Loan charge activity during coronavirus (COVID-19)

HMRC has written to the Chairs of the Loan Charge All-Party Parliamentary Group setting out HMRC’s approach to taxpayers within the scope of the loan charge rules. The letter states that, in general, HMRC continues to write to customers where failure to do so would lead to the expiry of a statutory time limit. HMRC is also continuing to engage with taxpayers who have an open compliance enquiry and wish to bring it to a conclusion by settling the enquiry.

In the specific context of the loan charge, HMRC states that its focus is on supporting those taxpayers who provided the information needed to settle by 5 April 2019. It will continue to write to these taxpayers to provide information, including details of their settlement calculation, revised where appropriate to account for the changes to the loan charge announced by the Government. It will invite them to respond in 30 days (longer in some cases) to indicate whether they would like to proceed with a settlement, or instead include the loan charge on their 2018/19 tax return. Taxpayers who need more time to make a decision should let HMRC know.

HMRC has updated its guidance on how to report and account for the disguised remuneration loan charge, to add information about claiming grants through the self-employment income support scheme (SEISS). Individuals are required to file their 2018/19 tax return by 30 September 2020. The SEISS award will be based on:

  • the average of the tax years 2016/2017 and 2017/2018, or
  • just the tax year 2017/18 where the individual was not self-employed in 2016/17

For more on the loan charge, see Simon’s Taxes E4.137A.