Anyone who has used a tax avoidance scheme that falls under the heading of Disguised Remuneration between 6 April 1999 and 5 April 2016 may now be entitled to EBT refunds. HMRC are refunding PAYE and NIC to companies who have settled on the basis of Voluntary Restitution. This applies to most schemes such as EBTs and EFRBs through which loans were made to employees.
Have you reached a Settlement with HMRC?
Many taxpayers may have reached a Settlement with HMRC for the PAYE and NIC that was due. The Settlement needs to be dated on or after 16 March 2016 and before 11 March 2020.
If this applies to you and you have paid some or all of the tax or National Insurance contributions on the basis of Voluntary Restitution in order to avoid the Loan Charge, you may be entitled to EBT refunds or a waiver of any outstanding balance.
Are you entitled to a refund?
In addition to the above criteria, taxpayers must also have made a ‘reasonable disclosure’ – but where? According to HMRC, in their Income Tax Self Assessment returns or the Corporation Tax Self Assessment. HMRC expects this for each loan they received. The information disclosed must have:
- Made it clear that there was a loan, and who it was made to;
- Identified how the loan had been made;
- “Been sufficient for it to be clear that Income Tax and National Insurance contributions were due in relation to that loan”.
Points 1 and 2 are most likely to have been achieved as the Tax Return includes the company’s accounts. It is normally within the company’s accounts that the disclosure s most likely to have been made.
The third is quoted directly from HMRC’s website. My concern is that this may be a stumbling block for some taxpayers. I have never seen such wording . But that is not to say a taxpayer should not begin exploratory talks to see if they qualify. Then the detail can be submitted to determine what the amounts involved may be.
Each loan is being treated separately. The fact that one loan may fail does not necessarily mean that all the loans fail.
At the Commissioner’s discretion
Readers may not be surprised to learn that the refund request is yet another “process” to go through as opposed to a simple yes or no decision. A process set out by HMRC. It’s rigid. My concern is that there are numerous references to “at the Commissioner’s discretion”. Is this fair? Will there be bias?
What should taxpayers do?
The clock is ticking. Act now. Look at the facts.
Applications need to be in by 30 September 2021. HMRC will make a decision in 2 months.
Taking that first step can be difficult. Having your refund application makes it a bigger hurdle. There is an appeals process. Don’t just give up.
Help is at hand
If you have a matter that you wish to discuss, please call me on 07979 313 010 or email me at email@example.com for a free no obligation consultation.