Contractors face loan charge choice

Money Box

BBC

Business

4.2 • 825 Ratings

🗓️ 23 February 2019

⏱️ 26 minutes

🔗️ Recording | iTunes | RSS

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Summary

On April 6th the loan charge comes into force. It's an anti-tax avoidance measure which will enable HMRC to recover tax from disguised remuneration schemes which involved paying earnings back via a loan. Contractors, some of whom now face bills of hundreds of thousands of pounds, have told Money Box they were advised by their accountants to use these schemes, while others said they were told they would lose contracts without one. HMRC options for people in this situation are to repay the loans, settle the tax due or pay the loan charge in April which will apply to all loans made since 6 April 1999 if they are still outstanding. If a settlement has been agreed or is in progress with HMRC the charge will not apply. Guests: Andy Chamberlain, Deputy Director of Policy and External Affairs IPSE and Rebecca Benneyworth, Tax Lecturer and writer.

Money Box listeners have been in touch to ask "what happens to debts when you die?" Guest: Andy Shaw, debt advice co-ordinator with StepChange debt charity.

Margaret Snowdon, Chair of the Pension Scams Industry Group, discusses the findings of its pilot survey of three pension providers, who between them handled 27,000 pension transfers worth £1.33bn in a year. One of the aims of the survey was to identify areas where scams concerns around pension transfers might arise. It found the top concern to be the involvement of unregulated introducer firms who generate business leads for authorised advisers.

Presenter: Paul Lewis Producer: Charmaine Cozier Editor: Richard Vadon

Transcript

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0:00.0	In Northern Ireland, from the late 70s to the early 90s, the IRA killed over 40 alleged informers.
0:08.0	But the man who often found, tortured and sometimes killed these people on behalf of the IRA
0:12.0	was himself an informer, a secret British army agent with the codename Stakeknife.
0:18.0	Who gets to play God? And why me? Why my family? When lies are still being told to this day,
0:24.0	who do you believe? I wouldn't even know where to start and I'm with the IRA.
0:28.5	Steakknife. Listen first on BBC Sounds. BBC Sounds, music, radio, podcasts. Hello, in today's program. 50,000 people face big, Music, Radio, podcasts.
0:49.6	Hello, in today's program, 50,000 people face big, often life-changing tax bills in April after HMRC gets powers to go back 20 years to undo tax avoidance schemes.
0:54.2	When you died, your debts die with you, or are they inherited by your loved ones?
1:00.0	And should pension schemes do more to prevent members cashing in their pension and giving it to crooks?
1:06.0	But first, around 50,000 people are facing big and often life-changing tax bills in April.
1:10.9	Her Majesty's Revenue and Customs got new powers to undo a tax avoidance scheme that's been operating since 1999.
1:14.2	People can agree to the demand before the 5th of April and arrange terms to repay it with interest over the next few years.
1:21.0	If they don't, HMRC will demand all the money in one lump sum, which they will have to pay by the end of January.
1:28.6	These individuals use what are called contractor loan schemes. Instead of being paid their fees or salary in the
1:33.7	normal way, the money was paid to an offshore company, and then at least some of it was lent back
1:38.5	to the individuals, and because it was a loan, it wasn't taxable, even though the intention was
1:43.7	that the loan would never
1:44.9	be repaid. But now, HMRC says this income was taxable. It calls them disguised remuneration
1:52.3	schemes and it wants the tax right back to 1999. If people don't agree to pay, it will impose
1:59.1	what it called the loan charge to get the whole lot back in one year.
2:02.6	And these tax demands are typically for tens, even hundreds of thousands of pounds.
2:07.0	And Dee Taylor is an IT consultant from Surrey.
	...

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