The lowest earning taxpayers will have to pay a large amount of interest if they choose to pay their loan charge debt over multiple years.
The loan charge relates to employees, and their employers, who used disguised remuneration schemes to receive income payments through loans rather than salary and so avoided paying income tax.
With the loan charge, which was approved by Parliament in the 2017 Finance Bill, HM Revene & Customs was authorised to pursue individuals and companies that engaged the practice going back to 1999.
HMRC expects to collect £3.2bn in total, with two thirds of that to come from individuals.
The taxman expects the average settlement from individuals to be £13,000, and has offered those with earnings of less than £50,000 the opportunity to pay over five years, and those with earnings below £30,000 the chance to pay over seven years.
But taxpayers who take advantage of those payment terms are facing interest charges, with the rate determined by how long the debt has been due.
A reader who contacted FTAdviser said he owes £238,000, on which HMRC wants to levy a 4.5 per cent interest.
The man, who wishes to remain anonymous, said: "[HMRC] want £238,000 from me. I'm trying to raise the money as the five or seven year HMRC plan does not mention the extortionate 4.5 per cent interest rate."
A HMRC spokesman said there was a statutory rule that late payment of tax carried an interest rate.
The rates are as follows:
Late payment %
21 August 2018
21 November 2017
23 August 2016
29 September 2009
24 March 2009
27 January 2009
6 January 2009
6 December 2008
6 November 2008
6 January 2008
6 August 2007
6 September 2006
6 September 2005
6 September 2004
6 December 2003
6 August 2003
6 November 2001
6 May 2001
6 February 2000
A number of MPs have been critical of the loan charge, stating that by applying the charge to cover a time period prior to it being announced in the 2016 Budget this violated the principle that legal changes should not be applied retrospectively.
Nicky Morgan, who chairs the Treasury Select Committee, said applying the rules retrospectively violated the principle of "certainty", which is that people know how they will be treated under the law at the time they take an action, rather than having to find out later.
But HMRC believes as the loan in question have not been repaid in the current tax year, the matter is not being applied retrospectively.
Lib Dem MP Sir Ed Davey, who has campaigned against the loan charge, said: "HMRC’s approach on everything to do with the loan charge seems vindictive.
"Even when they claim to be offering help, it comes with strings attached. Ministers are either not listening or not getting a grip of HMRC officials."