Newbie. Just found out about the Loan charge. Help

**NotAllThere** · 12 August 2018, 10:44

Originally posted by Raymondo View Post

...
They are being dishonest aren't they?

It seems very likely. What are the terms of the "genuine commercial" loan? If you feel able to name the "umbrella company" (in quotes, because if it were a real umbrella company, it wouldn't be offering these schemes), then it would be helpful to do.

Finally, did your agency, or an agent of your agency suggest you use the scheme?

**Delendog** · 12 August 2018, 10:50

Originally posted by Raymondo View Post

Hi

I am a locum Dietitian, working with an agency and Umbrella company. After a job and agency change in January 2018 a new Umbrella company was advised via my new agency.

I had been PAYE until this time, however the new Umbrella company advised me on this loan scheme which was said to be legal and was able to reduce tax due to some self-employment rules. In truth, I know nothing about the legal side of contracting so just went with it thinking this must all be above board.

Fast forward 8 months later and via an email sent out from an old employment agency I discovered the forthcoming HMRC Loan charge and that my scheme fell under it.

I contacted my umbrella company who said it was legal - this is what they said:

"HMRC legislation changes coming into effect in 2019 relates specifically to the same EBT’s, 3rd party lenders and other lending or annuity and pension type schemes that have already been challenged or are about to be challenged. None of the changes affect a genuine commercial loan from a single employer...…..please see attached a copy of the legislation that is coming into effect in April next year.....
I would draw your attention to Chapter 2, Section 7 which outlines why x as your employer is able to provide you with a genuine commercial loan which is exempt from this legislation".

They are being dishonest aren't they? Or have I misread this?

I suppose I wanted to know if this loan charge will apply to me and if so - what do I do to fix this. I have a young family and am scared I am going to harm us.

1) Get out of it ASAP - Go soletrader or set up your own ltd.
2) HMRC will consider it is under the loan charge. Ask your provider for HMRC written specific confirmation that it is not hit by the LC.
3) Work out what you may owe tax wise if the loans were added to your income in each of the financial years - as you joined Jan 18 then Jan18 - 5th April 18 - you have until Jan 2019 to complete your own self assessment anyway so you could just declare the loan.
4) Get some professional advise - Suggest Phil at DWS he will allow a free call.

But get out now.

**Raymondo** · 13 August 2018, 03:29

Hi

Well a very big thank you all for your replies - and warnings to get out. I will. I'll change my Umbrella company and go PAYE today

My agency didn't work with the old umbrella company I had and had a list of ones they work with - so I just picked one out of the list at random. It was when liasing with the Umbrella company that they offered this scheme. I know another Dietitian doing same thing. She is Australian and going back in a few months. Should I warn her too?

I've asked my Umbrella company for evidence that this is a genuine loan but I know they are lying - I can't believe that after calling them out they are saying it's all ok.

I have said I'll report them to HMRC myself - not sure if HMRC cares? I have also asked for them to foot half the bill.

I am not sure how big the hit is - average loans were around 450 - 500 per week over 8 months. So a large bill but not as bad as others - so sad to read the stories here.

I can name the Umbrella company - and will. Just will del with a few things first. Once ties are severed I'll name them for sure!

I can't set up limited companies - the NHS here does not work with them and I believe under IR35 things changed. I Am very dense regarding this. PAYE is the only way I can go as a locum

Cheers.

**NotAllThere** · 13 August 2018, 05:52

You should inform your Australian colleague. If your income is relatively low, then switching to a legitimate umbrella company is your best bet.

**Groundhogdays** · 13 August 2018, 07:27

Originally posted by NotAllThere View Post

You should inform your Australian colleague. If your income is relatively low, then switching to a legitimate umbrella company is your best bet.

Across the NHS and other sectors, they really don't know yet, do they? There's part of the answer as to relatively low petition turnout thus far...

**CapitalP** · 13 August 2018, 07:28

Originally posted by Raymondo View Post

Hi

Well a very big thank you all for your replies - and warnings to get out. I will. I'll change my Umbrella company and go PAYE today

My agency didn't work with the old umbrella company I had and had a list of ones they work with - so I just picked one out of the list at random. It was when liasing with the Umbrella company that they offered this scheme. I know another Dietitian doing same thing. She is Australian and going back in a few months. Should I warn her too?

I've asked my Umbrella company for evidence that this is a genuine loan but I know they are lying - I can't believe that after calling them out they are saying it's all ok.

I have said I'll report them to HMRC myself - not sure if HMRC cares? I have also asked for them to foot half the bill.

I am not sure how big the hit is - average loans were around 450 - 500 per week over 8 months. So a large bill but not as bad as others - so sad to read the stories here.

I can name the Umbrella company - and will. Just will del with a few things first. Once ties are severed I'll name them for sure!

I can't set up limited companies - the NHS here does not work with them and I believe under IR35 things changed. I Am very dense regarding this. PAYE is the only way I can go as a locum

Cheers.

If it sounds overly complicated alarm bells should be ringing.

**Raymondo** · 13 August 2018, 15:55

Originally posted by Groundhogdays View Post

Across the NHS and other sectors, they really don't know yet, do they? There's part of the answer as to relatively low petition turnout thus far...

Absolutely not mate. We are clueless. I spoke to 3 people today - locums - none had a clue. I found out on 2 days ago by pure chance.

**Raymondo** · 13 August 2018, 16:01

Ok. So I emailed my Umbrella company saying I wanted them to recalculate my wages for the past 8 months as per PAYE - I'd then contact HMRC and settle.

This is their response - but in summary - they are saying this is a genuine loan and does not fall under these remuneration plans. Tell me what you think.

"I have attached a copy of the contract of employment that you signed when you initially signed up with ourselves. This is what confirms us as your employer and we have to be your employer in order to deduct tax and NI contributions from your pay.

The loan you have received does not fall into the bracket of disguised remuneration as it is paid to you direct from your employer (i.e. us) not via any third party or disguised Trust.

You mention that you do not want to get into trouble, if we were to unravel your payments in the way you have mentioned we would have to re calculate all of your previous payments one by one and then re submit them to HMRC. This would actually be more likely to prompt questions from HMRC. HMRC are only looking at chasing up people who have avoided tax by using a tax avoidance scheme. Here at Simply you are not using a tax avoidance scheme at all."

**northernladuk** · 13 August 2018, 16:16

You could send them this link which has a fairly clear message in the opening paragraph.

HMRC can tax loans paid to contractors or freelance workers through trusts or umbrella companies , just like normal income.

https://www.gov.uk/guidance/contract...-cost-you-more

I can't see how they believe a simple fudge to try and avoid being a 'scheme' is going to stand up to even the lightest scrutiny.

Newbie. Just found out about the Loan charge. Help