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Do you have a pre 9 December 2010 loan? Being outside of the loan charge is not the end of the story…
As a consequence of the Morse review, taxpayers with pre 9 December 2010 loans will not have been affected by the recent 30 September 2020 loan charge deadline. This is because the review said that the loan charge should not apply to loans entered into before 9 December 2010. However, there may still be important action that needs to be taken.
If you already settled with HMRC to avoid the loan charge on these loans you may be due a refund. However, if you have open enquiries or assessments for those earlier years, you may still owe HMRC money even though the loan charge does not apply.
Taxpayers who do not have open enquiries or assessments
You may be due a refund or waiver of any amounts settled ‘voluntarily’ to avoid the loan charge. This will not happen automatically and an application must be made. Refunds will be dealt with through the voluntary restitution scheme.
In two articles written for Accounting Web, which can be accessed here and here, we give a high-level overview of how the voluntary restitution scheme will work. We also highlight a potential ‘double tax’ issue for those who did not settle before 11 March 2020, if they organise the write-off of their loans in the future.
Taxpayers who do have open enquiries or assessments
If you have open enquires or assessments, the requirement to pay tax on loans entered into before 9 December 2020 does not fall away altogether even though the loan charge doesn’t apply.
If you did not pay what you owe in relation to these open enquiries or assessments using the ‘November 2017’ settlement process, you should consider whether you want to settle using HMRC’s new August 2020 settlement facility.
Further guidance about the August 2020 settlement process is available on GOV.UK.
Contact: Meredith McCammond (click here to Contact Us)
(First published: 15/10/20)