Asked by: Daisy Cooper (Liberal Democrat - St Albans)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether HMRC pursues unpaid tax receipts from disguised remuneration schemes operated before 9 December 2010.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
HMRC have open enquiries and assessments into disguised remuneration (DR) use before 9 Dec 2010. These will need to be resolved by way of settlement with HMRC or through litigation.
The Independent Loan Charge Review was clear that HMRC should continue with enquiries and settling cases under their normal powers, including where loans now fall outside the scope of the Loan Charge.
HMRC continues to work with and support taxpayers to resolve all outstanding enquiries and assessments relating to their use of DR loans, in accordance with their published DR settlement terms and HMRC Litigation and Settlement Strategy.
Asked by: Dave Doogan (Scottish National Party - Angus)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the amount that will be raised by the Loan Charge.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The Loan Charge was introduced to draw a line under the historic use of disguised remuneration (DR) schemes which paid income in the form of loans via third parties, often offshore trusts.
When announced at Budget 2016, the Loan Charge formed part of a package estimated to yield more than £3.2 billion over five years. 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.
There has already been an independent review of the Loan Charge. The Independent Loan Charge Review, led by Lord Morse, assessed the impact of the policy on affected taxpayers. The Government accepted all but one of the Review’s 20 recommendations and changes resulting from the review have reduced the Exchequer yield by an estimated £620 million.
Any loss of life is a tragedy, and HMRC takes issues relating to loss of life or serious injury extremely seriously. HMRC has made ten referrals to the Independent Office for Police Conduct (IOPC) in relation to individuals who have sadly taken their lives and have used DR schemes. In the eight concluded cases, the investigations found no evidence of misconduct by any HMRC officer. Individuals affected by the Loan Charge are supported by HMRC’s Extra Support teams. These are teams of specialist trained advisors who, where appropriate, signpost taxpayers to specialist Voluntary and Community organisations. To further strengthen the support offered to taxpayers, HMRC and Samaritans are currently working together to deliver an 18-month project.
Asked by: Dave Doogan (Scottish National Party - Angus)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will conduct a review of the potential effect of the Loan Charge on instances of the suicides in the UK.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The Loan Charge was introduced to draw a line under the historic use of disguised remuneration (DR) schemes which paid income in the form of loans via third parties, often offshore trusts.
When announced at Budget 2016, the Loan Charge formed part of a package estimated to yield more than £3.2 billion over five years. 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.
There has already been an independent review of the Loan Charge. The Independent Loan Charge Review, led by Lord Morse, assessed the impact of the policy on affected taxpayers. The Government accepted all but one of the Review’s 20 recommendations and changes resulting from the review have reduced the Exchequer yield by an estimated £620 million.
Any loss of life is a tragedy, and HMRC takes issues relating to loss of life or serious injury extremely seriously. HMRC has made ten referrals to the Independent Office for Police Conduct (IOPC) in relation to individuals who have sadly taken their lives and have used DR schemes. In the eight concluded cases, the investigations found no evidence of misconduct by any HMRC officer. Individuals affected by the Loan Charge are supported by HMRC’s Extra Support teams. These are teams of specialist trained advisors who, where appropriate, signpost taxpayers to specialist Voluntary and Community organisations. To further strengthen the support offered to taxpayers, HMRC and Samaritans are currently working together to deliver an 18-month project.
Asked by: Tim Loughton (Conservative - East Worthing and Shoreham)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people who have requested a refund under the changes resulting from the Morse Review have been refunded by Her Majesty's Revenue and Customs.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
Following Lord Morse’s Independent Loan Charge Review in 2019, HMRC established the Disguised Remuneration (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.
By the end of November 2022, HMRC had processed approximately 2400 applications, of which approximately 1375 had received either a repayment, a waiver, or both. Over 1000 of the applications processed at that date were either invalid or ineligible.
Asked by: Darren Jones (Labour - Bristol North West)
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.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The Loan Charge was announced at Budget 2016 as part of a package of measures to tackle Disguised Remuneration (DR) tax avoidance which was costed as a whole. At Spring Statement 2022, this package was estimated to bring in an estimated overall Exchequer yield of £3.4 billion. The changes resulting from the 2019 independent review of the Loan Charge are estimated to reduce the Exchequer yield by £620 million.
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 28 October 2022, HMRC had processed over 2350 applications, of which over 1350 had received either a repayment, a waiver, or both. Over 1000 of the applications processed at that date were either invalid or ineligible.
Asked by: Darren Jones (Labour - Bristol North West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how much revenue the Loan Charge is estimated to raise, separate from other measures.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
The Loan Charge was announced at Budget 2016 as part of a package of measures to tackle Disguised Remuneration (DR) tax avoidance which was costed as a whole. At Spring Statement 2022, this package was estimated to bring in an estimated overall Exchequer yield of £3.4 billion. The changes resulting from the 2019 independent review of the Loan Charge are estimated to reduce the Exchequer yield by £620 million.
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 28 October 2022, HMRC had processed over 2350 applications, of which over 1350 had received either a repayment, a waiver, or both. Over 1000 of the applications processed at that date were either invalid or ineligible.
Asked by: Jim Shannon (Democratic Unionist Party - Strangford)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people seeking refunds as a result of changes made in response to the Morse Review have been refunded by HMRC.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
I refer the Hon. Member to the answer given to UIN 80825.
Asked by: Sarah Olney (Liberal Democrat - Richmond Park)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many and what proportion of people seeking refunds due to the changes recommended by the Morse Review have been refunded by HMRC.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
Following Lord Morse’s Independent Loan Charge Review in 2019, HMRC established the Disguised Renumeration (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 28 October 2022, HMRC had processed over 2350 applications, of which over 1350 had received either a repayment, a waiver, or both. Over 1000 of the applications processed at that date were either invalid or ineligible.
Asked by: Ian Murray (Labour - Edinburgh South)
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 to date.
Answered by Richard Fuller
I refer my hon. Member to the answer that was given to the Question UIN 59171.
Asked by: Wera Hobhouse (Liberal Democrat - Bath)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the revenue that will accrue to the Treasury from the loan charge.
Answered by Richard Fuller
The Loan Charge was announced at Budget 2016 as part of a package of measures to tackle Disguised Remuneration (DR) tax avoidance. At Spring Statement 2022, this package was estimated to bring in an estimated overall Exchequer yield of £3.4 billion. The changes resulting from the 2019 independent review of the Loan Charge have reduced the Exchequer yield by an estimated £620 million.
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 £3.4 billion HMRC brought into charge through DR settlements between Budget 2016 and the end of March 2022 was from employers.
However, liability for the tax is always that of the individual and HMRC will consider other options when collection from the employer is not possible, such as when the employer no longer exists or is based offshore. Parliament has provided a range of statutory powers allowing HMRC, in certain circumstances, to collect the amount due from the employee.
HMRC’s lawyers considered all of these points when providing legal advice that informed this policy’s development.