HMRC Loan Charge

HartD

I worked for a round 7 months for an umbrella company - where my salary was "borrowed from my employer" in order to pay less tax,. I have recently received a latter to say "Effectively, anyone who used a disguised remuneration, or tax avoidance scheme that involved lending money from a 3rd party will be required, by law, to report all outstanding loans at self-assessment next year. Once the liability is calculated by HMRC the tax and NI will have to be paid by the contractor. In short, it doesn’t affect you directly at all because you borrowed from your employer on commercial terms and this does not constitute the type of loan that HMRC are trying to reclassify as taxable income"

However, the indemnity company have contacted me saying if I pay them £27k I should be all in the clear should HMRC come calling?


Anyone else in this situation? Any ideas? I didn't even earn that £27k!

00ec25

in what way do you think you can "borrow" a salary and avoid tax on it? Yes these schemes were widely promoted and legal at the ime, but as with all such schemes, one ounce of sense would have questioned how they could escape ultimate sanction given they meant you got paid pots of money for doing a job of employment without paying tax

what are the terms of this loan?
- is it re-payble, if so when?
- what is the interest rate and when is interest payable?

those are the 2 areas that HMRC have attacked, free loans that never get repaid but are in reality directly based upon your so called "tax free" salary being paid to you every month. Hardly the activity pattern associated with a genuine loan

BoGoF

One way or another it's came back to bite you on the proverbial.

uknick

HartD, first thing I'd do is ask the "indemnity company" to provide the calculation. Then, if you don't understand the figures, pay an accountant to check them. And, whilst they're at it ask them to estimate what you do owe in tax.

Once you have a figure you're satisfied is the correct amount, pay HMRC directly what you owe them. Do not pay through anybody else as I assume you'll be paying a premium for their services.

Finally, in answer to your question, "anyone else in this situation?", there are thousands of UK taxpayers getting bills for the loan schemes they were part of. You can try appealing the charge, but I think you have two hopes of winning; no hope and Bob Hope.

Keep_pedalling

The “indemnity company” sound like a bunch of scammers, and you certainly only owe HMRC a small fraction of the amount they are asking of you.

Yellow_mango

I’d contact your employer. If HMRC is enquiring into this arrangement it is likely this will be through the company rather than directly with each employee / contractor. It’s much easier for them that way, and there is employer’s NIC at stake too.

It may be that the company is / can co-ordinate a response for all affected employees, or advise you on how to approach HMRC.

It could also be that there is no actual HMRC enquiry (yet) and this company is just fishing.

Either way, do not pay anything to this company.

taylornj

Anything to do with the Loan charge contact the Loan Charge Action Group. www.hmrcloancharge.info


If you feel that you are unable to cope, text ‘LCAG HELP’ to 81025 and a member of our team will call you back

There are scamers taking advantages, even umbrella companies, and those that were running the Loan Schemes will take advantages.


I myself am a LCAG member, caught by the Loan Charge, or would be if the Loans hadn't been repaid.


If Loans have been repaid before 5th April 2019 then there is no Loan charge as it works on the balance of Loan Outstanding at that date.


If your in the process of settling with HMRC then the first date of concern is 31st August 2019, so have made the settlement. That is you pay the tax, interest, penalties for the tax that was due.


If you aren't settling and faced with the Loan Charge then the first date you should be concerned about is the 30th Sept 2019 by which time you should have notified HMRC of all the details of the Loans, there is an online portal for this however last time I tried it was rather broken.


Depending on details, if the employer (umbrella company) still exists or not, is overseas. If employer exists they should been issued a Reg 80 determination, and the employer contacted you.


If employer no longer exists then you face the loan Charge, which requires possible registration as self employed to complete a self assessment if not already registered for self assessment.


I completing a self assessment then the normal self assessment dates apply, by paper 31st Oct 2019, 31st Jan 2019 online.


The amount is calculated as if you were self employed but has a separated box, so your taxed as self employed, and pay Class 4 NI on top of the tax calculated in the self assessment.


LCAG have a forum, and a chat room using telegram, there are a lot of members with much better knowledge than myself.


£27k looks nearly as much as you earned in 7months, go to the LCAG website, there is a forum, you can view as guest.


You should also consider contacting your MP, and getting in contact with others.


In my case it's rather strange HMRC miscalculated, the Loan Charge I can make come to zero, then Pension contribution means I claim back more than taxes paid in tax relief.


HMRC should have been in contact with you well before this time, my letter of July 2018 was considered late. As said some companies as exploiting the Loan Charge.



HMRC themselves will be of little help on the matter, because you won't get told the truth.


There are many variations of these schemes.


If you want to pay for advise, there are a number WTT I know is used by quite a few. Your not alone in this.


Also worth noting is the Loan Charge APPG, an all part group of MP that has been looking into the Loan Charge, if you MP is a member he/she might be able to give help and advise, some MP's are next to useless.