‘Remove demand to report loan charge in tax returns’
6th December 2019
Thousands of people in the loan charge settlement process should not have to report backdated taxes through self-assessment next month, a tax group argues.
Up to 50,000 people were paid through loans from offshore trusts dating back to 1999, and more than 8,000 have paid backdated taxes to HMRC worth £2 billion.
Those who have yet to settle their liabilities have to declare any untaxed income from the last 20 years before midnight on 31 January 2020.
To add insult to injury, the Revenue is using the same deadline to demand payments on those unpaid taxes.
A report into whether the loan charge was the most suitable way to deal with disguised remuneration schemes was due to be published last month.
But the publication of the report, led by Sir Amyas Morse, was kicked into the long grass following the decision to call a General Election.
As it stands the midnight deadline on 31 January 2020 still applies to those affected, and the Low Income Tax Reforms Group (LITRG) has hit out.
It expects tax return errors to be rife, with many of those affected said to be going through self-assessment for the first time - and without an accountant.
Victoria Todd, head of the LITRG, said:
"The need to file a tax return to report the loan charge by 31 January risks making the situation much worse, particularly for those not already in self-assessment.
"HMRC has paused work on settlement cases, pending the outcome of the review, making it difficult, if not impossible, for taxpayers to make the deadline.
"HMRC should consider removing this requirement to file a tax return for those in the process of settling the loan charge.
"This is the right thing to do, for fairness, for simplicity and for the proper administration of taxes."
Get in touch for help submitting a tax return.