Arrangements that claim to get users out of the 2019 loan charge

HMRC is aware of a number of arrangements being promoted which claim to enable users to escape the 2019 loan charge.

HMRC’s view is that these arrangements do not work and users are advised not to sign up to them. While promoters claim that these arrangements work, users should be clear that HMRC does not agree. Any arrangements to avoid the loan charge, which seek to deceive HMRC as to what is really happening, may be fraudulent.

A number of previous cases promoted as being compliant and legal have resulted in criminal convictions for the key people involved and extensive investigation of several hundred users. HMRC will investigate all of these arrangements and is likely to take similar action if it finds any that are seeking to deceive. At the very least, anyone who takes part in an offensive arrangement is likely to face penalty sums, chargeable along with any tax and interest that will be due.

Tax avoidance doesn’t pay. Most arrangements simply don’t work and people can end up paying more than they were trying to avoid. Users may have a long-term requirement to deal with the cost, commercial and tax fallout from these transactions with no support from the promoter of the original arrangement. If users are worried about their financial position, it is better to contact HMRC rather than risk more investigation and what is likely to be a larger bill.

If you think one of your clients may be tempted by an arrangement claiming to circumvent the loan charge, please encourage them to look at GOV.UK.

The 2019 loan charge

Users have been advised to register their interest in settling their Disguised Remuneration tax liabilities by 31 May, to ensure they have the best possible chance of reaching agreement with HMRC before the loan charge arises. They need to register and provide HMRC with all the required information by 30 September 2018 to settle their tax affairs before the 2019 loan charge arises.

If you have clients who wish to settle their tax affairs, then please register them as soon as possible. Details of how to do this are on GOV.UK.