Asked by: Sammy Wilson (Democratic Unionist Party - East Antrim)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many notices under section 684 of the Income Tax Act 2007 have been issued to individuals with Loan Charge liabilities incurred before December 2010.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
In the context of Disguised Remuneration (DR), HM Revenue and Customs (HMRC) has in some circumstances used the power provided under s.684(7A)(b) of the Income Tax (Earnings and Pensions) Act 2003 (the Discretion) to collect the tax owed; and since 2022, HMRC has issued around 2,700 decisions using the Discretion.
In his independent review, Lord Morse recommended that the Loan Charge should no longer apply to loans made before 9 December 2010. However, Lord Morse said “HMRC should continue being able to settle and investigate cases prior to this point under their normal powers where they have appropriate grounds, and a legal basis, to do so”.
In line with this recommendation, HMRC is still seeking to recover the tax due where it had taken the necessary steps in the past to ensure there is an open tax enquiry or assessment which gives it the legal basis to do so.
In May 2022, the Court of Appeal said that HMRC could consider using the Discretion to collect tax directly from the individual who received income through a DR scheme.
Asked by: Janet Daby (Labour - Lewisham East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the number of people who have been affected by the loan charge.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
In September 2023, HM Revenue and Customs published an updated issue briefing on disguised remuneration and the loan charge. The issue briefing contains information at UK level and is available on GOV.UK here:
Asked by: Drew Hendry (Scottish National Party - Inverness, Nairn, Badenoch and Strathspey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has made an assessment of the compatibility of the issuing of section 684 notices by HMRC with the recommendations of the independent loan charge review led by Sir Amyas Morse.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
The Loan Charge is targeted at contrived tax avoidance schemes that sought to avoid Income Tax and National Insurance contributions by paying users their income in the form of loans.
In his independent review, Lord Morse recommended that the Loan Charge no longer apply to loans made before 9 December 2010. However, Lord Morse said “HMRC should continue being able to settle and investigate cases prior to this point under their normal powers where they have appropriate grounds, and a legal basis, to do so”. The government accepted this recommendation. In line with this recommendation, HMRC is still seeking to recover the tax due where it had taken the necessary steps in the past to give it the legal basis to do so.
In May 2022, the Court of Appeal said that HMRC could consider using certain provisions in the PAYE system (referred to as ‘section 684(7A)(b)’) to collect tax directly from the individual who received income through a DR scheme. HMRC using these provisions where appropriate is in line with Lord Morse’s recommendation.
Asked by: Ranil Jayawardena (Conservative - North East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will have discussions with HMRC on ending actions on the loan charge.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
The Loan Charge was introduced to ensure that people who had not had tax deducted from their incomes paid their fair share.
The Government has already had an independent review. In 2019 Lord Morse led an independent review of the Loan Charge and its implementation. Lord Morse had full discretion over how the review was run, whom he consulted, and the recommendations made. The Government accepted 19 of his 20 recommendations, which benefited more than 30,000 people, including around 9,500 who were removed from the scope of the Loan Charge entirely.
As well as recommending changes to the policy, Lord Morse was clear that the Loan Charge was necessary, in the public interest and should remain in force.
Asked by: Ranil Jayawardena (Conservative - North East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will commission an independent review into the loan charge.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
The Loan Charge was introduced to ensure that people who had not had tax deducted from their incomes paid their fair share.
The Government has already had an independent review. In 2019 Lord Morse led an independent review of the Loan Charge and its implementation. Lord Morse had full discretion over how the review was run, whom he consulted, and the recommendations made. The Government accepted 19 of his 20 recommendations, which benefited more than 30,000 people, including around 9,500 who were removed from the scope of the Loan Charge entirely.
As well as recommending changes to the policy, Lord Morse was clear that the Loan Charge was necessary, in the public interest and should remain in force.
Asked by: Ranil Jayawardena (Conservative - North East Hampshire)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many (a) promoters and (b) operators of schemes subject to the loan charge have been prosecuted.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
Promotion or operation of mass marketed tax avoidance schemes is not in, or of itself, a criminal offence. However, there are a range of offences which might be committed by those who promote tax avoidance schemes or advise on their use.
