You may have seen headlines about another Loan Charge review in the media since it was launched on 23 January 2025.
If you haven’t already looked at HMRC’s website, here is a link to the announcement and the review’s Terms of Reference.
Essentially, HMRC has said that everything is back on hold again. That is unless a taxpayer wants to settle based on computations already issued under the Terms of the 2020 Settlement.
My initial view
The outcome of any review now is more likely to favour the taxpayer than HMRC. I believe it should address those “non business groups” who should never have been caught up in the first place such as nurses etc.. For business groups, I believe that it should focus on:
- individuals acting as (IT) contractors; and
- the wider participants in Disguised Remuneration schemes (i.e. all taxpayers, corporate and individual) in terms of whether a penalty is applicable or not.
The latest review will also only consider matters after 9 December 2010 (see Section 2 of Terms of Reference) and how tax (PAYE) and National Insurance are calculated. Again, this can directly affect you.
Timescale
This won’t be concluded quickly; it will be a long haul. The reviewer will report and present their recommendations to the Exchequer Secretary to the Treasury by Summer 2025. Once presented, the government will consider the review and publish a response by the Autumn Budget 2025 (see Section 3).
It is unlikely that any part of an Autumn Budget will be legislated in a Bill and passed by Parliament before February/March 2026 at the earliest. An emergency measure may be passed more quickly, but who really knows?
Actions to be considered
My suggestion at the moment is to:
Take stock of where you are.
- If you are wanting to explore ways of exiting any form of Disguised Remuneration, then seek specialist advice and start the process now as it can take months/years.
- If you are already in the process of exiting, consider whether to continue under the 2020 Terms or put matters on hold before you settle;
- Any corporate taxpayer seeking any form of share restructuring or corporate sale and has legacy issues in its balance sheet, can continue but perhaps along a slightly different path.
Submit any outstanding documentation and/or information requested by HMRC;
Make Payments on Account to a SAFE reference of any estimated taxes due in order to stop any further interest from accruing on a daily basis;
Ensure all appeals and postponement applications have been submitted to HMRC.
In conclusion
Whilst this is disappointing(!), it is not a game changer in my opinion.
Any taxpayer caught up in this has my sympathy, as unless a Settlement is made on the (potentially more costly) 2020 Terms, the certainty and conclusion they have been seeking may be unobtainable until February/March 2026.
For more help and advice on the Loan Charge or tax investigations generally, contact me.