MPs are calling for an independent review of HMRC’s controversial loan charge, which came into effect earlier this year.
In a letter to Chancellor Sajid Javid, MPs have called for a thorough review of the loan charge and a delay to the 31 October loan charge payment deadline.
The loan charge, which came into effect on 6 April this year, applies to anyone who used ‘disguised remuneration’ schemes. The legislation added a 45% non-refundable charge on all loans advanced through the schemes, unless the individual had agreed with HMRC to settle their tax affairs by 5 April.
The charge mainly affects freelancers and agency workers: however, many of the 50,000 people caught up in the issue are low paid and were persuaded by their employers to join the schemes. The typical sum owing, according to the Loan Charge Action Group, is almost £120,000.
Commenting on the loan charge, a Treasury spokesperson said: ‘The loan charge is designed to tackle tax avoidance and ensure everyone pays their fair share. It builds on more than two decades of HMRC action to challenge these schemes.’
During the recent Conservative Party leadership election, Prime Minister Boris Johnson promised a review of the charge, but has not acted so far