HMRC have updated their guidance on the settlement terms being offered for disguised remuneration and contractor loan schemes ahead of the loan charge in April 2019.
The Loan Charge will apply to all disguised remuneration and contractor loans outstanding on 5 April 2019 unless a settlement is agreed with HMRC before then.
HMRC have advised that, out of an estimated total of 50,000, there are 6,000 cases that have been settled to date, they have issued 9,000 terms of calculations and the typical settlement amount is £13,000. HMRC expect 75% of those affected will settle, meaning that a further 31,500 settlements still need to be agreed. This is of course with only 2 months to go before the loan charge comes in.
They have also said that taxpayers wishing to settle who have taxable income of less than £30,000 in the current year will be offered 7 years to pay.
In the revised guidance they have confirmed that it is not too late to settle as long as all of the information necessary to agree settlement is with HMRC by 5 April. Anyone who has registered an interest in settling should expect to hear from HMRC within 4 to 6 weeks. Nobody will be disadvantaged if they provided the relevant information by 5 April but have not been able to settle due to HMRC delays. People who registered before 30 September and sent the required information should receive a calculation by the end of February.
They have also said that taxpayers wishing to settle who have taxable income of less than £30,000 in the current year will be offered 7 years to pay.
Contrary to some reports, HMRC have clarified that they will not force anyone to sell their main home to pay their settlement tax liabilities. On a similar note, they have explained that insolvency will only be considered as a last resort when scheme users are at risk of racking up further debt or they are actively avoiding paying what they owe.
Anyone who has not yet registered to settle their scheme and wishes to do so is advised to contact HMRC as soon as possible.
