Asked by: Andrew Rosindell (Conservative - Romford)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the number of people who will become bankrupt as a result of the Loan Charge.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
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 Budget 2021, with the latest estimated overall Exchequer yield of £3.3 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. At Budget 2020, the changes were costed as a separate measure, with an estimated reduction to the Exchequer yield of £745 million.
No estimate can be provided for the number of people who have fallen into debt or who have been declared bankrupt that are subject to the Loan Charge.
Where debts arise, HMRC are not always the only creditor. Some individuals are declared bankrupt as a result of a non-HMRC debt and some individuals may choose to enter insolvency themselves based on their overall financial position.
HMRC only ever considers insolvency as a last resort, and they encourage taxpayers to get in contact to agree the best way to settle their tax debts. To date, HMRC has not initiated insolvency proceedings against any taxpayer for a Loan Charge debt.
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 DR 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 is based offshore. Liability for the tax is always that of the individual. Parliament has provided a range of powers allowing HMRC, in certain circumstances, to collect the amount due from the employee.
Asked by: Andrew Rosindell (Conservative - Romford)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the total revenue generated by the Loan Charge during its lifespan.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
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 Budget 2021, with the latest estimated overall Exchequer yield of £3.3 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. At Budget 2020, the changes were costed as a separate measure, with an estimated reduction to the Exchequer yield of £745 million.
No estimate can be provided for the number of people who have fallen into debt or who have been declared bankrupt that are subject to the Loan Charge.
Where debts arise, HMRC are not always the only creditor. Some individuals are declared bankrupt as a result of a non-HMRC debt and some individuals may choose to enter insolvency themselves based on their overall financial position.
HMRC only ever considers insolvency as a last resort, and they encourage taxpayers to get in contact to agree the best way to settle their tax debts. To date, HMRC has not initiated insolvency proceedings against any taxpayer for a Loan Charge debt.
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 DR 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 is based offshore. Liability for the tax is always that of the individual. Parliament has provided a range of powers allowing HMRC, in certain circumstances, to collect the amount due from the employee.
Asked by: Rupa Huq (Labour - Ealing Central and Acton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people seeking refunds as a result of the changes made in response to the Morse Review have been refunded by HMRC as of 15 December 2021.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
Following Lord Morse’s Independent Loan Charge Review, the Government introduced legislation requiring HMRC to establish a scheme to repay relevant Voluntary Restitution elements of disguised remuneration settlements.
These amounts were 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 disguised remuneration scheme settlements, and/or waives amounts of instalments due that have not yet been paid if certain conditions are met.
As of 17 December 2021, HMRC had processed approximately 1330 applications, of which approximately 925 had received either a repayment, a waiver, or both. Approximately 405 of the applications processed at that date were either invalid or ineligible.
Asked by: Dean Russell (Conservative - Watford)
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.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
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.
Asked by: Jon Trickett (Labour - Hemsworth)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he plans to announce a further review of the Loan Charge in response to the eighth referral of a case to the Independent Office for Police Conduct where a taxpayer has taken their life and used a disguised remuneration scheme.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
An independent review of the Loan Charge has already taken place. The 2019 Review, conducted by Lord Morse, concluded that it was right for the Loan Charge to remain in force and right for the Government to collect the tax due, but made a number of recommendations to reduce the impact of the policy.
The Government accepted all but one of the 20 recommendations, and those changes are estimated to have benefitted over 30,000 individuals, removing 11,000 from the Loan Charge entirely.
The charge on disguised remuneration loans is targeted at contrived tax avoidance schemes which seek to avoid income tax and National Insurance contributions by paying users their income in the form of loans, usually via an offshore trust. This kind of tax avoidance deprives the Exchequer of funds to deliver vital public services.
Any loss of life is a tragedy, and the Government’s thoughts are with the families of those affected. The Government will continue to work with HMRC to consider what additional support could be provided to taxpayers who need extra help.
Asked by: Chi Onwurah (Labour - Newcastle upon Tyne Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will commission a further independent review of the Loan Charge.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
An independent review of the Loan Charge has already taken place. The 2019 Review, conducted by Lord Morse, concluded that it was right for the Loan Charge to remain in force and for the Government to collect the tax due.
