Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the number of people working in the public sector that are subject to the 2019 loan charge; and if he will make a statement.
Answered by Jesse Norman
Disguised Remuneration (DR) schemes are contrived arrangements that pay loans in place of ordinary remuneration, with the sole purpose of avoiding income tax and National Insurance contributions. The loans are provided on terms that mean they are not repaid in practice, so they are no different to normal income and are, and always have been, taxable.
The Government estimates that around 50,000 individuals could be affected by the 2019 loan charge. Further information on who the charge affects can be found at page 17 of HM Treasury’s report on time limits and the charge on disguised remuneration loans:
This shows, for example, that 65% of the DR user population worked in business services, and only 3% worked in medical or education services.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what discussions his Department has had with officials in the EU on the VAT status of aircraft imported into UK territories but remain in EU member states after the UK leaves the EU.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
Treasury Ministers meet regularly with EU counterparts to discuss a wide range of issues.
The free movement of aircraft being used as a means of transport is guaranteed by the Chicago Convention. This allows aircraft to land and take off at airports all over the world without the inconvenience of paying and reclaiming customs duties each time a trip is made. This will continue after the UK exits the EU.
VAT is charged on the sale or import of aircraft at two rates – either 20 % or 0%. The rate applied is dependent on how the aircraft is used. Details of which rate is applicable is available on the government website GOV.UK.
If the UK leaves the EU without a deal imports from the EU will be charged VAT in line with the rules currently applicable to imports from outside the EU. However where the aircraft belong to a person or company established outside the UK they can stay in the UK for at least 6 months using temporary admission. Where the aircraft belongs to a person/company established in the UK the person may be eligible for returned goods relief which allows UK companies and persons to re-import their items into the UK without payment of VAT as long as they fulfil the conditions given in HMRC guidance.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has plans to charge VAT on aircraft imported into other EU states but remain in the UK after the UK has left the EU.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
Treasury Ministers meet regularly with EU counterparts to discuss a wide range of issues.
The free movement of aircraft being used as a means of transport is guaranteed by the Chicago Convention. This allows aircraft to land and take off at airports all over the world without the inconvenience of paying and reclaiming customs duties each time a trip is made. This will continue after the UK exits the EU.
VAT is charged on the sale or import of aircraft at two rates – either 20 % or 0%. The rate applied is dependent on how the aircraft is used. Details of which rate is applicable is available on the government website GOV.UK.
If the UK leaves the EU without a deal imports from the EU will be charged VAT in line with the rules currently applicable to imports from outside the EU. However where the aircraft belong to a person or company established outside the UK they can stay in the UK for at least 6 months using temporary admission. Where the aircraft belongs to a person/company established in the UK the person may be eligible for returned goods relief which allows UK companies and persons to re-import their items into the UK without payment of VAT as long as they fulfil the conditions given in HMRC guidance.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it his policy to delay the loan charge settlement day until after the conclusion of the review of that charge.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
The Government chose to accept section 95 during the passage of the Finance Bill introduced by a cross party group. As set out by section 95, the Government will lay a report no later than 30 March 2019. The report will review the effect of changes made to the time limits for assessment where tax loss arises in relation to offshore tax, and compare these with other legislation including the charge on disguised remuneration loans.
The charge on disguised remuneration loans remains unchanged as a result of the requirement for a report, and will apply to disguised remuneration loan balances on 5 April 2019.
The charge on disguised remuneration (DR) loans will apply to outstanding DR loan balances on 5 April 2019. It is targeted at artificial tax avoidance schemes where earnings were paid in the form of non-repayable loans made by a third party. The loans are provided on terms that mean they are not repaid in practice, so they are no different to normal income and are, and always have been, taxable.
The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. Information is not held at constituency, borough or regional level.