On that basis, to date, while there have been no prosecutions of individuals for the promotion and/or operation of schemes subject to the Loan Charge, one individual involved in selling Disguised Remuneration schemes subject to the Loan Charge has been convicted for a related offence. Also, a number of individuals are currently under criminal investigation by HMRC for offences linked to schemes subject to the Loan Charge.
In addition to schemes subject to the Loan Charge, since 1 April 2016, more than 20 individuals have been convicted for offences relating to arrangements which have been promoted and marketed as tax avoidance. These have resulted in over 100 years of custodial sentences and 9 years of suspended sentences being ordered, the majority of which relate to promoters.
Prosecutions are only one type of intervention available to HMRC where they identify concerns.
Asked by: Charlotte Nichols (Labour - Warrington North)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, what her Department's policy is on lenders threatening to charge additional fees and penalties on the repayment of loans under the Bounce Back Loan Scheme; and whether her Department has taken enforcement action against such lenders.
Answered by Kevin Hollinrake - Minister of State (Department for Business and Trade)
As part of the scheme design, no early repayment fees or other lender-levied fees of any type following drawdown were permitted.
The Lender Audit and Assurance Programme verifies appropriate administration of Covid Loan Scheme portfolios by accredited Delivery Partners in line with their contractual obligations. If any concerns are identified, remedial actions are agreed with Delivery Partners to rectify areas failing to meet guarantee requirements.
Should a person or organisation have any particular concerns or incidents to raise, these can be directed to the British Business Bank via the contact form available at: https://www.british-business-bank.co.uk/contact-details/.
Asked by: Charlotte Nichols (Labour - Warrington North)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, what rules and regulations apply to the operation of Bounce Back Loan Scheme agreements as of 24 January 2024; and whether lenders may (a) levy fees and (b) charge additional interest under the scheme.
Answered by Kevin Hollinrake - Minister of State (Department for Business and Trade)
The Bounce Back Loan scheme provided financial support to businesses across the UK that faced disruption as a result of the Covid-19 pandemic.
A lender could provide a six-year term loan from £2,000 up to 25% of a business’ turnover, up to a maximum of £50,000. The scheme gave the lender a full (100%) government-backed guarantee against the outstanding balance of the facility.
As part of the scheme design, no early repayment fees or other lender-levied fees of any type following drawdown were permitted. The Government covered the first 12 months of interest, which meant that borrowers paid 0% interest for the first year. Following that, an interest rate of 2.5% per annum applies.
A list of frequently asked questions is available on the British Business Bank’s website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/.
Asked by: Chris Stephens (Scottish National Party - Glasgow South West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has made an estimate of the number of people that are required to make payments under the Loan Charge as of 19 December 2023.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
HM Revenue and Customs (HMRC) estimates that there are around 40,000 individuals and around 5,000 employers who have either failed to return the Loan Charge or have returned a figure that is not correct.
HMRC continues to support taxpayers to resolve their use of disguised remuneration schemes and get out of avoidance for good, including helping those who need extra support and providing additional time to pay where needed.
Asked by: Munira Wilson (Liberal Democrat - Twickenham)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to update to the List of named tax avoidance schemes, promoters, enables and suppliers of 1 December 2023, what recent assessment he has made of the potential impact of changes to the loan charge that came into effect on 5 April 2019 on the financial wellbeing of freelancers.
Answered by Nigel Huddleston - Financial Secretary (HM Treasury)
The Loan Charge was independently reviewed by Lord Morse, who considered the impacts of the policy on individuals. The Government accepted 19 of his 20 recommendations. These changes, such as removing loans made before 9 December 2010 from the scope of the Loan Charge, reduced the impact of the policy and removed aspects which were of wider concern.HMRC puts support for those affected at the core of its work to collect the Loan Charge and bring cases to settlement.
HMRC can agree an affordable and sustainable instalment plan based on taxpayers’ specific circumstances and for as long as they need. HMRC can also refer taxpayers for free debt advice that is independent from HMRC.