'Lessons must be learned' from loan charge controversy, states ICAEW

The Institute of Chartered Accountants in England and Wales (ICAEW) has stated that 'lessons must be learned' from the controversy surrounding the loan charge.

11 Oct 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) has stated that 'lessons must be learned' from the controversy surrounding the loan charge.

The loan charge, which came into effect on 6 April this year, added a 45% non-refundable charge on all loans advanced through the scheme, unless the individual had agreed with HMRC to settle their tax affairs by 5 April. The charge mainly affects freelancers and agency workers.

The ICAEW said that part of the problem is that many of the people affected are low paid, and were persuaded by their employers to join the loan charge scheme. As a result, many are now facing bankruptcy.

Sir Amyas Morse, the former Chief of the National Audit Office (NAO), is currently heading up an independent review into the controversial loan charge, which is due to be published by the middle of November.

In a letter to Sir Morse, the ICAEW stated: 'While there were some taxpayers using disguised remuneration schemes for the sole purpose of avoiding tax, some taxpayers were misled into such arrangements or had little choice but to accept them and thought the arrangements were in order.

'We suggested that HMRC should take a 'sympathetic and flexible approach' to resolving such cases, rather than looking to make the taxpayers concerned bankrupt.'

Browse our library section

Great tips and advice you can download

Find out more

Follow us on Twitter

Copyright

© 2020 Lawrence Grant. All rights reserved. We use cookies on this website, you can find more information about cookies here.

Lawrence Grant

We are a member firm of the Institute of Chartered Accountants of England & Wales (ICAEW). Registered to carry on audit work in the UK and Ireland. Our Insurer is Prosure Solutions (per W R Berkley , and IGI), 34 Lime St, London EC3M 7AT (worldwide, excluding North America). Also an independent member of GGI, a multidisciplinary worldwide association of accountants, tax consultants & lawyers.