Loan charge - HMRC update

[webberg]

Find out how the changes to the loan charge affect you - GOV.UK

Some interesting nuggets to chew on here.

[RickG]

Draft legislation published:

Implementation of changes to the loan charge - GOV.UK

Interesting they've adopted the "reasonable disclosure" clause, rather than the more restricted full disclosure.

[Delendog]

Draft legislation published:

Implementation of changes to the loan charge - GOV.UK

Interesting they've adopted the "reasonable disclosure" clause, rather than the more restricted full disclosure.

also looks as if forward interest has been dropped.

[Iliketax]

Draft legislation published:

Implementation of changes to the loan charge - GOV.UK

Interesting they've adopted the "reasonable disclosure" clause, rather than the more restricted full disclosure.

I think you need to read a bit further:

(5) For the purposes of sub-paragraph (1)(b) a tax return contains a
reasonable disclosure of the loan or quasi-loan if—

(a) it identifies the loan or quasi-loan,
(b) it identifies the person to whom the loan or quasi-loan was
made in a case where the loan or quasi-loan was made to a
person other than A,
(c) it identifies the relevant arrangements in pursuance of which
or in connection with which the loan or quasi-loan was made,
and
(d) it contains such other information as is sufficient for it to be
apparent that a reasonable case could be made that for the
relevant year A is chargeable to income tax on an amount that
was referable to the loan or quasi-loan.

(6) The condition in sub-paragraph (1)(b) is to be taken to be met if a
single tax return made by A for a qualifying tax year does not meet
the requirements sub-paragraph (5) but two or more tax returns
made by A for qualifying tax years, when taken together, do meet
those requirements.

That's quite a tough definition of "reasonable" that, I would expect, few people are likely to satisfy in practice.

[DealorNoDeal]

That's quite a tough definition of "reasonable" that, I would expect, few people are likely to satisfy in practice.

+1

It's not obvious that even having a DOTAS number on the return would satisfy that.

[webberg]

also looks as if forward interest has been dropped.

Perhaps I'm being a bit dim, but where is this please?

I see that rather clumsy provisions are in place to remove interest between January and September 2020.

However forward interest is usually defined as a charge on settlement where the entire amount is not paid immediately but is spread over a long period into the future. It has been at the official rate +1%.

As I said, perhaps I've missed this on my first skim.

In which case, I'd appreciate a steer please.

[webberg]

Late interest vs forward interest

I've read through the pages again and I think we need to understand the lexicon here if we are to stop hares running away from us carrying false information (and hopes).

My definition of the above phrases.

Late interest - applies where tax is paid after the due date and is usually at rates determined in statute and pegged to the official base rate.

Forward interest - applies where tax agreed to be due as part of a settlement is paid over a period stretching into the future. It is a charge on outstanding balances due and is usually at the late interest rate + 1%.

The information that came out yesterday specifically says that nothing in it affects settlements.

My conclusion therefore is that nothing in this raft of papers has any impact on forward interest charged in settlements.

That may come but as settlement is not something that is included in statute I suspect any changes to terms will be part of a new, separate and distinct HMRC statement (if indeed any changes are to be made).

[Delendog]

Perhaps I'm being a bit dim, but where is this please?

I see that rather clumsy provisions are in place to remove interest between January and September 2020.

However forward interest is usually defined as a charge on settlement where the entire amount is not paid immediately but is spread over a long period into the future. It has been at the official rate +1%.

As I said, perhaps I've missed this on my first skim.

In which case, I'd appreciate a steer please.

If you follow through from your link above and get to the paying debt you find the below with a link - there is no mention anywhere of forward interest being applied (that I could see).

Find out how to pay a debt to HMRC with a time to pay arrangement - GOV.UK
Interest charged on time to pay arrangements

Interest accrues from the due date to the end of the time to pay arrangement. The interest payable will be included in overall debt covered by the arrangement. Find information on interest payable on tax debts and charges.

[Delendog]

I've read through the pages again and I think we need to understand the lexicon here if we are to stop hares running away from us carrying false information (and hopes).

My definition of the above phrases.

Late interest - applies where tax is paid after the due date and is usually at rates determined in statute and pegged to the official base rate.

Forward interest - applies where tax agreed to be due as part of a settlement is paid over a period stretching into the future. It is a charge on outstanding balances due and is usually at the late interest rate + 1%.

The information that came out yesterday specifically says that nothing in it affects settlements.

My conclusion therefore is that nothing in this raft of papers has any impact on forward interest charged in settlements.

That may come but as settlement is not something that is included in statute I suspect any changes to terms will be part of a new, separate and distinct HMRC statement (if indeed any changes are to be made).

100% agree but it looks as if forward interest is not charged for TTP on the LC.

[webberg]

If you follow through from your link above and get to the paying debt you find the below with a link - there is no mention anywhere of forward interest being applied (that I could see).

Find out how to pay a debt to HMRC with a time to pay arrangement - GOV.UK
Interest charged on time to pay arrangements

Interest accrues from the due date to the end of the time to pay arrangement. The interest payable will be included in overall debt covered by the arrangement. Find information on interest payable on tax debts and charges.

So that says interest will be applied to tax due.