The ‘loan charge’ has taken effect today. Those beneficiaries of ‘EBT loan schemes’ who have by now failed to settle, or at least register with HMRC their willingness to agree to settle, all unpaid liabilities to income tax, NICs and, if appropriate, inheritance tax arising from re-directed earnings and earlier ‘disguised remuneration’ charges (on, for example, any post 5th April 2011 earmarking and/or making of a loan) must now take action to ensure that income tax and NICs are properly accounted for.
Unless, before 5 April 2019 the client and/or the employer company (a) registered with HMRC a clear intention to settle all related earlier tax liabilities and (b) provided all relevant information to HMRC, the employer company is liable to account for the tax and NICs on the amount of any loans and ‘quasi-loans’ outstanding (or deemed to be outstanding) by 19th April (by post) or 22 April (online) and to report the loan charge amount to HMRC via RTI in April 2019 using an Earlier Year Update submission (available from 20 April 2019). The relevant individual is also be obliged to deliver to HMRC an information return by 30 September 2019.
This information requirement, and a description of the rules affording a degree of mitigation against double taxation which apply when determining the amount of tax payable upon the loan charge and when subsequent ‘relevant steps’ are taken within the scope of the ‘disguised remuneration’ rules, are the subject of my article published in Tax Journal on 5th April 2019. See:
[Note, if you do not subscribe to Tax Journal, I shall be permitted to reproduce the article as from Sunday 14th April.]
David Pett, Tax Barrister 