Taxpayers subject to the controversial ‘loan charge’ only have three weeks until the deadline to settle their debts with HMRC.
Despite major public pressure to drop the loan charge, HMRC is giving taxpayers until 30 September* to negotiate a settlement or to pay it in full.
Following a review by Sir Amyas Morse, the Government ordered HMRC to take a fairer approach to taxpayers liable for the loan charge. This led to HMRC extending the deadline for payment from January to September.
HMRC has also agreed to additional measures to make it easier for taxpayers to pay the charge and incentivise them to cooperate, including allowing individuals to spread the cost over three tax years.
However, despite softening its stance over recent months, taxpayers should be warned that HMRC is not going to have a last-minute change of heart about the loan charge, as unfair as many find it.
Taxpayers should consider their own situations carefully when deciding whether to enter into an agreement with HMRC or pay the charge outright (see table below).
John Sheehan, partner at at Letchworth office, says: “Even though HMRC has taken a softer approach this year, 30 September is still the deadline that really matters. It isn’t going to change its stance further or drop the loan charge.”
“If you have been caught by the loan charge, it’s important not to bury your head in the sand. The longer you leave it, the less likely you will be able to agree a settlement with HMRC. That means paying the charge in full and still being susceptible to further HMRC action.”
“Taxpayers should make sure they do not make any decision on how to handle the loan charge without first seeking professional advice.”
