What is the 2019 Loan Charge?

[iheartclso2]

Are you an HMRC employee on a bonus for pushing CLSO2?

You must be an employee of HMRC because your spelling and the way you structure your sentences makes me believe you are

Asbolutely NOT TRUe/

Iam catarogially NOT HRMC/
aslo NOT shceme premeteor or
NOT linked for shceme premotor.
and NO ex cotnacts at HRMC working on wink nudge/ and
NO skin in game ONLY CSLO2 employye contractar feeling 2019 FEAR AND DOUBT

please RETRACT and apoligies for acusation.

NO link to HRMC otherthan SCAREY letters giveme FEAR. reading iliketaxs hepful iformation and analsys obvios CSL02 ONLY WAY OUT the logicial coclusion TOTALLY DOOMED/
pay CSLO" and HRMC get fair tax PREMOTORS not unfarley taxed wwe pay LESS tax so WIN WNI WIN

look at GUIADNCE no 2019 made up revelant step even reuqired for 1999 tax/guiadnce is guiadnce used by Dury in COURT HRMC ALWSAYS win NO DOUBT OR UNCETRAINTY theyre

HRMC kindly tax now at LESS than 2019/
HRMC win PREMOTORS win WE win . CLSO2 makess ense AND NO COURT NO DOBT JUST CEARTINTY NO FEAR

[webberg]

Apologise in advance if I've misunderstood, but how do you arrive at the "promoters win" position?

HMRC say that you can settle via CLSO 2 = you pay the tax and promoters do not.

HMRC say that if you do not, then you pay DR charge 2019 = you pay the tax and promoters do not.

HMRC say that they will continue their enquiries despite the DR charge and if they "prove" tax was due in earlier years = you pay the tax and promoters do not.

Seems to me that promoters, agencies, end clients all walk away free and Johnnie Contractor picks up the bills caused to a large degree by HMRC inaction and silence.

[stonehenge]

Even if there is a cunning plan, it needs to be submitted for each taxpayer prior to the 2019LC reporting is due for that taxpayer. Otherwise you are into evasion territory.

Unless the plan is to pay the LC and then carry on fighting afterwards.

Webberg has already said that BG is not aiming to achieve a better outcome than CLSO2 (financially) because HMRC don't negotiate like that.

And there's no chance of avoiding the reporting requirements for 2019LC.

So how much better can any other solution be?

CLSO2 will cost the taxpayer £x.
LC19 will cost £y.

There's no point to any group action unless it ends up costing less than both £x and £y.

And I'm not convinced anyone can achieve that.

[ChimpMaster]

CLSO2 will cost the taxpayer £x.
LC19 will cost £y.

There's no point to any group action unless it ends up costing less than both £x and £y.

And I'm not convinced anyone can achieve that.

This was my point too.

What Webberg commented was:
What we say is that the facts and the case at Supreme Court in Rangers points to an employer being liable in pretty much all cases.

which is fine except that there is a transfer of liability now enshrined in the Act. HMRC will get the money somehow, and ultimately the contractor is liable.

And the other point I was trying to make - perhaps I wasn't clear enough - is that any battle against HMRC will have to carry on after the 2019LC. So any contractor who doesn't settle under CLSO2 will have to pay the 2019LC and then carry on fighting afterwards.

HMRC has the advantage because it is not a living organism. It can continue to use delay tactics for decades, all while your life erodes away. HMRC can continue to circumvent law and change law retroactively to cause retrospective damage to taxpayers.

I am absolutely gutted to be in this position, especially as I have no Open years. But no matter which way we turn, there seems to be no way out.

[Loan Ranger]

I've been fighting HMRC for 10 years over BN66 (s58 FA 2008).

It's a thoroughly dispiriting experience, and it has definitely taken its toll on my mental wellbeing.

I would advise anyone to think very carefully before going down this path.

[ChimpMaster]

I've been fighting HMRC for 10 years over BN66 (s58 FA 2008).

It's a thoroughly dispiriting experience, and it has definitely taken its toll on my mental wellbeing.

I would advise anyone to think very carefully before going down this path.

A genuine question if I may: why didn't you settle under CLSO1? Were you offered any opportunity to settle?

[Loan Ranger]

A genuine question if I may: why didn't you settle under CLSO1? Were you offered any opportunity to settle?

I didn't really look into CLSO1 because HMRC's investigation of the scheme seemed to be going nowhere and, at that time, there was no loan charge in the offing.

[Laxmi]

Non resident

Yep. But at the moment I don't know your facts and don't have time to give you an answer it in a way that will make sense to you. So here's somethings to have a look at.

Have a read of s554Z4 (residence issues) and s554Z4A (temporary non-residents) ITEPA 2003. HMRC's guidance on s554Z4 on the current DR charge is here: https://www.gov.uk/hmrc-internal-man...anual/eim45720 You can find (most of) s554Z4 here: Finance Act 2011 but some bits - which at this stage are likely to be random words to you - have since been changed by Finance Act 2013. You can find s554Z4A is FA 2013 as well (but probably won't be relevant to most contractors).