Since the announcement of the 2019 loan charge at Budget 2016, HMRC has now agreed settlements on disguised remuneration schemes with employers and individuals totalling over £1 billion. Pay As You Earn (PAYE) liabilities fall on the employer in the first instance. The charge on DR loans does not change this principle and the employee will only be liable where the amount cannot reasonably be collected from the employer, such as where the employer is offshore or no longer exists. Around 85% of the settlement yield since 2016 is from employers, with less than 15% from individuals. HMRC will never force somebody to sell their main home to pay for their DR debt, or the loan charge.
HMRC is working hard to help individuals get out of avoidance for good and offer manageable and sustainable payment plans wherever possible. It carefully considers each case and there is no maximum limit on how long a customer can be given to pay what they owe. HMRC considers a customer’s ability to pay on a case by case basis and decisions are based on each individual’s personal circumstances.
HMRC has simplified the process for those who want to settle their use of DR schemes before the loan charge arises. DR scheme users who currently have an income of less than £50,000 and are no longer engaging in tax avoidance can automatically agree a payment plan of up to five years without the need to give HMRC detailed information about their income and assets. This arrangement has been extended to 7 years for scheme users who have an income of less than £30,000.
Anybody who is worried about being able to pay what they owe should get in touch with HMRC as soon as possible. They have a number of ways to help those who are genuinely unable to make a full payment of tax on time, for example, by arranging payments by instalments.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, for what reason the Government has not put back the Loan Charge settlement date while its review of that policy is ongoing.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
Disguised Remuneration (DR) schemes are contrived arrangements that pay loans in place of ordinary remuneration with the sole purpose of avoiding income tax and National Insurance contributions.
HMRC is working hard to help individuals get out of tax avoidance for good and is encouraging anyone who is concerned about their ability to pay what they owe, to contact them as soon as possible to discuss their position. In November 2017, HMRC set up a dedicated helpline for those wanting to settle their avoidance scheme use, and discuss payment options. HMRC will work with all individuals to reach a manageable and sustainable payment plan wherever possible.
Since the announcement of the 2019 loan charge at Budget 2016, HMRC has now agreed settlements on disguised remuneration schemes with employers and individuals totalling over £1 billion. Pay As You Earn (PAYE) liabilities fall on the employer in the first instance. The charge on DR loans does not change this principle and the employee will only be liable where the amount cannot reasonably be collected from the employer, such as where the employer is offshore or no longer exists. Around 85% of the settlement yield since 2016 is from employers, with less than 15% from individuals.
HMRC has also introduced a simplified process for those who choose to settle their use of DR avoidance schemes before the loan charge arises. DR scheme users who currently have an income of less than £50,000 and are no longer engaging in tax avoidance can automatically agree a payment plan of up to five years without the need to give HMRC any information about their income and assets. This arrangement has been extended to 7 years for scheme users who have an income of less than £30,000.
The Government chose to accept New Clause 26, now Clause 95, during the passage of the Finance Bill introduced by a cross party group. As set out by the Clause, the Government will lay a report no later than 30 March 2019. The report will review the effect of changes made to the time limits for recovery or assessment where tax loss arises in relation to offshore tax, and compare these with other legislation including the charge on disguised remuneration loans.
The charge on disguised remuneration loans will apply to disguised remuneration loan balances on 5 April 2019.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, when he plans to publish the outcome of his Loan Charge review.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
Disguised Remuneration (DR) schemes are contrived arrangements that pay loans in place of ordinary remuneration with the sole purpose of avoiding income tax and National Insurance contributions.
HMRC is working hard to help individuals get out of tax avoidance for good and is encouraging anyone who is concerned about their ability to pay what they owe, to contact them as soon as possible to discuss their position. In November 2017, HMRC set up a dedicated helpline for those wanting to settle their avoidance scheme use, and discuss payment options. HMRC will work with all individuals to reach a manageable and sustainable payment plan wherever possible.
Since the announcement of the 2019 loan charge at Budget 2016, HMRC has now agreed settlements on disguised remuneration schemes with employers and individuals totalling over £1 billion. Pay As You Earn (PAYE) liabilities fall on the employer in the first instance. The charge on DR loans does not change this principle and the employee will only be liable where the amount cannot reasonably be collected from the employer, such as where the employer is offshore or no longer exists. Around 85% of the settlement yield since 2016 is from employers, with less than 15% from individuals.
