Press release: Loan Charge review launched
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, James Murray.
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, James Murray 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