The Government accepted all but one of the 20 recommendations in the review, which is estimated to benefit over 30,000 individuals, removing 11,000 from the Loan Charge entirely.
The charge on disguised remuneration loans is targeted at contrived tax avoidance schemes which seek to avoid income tax and National Insurance contributions by paying users their income in the form of loans, usually via an offshore trust. This kind of tax avoidance deprives the Exchequer of funds to deliver vital public services.
Asked by: Daisy Cooper (Liberal Democrat - St Albans)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people who were liable for the Loan Charge have taken their own lives.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Government takes concerns about the wellbeing of all taxpayers seriously and recognises that the Loan Charge can add significant pressures for some taxpayers.
Following Lord Morse’s Independent Loan Charge Review, the Government has taken further steps to mitigate the impact of the Loan Charge and to ensure that the right support is in place for those who need it.
HMRC operates a settlement helpline and a debt helpline for taxpayers who have used disguised remuneration avoidance schemes. All call handlers are trained to identify taxpayers who might need additional support. For taxpayers who need specialised help, HMRC advisors suggest they contact organisations like Samaritans or Mind. The Government is working with HMRC to consider what additional specialised support could be provided to taxpayers who need extra help.
HMRC has referred eight cases to the Independent Office for Police Conduct (IOPC) where a taxpayer has sadly taken their life and used a disguised remuneration scheme, as required by the law governing the IOPC’s oversight of HMRC. Following referral, HMRC has conducted independent investigations and the completed investigations have concluded that there was no evidence of misconduct by an HMRC officer.
Any loss of life is a tragedy, and my thoughts are with the families of those affected.
Asked by: Daisy Cooper (Liberal Democrat - St Albans)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has to establish a 24-hour helpline for people subject to the Loan Charge.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Government takes concerns about the wellbeing of all taxpayers seriously and recognises that the Loan Charge can add significant pressures for some taxpayers.
Following Lord Morse’s Independent Loan Charge Review, the Government has taken further steps to mitigate the impact of the Loan Charge and to ensure that the right support is in place for those who need it.
HMRC operates a settlement helpline and a debt helpline for taxpayers who have used disguised remuneration avoidance schemes. All call handlers are trained to identify taxpayers who might need additional support. For taxpayers who need specialised help, HMRC advisors suggest they contact organisations like Samaritans or Mind. The Government is working with HMRC to consider what additional specialised support could be provided to taxpayers who need extra help.
HMRC has referred eight cases to the Independent Office for Police Conduct (IOPC) where a taxpayer has sadly taken their life and used a disguised remuneration scheme, as required by the law governing the IOPC’s oversight of HMRC. Following referral, HMRC has conducted independent investigations and the completed investigations have concluded that there was no evidence of misconduct by an HMRC officer.
Any loss of life is a tragedy, and my thoughts are with the families of those affected.
Asked by: Daisy Cooper (Liberal Democrat - St Albans)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent estimate he has made of the amount of revenue that will be raised from the Loan Charge.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Loan Charge was announced at Budget 2016 as part of a package of measures to tackle Disguised Remuneration tax avoidance. The forecast was last revised at Spring Budget 2021, with the latest estimated overall Exchequer yield of £3.3 billion for the entire package, which includes an element of Loan Charge.
In September 2019, the Government commissioned an Independent Review into the Loan Charge, led by Sir Amyas Morse. The changes to the Loan Charge following the independent review were estimated to reduce the yield forecast through Loan Charge. At Budget 2020, the changes were costed as a separate measure, with an estimated reduction to the Exchequer yield of £745 million.
Asked by: Daisy Cooper (Liberal Democrat - St Albans)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people seeking refunds of Loan Charge payments under the changes adopted following the Morse Review have been (a) successful and (b) refused.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
Following Lord Morse’s Independent Loan Charge Review, the Government introduced legislation requiring HMRC to establish a scheme to repay relevant Voluntary Restitution elements of disguised remuneration settlements.
These amounts were 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 disguised remuneration scheme settlements, and/or waives amounts of instalments due that have not yet been paid if certain conditions are met.
By 18 October 2021, HMRC had processed approximately 940 applications, of which approximately 740 had received either a repayment, a waiver, or both. Approximately 200 of the applications processed at that date were either invalid or ineligible.