Loan charge - review outcomes - impact on settlement

[Boodog]

After NTRT lost, apart from TAA, then no.

It will take much more than LCAG to stand any chance against HMRC.

Then what? Don’t settle, don’t pay loan charge and attempt litigation? Or is it game over?

[GammaMadrid]

Then what? Don’t settle, don’t pay loan charge and attempt litigation? Or is it game over?

A bit early to say don't you think? Be interesting to see what Graham, Phil and others have to say.

The worry is that many simply cannot pay. Especially those going back many years.

The document say there have been many attempts to close schemes down. Or at least that many warnings were given. Who reads government documents? Why is there no emphasis on HMRC closing down these schemes earlier?

The report smells badly.

[dammit chloe]

A bit early to say don't you think? Be interesting to see what Graham, Phil and others have to say.

The worry is that many simply cannot pay. Especially those going back many years.

The document say there have been many attempts to close schemes down. Or at least that many warnings were given. Who reads government documents? Why is there no emphasis on HMRC closing down these schemes earlier?

The report smells badly.

Suspect you'll hear some of those thoughts soon.

[wilks]

No change: Report on time limits and the disguised remuneration loan charge - GOV.UK

Well the report was written by HMRC so of course no change. The key is what the 190+ MPs do about this in the coming weeks, not what HMRC says in a pointless report. Of course 190 MPs is not enough to effect change.

[stonehenge]

It will take much more than LCAG to stand any chance against HMRC.

It's hard to know how you could defeat the LC.

The Govt will vehemently resist any attempt to amend the legislation.

Litigation (judicial review) is a long shot, especially if it's on wishy washy grounds like human rights. You'd need to raise several hundred £k to mount such an action, even just to get to the High Court, let alone the court of appeal and supreme court. It's not just your own legal team you'd have to budget for either; if you lost, you'd have to pay HMRC's legal costs as well.

[dammit chloe]

It's hard to know how you could defeat the LC.

The Govt will vehemently resist any attempt to amend the legislation.

Litigation (judicial review) is a long shot, especially if it's on wishy washy grounds like human rights. You'd need to raise several hundred £k to mount such an action, even just to get to the High Court, let alone the court of appeal and supreme court. It's not just your own legal team you'd have to budget for either; if you lost, you'd have to pay HMRC's legal costs as well.

JR is certainly not a high percentage shot but there have been successes in the past including one against the DWP. Several may be launched. As usual HMRC will use every trick in the book to delay.

The Loan Charge is being held in place by Hammond and Stride. If they go sometime soon, there is an opportunity.

Difficult but not impossible.

[NeedTheSunshine]

It's hard to know how you could defeat the LC.

The Govt will vehemently resist any attempt to amend the legislation.

Litigation (judicial review) is a long shot, especially if it's on wishy washy grounds like human rights. You'd need to raise several hundred £k to mount such an action, even just to get to the High Court, let alone the court of appeal and supreme court. It's not just your own legal team you'd have to budget for either; if you lost, you'd have to pay HMRC's legal costs as well.

Of course they'll resist. HMRC are counting on everyone giving up. Doesn't mean that you have to.

Nobody has the £££££ to fight this alone. That's why people join groups - share resources. It's also why you don't see that much detailed discussion about the loan charge on this forum these days. Those that want to do something about it have joined one or more active groups.

[webberg]

Loan charge review - what next?

As predicted above, I have put my thoughts on the review into a separate thread and I'm sure that some of these that I have supplied in more detail to journalists and such will appear in various media sources soon.

In summary, I'm disappointed but not in the least surprised with the outcome.

The key question is "what next"?

Your choices remain as they were before the loan charge was even considered but now with the complication of the loan charge.

Those choices are

Settle, or

Fight.

If you settle, which means agreeing with HMRC's view that loans (and other payments) are taxable income and you are personally liable, then the loan charge does not apply. There will be some issues around timing, especially as we get towards the end of August, but the principle is that no tax charge arises.

If you fight, you accept that you are going against HMRC's view of tax liability and that it is entirely possible you will lose. If you do, the tax is due as is additional interest. Penalties? Perhaps but not usually. HMRC legal costs? Perhaps but again quite unusual.

What you cannot do is NOTHING.

The loan charge will attract legal challenge. We know of perhaps half a dozen. These are judicial review cases and as mentioned, they are hard to win. Even if one did, there might be a delay before a more compliant version is introduced - (which may also be challenged of course).

We happen to believe that a JR is not required in order for the loan charge not to apply. we happen to think that the legal definitions around the charge do not fit the facts of most schemes. This is a view that HMRC will not share with us and which we expect to fight as part of the overall strategy.

If you do not believe in any of the above challenges, then you should either settle or repay the loan. Repaying the loan will avoid the loan charge but not HMRC's view as to liability in the year the loan was made.

Whatever you do, DO NOT USE A SCHEME to avoid the charge. We have seen half a dozen and none of them achieve the terms required to avoid the loan charge - in our opinion.

In summary:

Settle

Fight

Seek temporary relief from the tax charges (loan charge) by repaying the loan.

[chrisalis]

Join the Loan Charge Action Group

Hi

Can we advise all members impacted by the Loan Charge to join LCAG and the Judicial Review?

Judicial Review - Loan Charge Action Group

In reality, this is your best hope of defeating HMRC's Loan Charge, which is still due to come into effect on 5th April.

Regards
Chris (LCAG Volunteer Team)

[dangermaus]

Hi

Can we advise all members impacted by the Loan Charge to join LCAG and the Judicial Review?

Judicial Review - Loan Charge Action Group

In reality, this is your best hope of defeating HMRC's Loan Charge, which is still due to come into effect on 5th April.

Regards
Chris (LCAG Volunteer Team)

Correct me if I’m wrong but those who only have open years probably have no benefit to joining any fight against the loan charge as, if it was scrapped, HMRC would still pursue these open years. Especially if they had already provided loan figures.

Surely they would only have an interest in joining a fight against HMRC’s view that the loans are taxable, if such a fight exists?