Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what comparative assessment he has made of the equity of HMRC pursuing employees and not employers on the use of the Loan Charge 2019.

The Loan Charge, a new charge on disguised remuneration loan balances outstanding on 5 April 2019, was announced at Budget 2016. This initially gave individuals three years from the announcement of the Loan Charge to either repay their loans or agree a settlement with HMRC.

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 has brought into charge through disguised remuneration settlements between Budget 2016 and the end of March 2021 has been 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 are based offshore.  Liability for the tax is always that of the individual. The Government has provided a range of powers allowing HMRC, in certain circumstances, to collect the amount due from the employee.

Following Lord Morse’s Independent Loan Charge Review, the Government has taken further steps to mitigate the impact of the Loan Charge to ensure that the right support is in place for those who need it.