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Written question asked by Roger Godsiff (Labour) on Tuesday, 22 May 2018, in the House of Commons. It was due for an answer on Monday, 4 June 2018 (named day). It was answered by Mel Stride (Conservative) on Monday, 4 June 2018 on behalf of the Treasury.

Tax Avoidance

Question

To ask Mr Chancellor of the Exchequer, for what reason the Government retrospectively introduced the 2019 Loan Charge from 1999 rather than from the date of Royal Assent to the Finance Act 2017; what assessment the Government has made of the effect of that decision to backdate on contracted staff (a) in general and (b) in relation to the potential for consequential bankruptcies; how many people will be required to pay backdated taxes as a result of the introduction of that charge; and what estimate the Government has made of what proportion of those people will lack the financial means to pay that charge.

Answer

The 2019 loan charge is targeted at artificial schemes where earnings were paid in the form of non-repayable loans made by an offshore third party (“disguised remuneration” schemes). It is unfair to ordinary taxpayers to let anybody benefit from contrived tax avoidance of this sort, and that is why this government has taken action to ensure that everybody pays the taxes they owe.

The loan charge is not retrospective. It is a new charge arising on disguised remuneration loan balances that remain outstanding on 5 April 2019. Its announcement at Budget 2016 provided scheme users with a three year period to repay their loans, or to agree a settlement with HMRC before the charge takes effect. The government estimates that around 50,000 individuals are affected by this legislation.

HMRC are able to help taxpayers who are not able to pay their taxes and will work with those who are in genuine difficulty to help them to get back on track.

Secondary information

Type
Written question
Reference
146722
Session
2017-19
Subjects
Tax avoidance
Legislation
Finance Act 2017
Link
View this Written question on www.parliament.uk