HMRC has also introduced a simplified process for those who choose to settle their use of DR avoidance schemes before the loan charge arises. DR scheme users who currently have an income of less than £50,000 and are no longer engaging in tax avoidance can automatically agree a payment plan of up to five years without the need to give HMRC any information about their income and assets. This arrangement has been extended to 7 years for scheme users who have an income of less than £30,000.
The Government chose to accept New Clause 26, now Clause 95, during the passage of the Finance Bill introduced by a cross party group. As set out by the Clause, the Government will lay a report no later than 30 March 2019. The report will review the effect of changes made to the time limits for recovery or assessment where tax loss arises in relation to offshore tax, and compare these with other legislation including the charge on disguised remuneration loans.
The charge on disguised remuneration loans will apply to disguised remuneration loan balances on 5 April 2019.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect on people affected by the 2019 Loan Charge.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
Disguised Remuneration (DR) loan schemes are contrived arrangements that pay loans in place of ordinary remuneration to avoid income tax and National Insurance contributions. The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. The loan charge applies to all users of DR tax avoidance schemes. It does not single out a specific group or industry, such as contractors or doctors. HMRC data indicates that fewer than 3% of those affected work in medical services (doctors and nurses) or teaching. If scheme users repay the loan or agree a settlement for the tax that they owe with HMRC, they will not face the charge.
The latest tax information and impact note (TIIN) can be found at: https://www.gov.uk/government/publications/disguised-remuneration-further-update/disguised-remuneration-further-update.
Further information can be found in the Government’s issue briefing at: https://www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-on-loans/hmrc-issue-briefing-disguised-remuneration-charge-on-loans
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an estimate of the number of locum (a) doctors and (b) nurses are affected by the 2019 Loan Charge.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
Disguised Remuneration (DR) loan schemes are contrived arrangements that pay loans in place of ordinary remuneration to avoid income tax and National Insurance contributions. The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. The loan charge applies to all users of DR tax avoidance schemes. It does not single out a specific group or industry, such as contractors or doctors. HMRC data indicates that fewer than 3% of those affected work in medical services (doctors and nurses) or teaching. If scheme users repay the loan or agree a settlement for the tax that they owe with HMRC, they will not face the charge.
The latest tax information and impact note (TIIN) can be found at: https://www.gov.uk/government/publications/disguised-remuneration-further-update/disguised-remuneration-further-update.
Further information can be found in the Government’s issue briefing at: https://www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-on-loans/hmrc-issue-briefing-disguised-remuneration-charge-on-loans
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what estimate his Department has made of the number of people who will be directly affected by changes to IR35.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
In 2016, when the Government consulted on possible reform of the off-payroll working rules (known as IR35) in the public sector, it estimated that around 26,000 people working through personal service companies would be affected by the changes. Reform to the rules in the public sector were introduced in April 2017.
The Government is currently consulting on how to tackle non-compliance with the current rules in the private sector. No decisions have been made on any changes to those rules.
Asked by: Grant Shapps (Conservative - Welwyn Hatfield)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, how many people have (a) agreed to repay their loans and (b) agreed a settlement offer with HMRC as a result of the disguised remuneration 2019 Loan Charge.
Answered by Mel Stride - Shadow Secretary of State for Work and Pensions
The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. Further information can be found in the ‘Disguised remuneration: further update’ policy paper: https://www.gov.uk/government/publications/disguised-remuneration-further-update/disguised-remuneration-further-update.
Information on how many DR scheme users have repaid their loans is not held. Individuals who have repaid their DR loans must provide this information to HM Revenue and Customs (HMRC) by 30 September 2019.
HMRC has agreed settlements with over 5,000 individuals and employers since the announcement of the 2019 loan charge at Budget 2016. This has raised over half a billion pounds for the Exchequer. Information is not held on how many people have settled as a direct result of the loan charge as it is one of a number reasons for settling with HMRC.