For new loans, HMRC's guidance basically says you look at what period you earned loan is for. If it is for the time you were performing UK duties then you are stuffed. There is no guidance on the April 2019 loan charge in relation to residence. Their guidance on the remittance basis says you look back at what happened to the actual loan (rather than the made up April 2019 relevant step). https://www.gov.uk/hmrc-internal-man...anual/eim47180

If they think the same (i.e. you look back at the original circumstances) then its taxable. See the example "Example: relevant step after A has emigrated" of the current DR rules I linked to.

Just to be clear (and I am taking the piss by saying that if you are not a tax adviser) the April 2019 loan charge counts as employment income and so is taxable whereever you are in the world. This is (for the very old) Schedule E without a case - see Nichols v Gibson. A DTA may be relevant, but almost certainly not for contractors.

Now it is IfartCLSO2's turn to ridicule that...

Having read some of the above, am I correct in saying that the loans are being taxed in year of receipt so being non resident has no impact . If it's 2019 that ppl opt for then surely they can get local legal advice in their country of residence stating this is retrospective and get some support to fight it as a non resident - after all hmrc/UK do not have global taxing power or jurisdiction .

[Iliketax]

Having read some of the above, am I correct in saying that the loans are being taxed in year of receipt so being non resident has no impact .

Let's ignore the April 2019 loan charge for a minute. Let's say someone gets a loan today (2017/18) that is within the scope of the disguised remuneration rules. They are resident in the UK and taxed in 2017/18. Easy. End of story.

Let's say that the facts are the same but they are not UK resident and no duties were performed in the UK at all. The question that s554Z4 asks is what year was that "for"? To do that you look at all the facts. So let's make up some. You were a permie before you left the UK, you got a brand spanking new job in a new country and the loan is 100% to do with that job. So this loan is "for" the tax year you are not resident and not performing duties in the UK and so is not taxed.

On the otherhand you might be taking a year out to do a bit of travelling and its clear that the loan comes from money your limited paid to a trust that it got for the work you did as a contractor while working in the UK and the money was lent to you just after you landed in Paris. So it's pretty clear it's "for" the tax year you worked in the UK. So its fully taxable. Section 554Z4 ITEPA gives you no relief.

Now let's pretend we have a 2006/7 loan that is outstanding on 5 April 2019. You are not resident in 2018/19 and so you have to ask what this notional loan that arises to you on 5 April 2019 is "for"? One obvious answer is that it is a stupid deeming rule and so it is not "for" anything, let alone a tax year you are resident. No tax. The other obvious answer is that it relates to the cash you got a good few years ago and so is "for" a year you were resident in the UK and so fully taxable.

What is right? Well that's something that different people will have different views on.

If it's 2019 that ppl opt for then surely they can get local legal advice in their country of residence stating this is retrospective and get some support to fight it as a non resident

I don't understand what "retrospective" has to do with it. What has it got to do with their current country of residence? It's a UK tax charge. Now you might argue that the UK has no taxing rights because of a double tax agreement with that particular country. But I doubt if that would help if the services that got the cash were carried on in the UK. But who knows? Well, you'll probably have to spend a lot of money finding out.

after all hmrc/UK do not have global taxing power or jurisdiction .

Of course they do. The UK is a sovereign country. It can tax what it likes. Collecting it may be difficult and it may have entered into double tax agreements, etc that limit it. The US is a good example of a country that taxes its people whereever they are in the world.

[Theythinkitsallover]

Non Resident

"Now let's pretend we have a 2006/7 loan that is outstanding on 5 April 2019. You are not resident in 2018/19 and so you have to ask what this notional loan that arises to you on 5 April 2019 is "for"? One obvious answer is that it is a stupid deeming rule and so it is not "for" anything, let alone a tax year you are resident. No tax. The other obvious answer is that it relates to the cash you got a good few years ago and so is "for" a year you were resident in the UK and so fully taxable."


Now you see Iliketax this is where it gets interesting for some.

Are you saying that because it is a tax for a loan in the year of say 06/07 when you were UK resident that this is why the 2019 LC should still apply to non residents as it is effectively for the year when they were in the UK for work undertaken whilst in the UK

Now if this is why you think a person who is non resident for tax purposes in the 18/19 tax year is still liable for the loan charge then surely this is effectively confirming that the LC tax is "retrospective" . Surely then Parliament will have been misled ?

I have seen letters to MPs confirming from Mr Mel Stride that it isn't retrospective ?

If it isn't retrospective as HMRC and HMG argue and it is just a new tax that applies for the 18/19 tax year that just happens to take into account historical loans from for example your 06/07 tax year. Then if it is truly not retrospective in anyway shape or form then surely it can't apply to someone who isn't resident in the UK for the 18/19 tax year. They are quite simply not subject to UK tax law.

I haven't seen anywhere that it is being classed as a deemed source of income like rental income and for that to occur it would have to be for a fixed asset in the UK (like a house). I am sure you can point me to something that states otherwise and for that I think many out there would be grateful.

My understanding is that the LC is a PAYE income only - therefore subject to UK tax laws only.

You see your explanation although well meaning and thorough it just doesn't really add up for me

It can't be both.