Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many and what proportion of people seeking refunds as a result of the changes made by the Morse Review have been refused that refund by HMRC.
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 the Commissioners of 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 were either invalid or ineligible.
Asked by: Drew Hendry (Scottish National Party - Inverness, Nairn, Badenoch and Strathspey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of (a) extending HMRC's Loan Charge helpline to a 24 hour a day service and b) ensuring that mental health support workers are available through that helpline.
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 to ensure that the right support is in place for those who need it.
HMRC operates a settlement helpline for taxpayers who have used disguised remuneration avoidance schemes, and all call handlers are trained to identify taxpayers who might need additional support.
It would be inappropriate for HMRC, as a tax authority, to set up a helpline for those in severe mental distress. For taxpayers who need specialised help, HMRC advisors suggest they contact organisations like Samaritans or Mind.
HMRC has a well-established approach to helping those who are struggling to pay their liabilities in full. HMRC will agree a sustainable and manageable payment plan to spread the tax liability for anyone who is unable to pay in full.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will set up a 24 hour suicide prevention helpline for people who are feeling suicidal as a result of facing 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 to ensure that the right support is in place for those who need it.
HMRC operates a settlement helpline for taxpayers who have used disguised remuneration avoidance schemes, and all call handlers are trained to identify taxpayers who might need additional support.
It would be inappropriate for HMRC, as a tax authority, to set up a helpline for those in severe mental distress. For taxpayers who need specialised help, HMRC advisors suggest they contact organisations like Samaritans or Mind.
HMRC has a well-established approach to helping those who are struggling to pay their liabilities in full. HMRC will agree a sustainable and manageable payment plan to spread the tax liability for anyone who is unable to pay in full.
Asked by: Esther McVey (Conservative - Tatton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment he has made of the effectiveness of the legislative framework governing HMRC's enforcement of the Loan Charge against (a) employees and (b) employers.
Answered by Jesse Norman
The Chancellor of the Exchequer has not had any recent discussions nor made any recent assessment as referenced in these questions.
The charge on disguised remuneration loans (the Loan Charge) was legislated in Finance (No.2) Act 2017. Changes to the Loan Charge were enacted in Finance Act 2020 in line with the accepted recommendations made in Lord Morse’s Independent Loan Charge Review.
HMRC published their report to Parliament on GOV.UK in December 2020. This covers the implementation of changes to the Loan Charge and next steps for affected taxpayers, including individuals and employers.
At Budget 2021, the Government committed to invest further in HMRC to fund compliance work on the Loan Charge, historic disguised remuneration cases and early intervention to encourage individuals to exit tax avoidance schemes. HMRC will continue to monitor compliance with the Loan Charge.
Asked by: Esther McVey (Conservative - Tatton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to HMRC's Freedom of Information Team's response to FOI request (FOI2021/00393) and the email of 31 January 2019 from HMRC's First Permanent Secretary and Chief Executive within that FOI response, what recent discussions he has had with relevant stakeholders on the effectiveness of the legislative framework governing HMRC's enforcement of the Loan Charge against (a) employees and (b) employers.
Answered by Jesse Norman
The Chancellor of the Exchequer has not had any recent discussions nor made any recent assessment as referenced in these questions.
The charge on disguised remuneration loans (the Loan Charge) was legislated in Finance (No.2) Act 2017. Changes to the Loan Charge were enacted in Finance Act 2020 in line with the accepted recommendations made in Lord Morse’s Independent Loan Charge Review.
HMRC published their report to Parliament on GOV.UK in December 2020. This covers the implementation of changes to the Loan Charge and next steps for affected taxpayers, including individuals and employers.
At Budget 2021, the Government committed to invest further in HMRC to fund compliance work on the Loan Charge, historic disguised remuneration cases and early intervention to encourage individuals to exit tax avoidance schemes. HMRC will continue to monitor compliance with the Loan Charge.
Asked by: Ian Lavery (Labour - Wansbeck)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people are subject to the Loan Charge as at 8 June 2021.
Answered by Jesse Norman
HMRC’s latest estimates for those affected by the Loan Charge are included in their GOV.UK publication titled Independent Loan Charge review: HMRC report on implementation.
As set out in this report, in January 2020, HMRC wrote to more than 55,000 individuals and employers who were identified as potentially affected by the Loan Charge. HMRC estimate the changes to the Loan Charge enacted in Finance Act 2020 took 11,000 people out of paying the charge altogether.
The report goes on to state that 5,600 employers and individuals settled their use of disguised remuneration schemes in the period to 30 September 2020.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, for what reason HMRC did not reject tax returns where loan charge schemes were listed in the most recent period for which data is available.
Answered by Jesse Norman
HMRC cannot reject Self-Assessment tax returns on the basis of information contained within the returns, including information relating to the Loan Charge or disguised remuneration schemes. Self-Assessment is a process now, check later regime. A Self-Assessment tax return would only be rejected if it fails to satisfy the filing requirements to constitute a statutory return. The Self-Assessment regime also gives HMRC the powers to open an enquiry into a return up to the end of a period of 12 months if the return was filed on or before the statutory filing date.
HMRC have also recently provided guidance on GOV.UK for taxpayers following the outcome of the independent Loan Charge Review which includes information for those taxpayers who have filed or are yet to file their 2018-19 Self-Assessment tax return: https://www.gov.uk/government/publications/disguised-remuneration-independent-loan-charge-review/guidance.
Asked by: Andrea Leadsom (Conservative - South Northamptonshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the compatibility of the retrospective application of the Loan Charge with the standard principles of the UK's tax regime.
Answered by Jesse Norman
The Loan Charge was legislated in Finance Act 2017, following the normal Parliamentary process.
The Loan Charge is not retrospective. It is a new charge on disguised remuneration loan balances outstanding at 5 April 2019 and was announced three years before the legislation took effect.
Lord Morse conducted an independent Review of the Loan Charge. His report was published in December 2019 and the Government welcomed his finding that the Loan Charge was a justified policy to draw a line under use of disguised remuneration tax avoidance.
The Government accepted all but one of the Review’s 20 recommendations. This included a recommendation that the Loan Charge should only apply to disguised remuneration loans which were entered into after 9 December 2010.
Asked by: Jim Shannon (Democratic Unionist Party - Strangford)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the implications for his policies of HMRC's reported use of contractors using disguised remuneration schemes.
Answered by Jesse Norman
The careful and considered Independent Loan Charge Review found that it was right to tackle disguised remuneration (DR) tax avoidance and that everyone should pay their fair share of tax.
HMRC do not engage in, or enter into, DR schemes. It is possible for a contractor providing services to HMRC to use a DR scheme without the department’s knowledge or participation. Where HMRC become aware of a contractor who is using a DR scheme, they take robust compliance action, including immediate action to terminate the engagement. These individuals are subject to the same tax compliance action in respect of their DR scheme use as any other scheme user.
Asked by: Rupa Huq (Labour - Ealing Central and Acton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people are subject to the Loan Charge as of 26 April 2021.
Answered by Jesse Norman
HMRC’s latest estimates of those affected by the Loan Charge are included in their GOV.UK publication titled Independent Loan Charge review: HMRC report on implementation.
As set out in this report, in January 2020, HMRC wrote to more than 55,000 individuals and employers who were identified as potentially affected by the Loan Charge. HMRC estimate the changes to the Loan Charge enacted in Finance Act 2020 took 11,000 people out of paying the charge altogether.
The report goes on to state that 5,600 employers and individuals settled their use of disguised remuneration schemes in the period to 30 September 2020.