Question to the HM Treasury:

To ask the Chancellor of the Exchequer, how many people seeking refunds due to the changes made by the Morse Review have been refunded by HMRC.

The Loan Charge was announced at Budget 2016 as part of a package of measures to tackle Disguised Remuneration (DR) tax avoidance. The forecast was last revised at Spring Statement 2022, with the latest estimated overall Exchequer yield of £3.4 billion for the entire package, which includes the Loan Charge.

In September 2019, the Government commissioned an Independent Review into the Loan Charge, led by Lord Morse. The Government accepted 19 of the 20 recommendations made by the review. Changes to the Loan Charge were estimated to reduce the forecast yield by £745 million at Budget 2020.

HMRC will go to the employer to settle the tax due or collect the Loan Charge in the first instance. Approximately 80 per cent of the £3.3 billion HMRC brought into charge through DR settlements between Budget 2016 and the end of March 2021 was from employers.

However, HMRC will consider other options to collect the tax where collection from the employer is not possible, such as when the employer no longer exists or is based offshore.

Following Lord Morse’s Independent Loan Charge Review in 2019, HMRC established the DR Repayment Scheme 2020 to repay voluntary payments that taxpayers had agreed to make as part of settlements concluded before changes were made to the scope of the Loan Charge. Individuals and employers had until 30 September 2021 to apply to HMRC for a refund or waiver.

HMRC repays amounts that were paid in DR scheme settlements, and/or waives amounts of instalments due that have not yet been paid if certain conditions are met.

As of 3 June 2022, HMRC had processed approximately 2100 applications, of which approximately 1300 had received either a repayment, a waiver, or both. Approximately 800 of the applications processed at that date were either invalid or ineligible.