An independent review into the Loan Charge has today been
launched (23 January).
- Ray McCann, former President of the Chartered Institute of
Taxation, will lead the review
- Review aims to bring end to the matter for people affected
and is expected to conclude in summer 2025
A new independent review into the Loan Charge has today (23
January) been launched by Exchequer Secretary to the Treasury,
.
Minister Murray has commissioned Ray McCann, former President of
the Chartered Institute of Taxation, to lead the new independent
review.
The Loan Charge, first announced in 2016, was designed to tackle
historical use of contrived tax avoidance schemes that seek to
avoid charges of income tax and National Insurance by disguising
remuneration as a form of non-taxable payment, typically a loan.
These schemes have existed since at least the mid-1990s and have
been considered by the courts. In the most notable case in 2017,
the Supreme Court agreed with HMRC that schemes that redirect
earnings and ultimately pay them in the form of loans do not
succeed in avoiding tax.
In a further decision in 2022, the Court of Appeal confirmed that
even where other parties (such as employers or agencies) have
obligations to operate PAYE, the liability for income tax is that
of the employee.
The government recognises the decisions of the courts and
believes it is right that those who did not pay the right amount
of income tax and National Insurance are required to resolve
their affairs with HMRC.
However, there remain ongoing concerns about the Loan Charge,
including the size of liabilities owed by some of those affected
and their ability to pay the tax that they owe in a reasonable
timeframe.
The new independent review aims to bring the matter to a close
for those affected while ensuring fairness for all taxpayers and
that appropriate support is in place for those subject to the
Loan Charge. Ray McCann will review the barriers preventing those
subject to the Loan Charge from reaching resolution with HMRC and
recommend ways in which they can be encouraged to do so.
The government's response to the review will be consistent with
its approach to closing the tax gap and the fiscal position.
Exchequer Secretary to the Treasury, said:
Today, we honour our commitment to launch an independent review
of the Loan Charge, bringing the matter to a close for those
affected while maintaining fairness for all taxpayers.
Ray McCann said:
The controversy surrounding the Loan Charge has for too long
acted as a barrier to bringing matters to a close for both the
individuals involved and for HMRC.
I was pleased to be asked to help find ways whereby those
involved can reach an agreement with HMRC that balances their
right to be treated fairly with the expectation of the vast
majority of taxpayers who have paid all of the tax and NIC due on
their earnings. My review will be entirely directed to that end.
The review was first announced at the Autumn Budget 2024. The
reviewer will present their final report to the Exchequer
Secretary to the Treasury by summer 2025.
Further information
