paid to people in such a way that means it’s unlikely that they’ll ever have to be repaid. In other words, the person receiving money from a loan scheme gets to keep it all. And they don’t pay any tax on this money, even though it’s clearly income.

“It’s highly unusual to receive your salary in loans and is clearly a method used to avoid paying tax.”

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