Repaying the loan charge is not realistic
As someone that is impacted by the loan charge, I thought I would take some time to respond to your article(Govt to overhaul tax charges after damning review’, December 20).
It is great news and very long awaited that HM Revenue & Customs has finally been brought back into line and has had no choice but to agree with all but one of Sir Amyas Morse’s recommendations.
From a personal perspective, having been on the receiving end of HMRC’s actions over the past eight years, this is a very welcome U-turn, but the stress it has caused can never be reversed.
I am disappointed, however, that the government and HMRC have rejected the one seemingly sensible (and catch-all) recommendation which is some kind of ‘write-off’ option to genuinely draw a line under any outstanding balance. This would allow people like me to move on after paying what they can afford.
I appreciate HMRC’s rationale for the rejection, but this leaves a glaring gap in handling this matter to its natural end point.
In response to Sir Amyas’ recommendation that “all individuals subject to the loan charge should only be asked to pay up to half their disposable income each year and a reasonable proportion of their liquid assets. No one should have to sell their primary residence or use their existing pension pot to pay the loan charge,” HMRC confirmed that no taxpayer will be forced to sell their main home to fund a loan charge or disguised remuneration tax bill. It also said that, in line with normal practice, no one will have to release funds from their existing pension pots.
However, for someone who is in my position, where HMRC has calculated a very large settlement sum, because they have opted to calculate the maximum possible due under basic PAYE rules, based on my current age (53), and taking into account the above new guidelines for paying back, I am simply never going to be able to pay off this tax debt.
I have very little in the way of liquid assets. I already had to sell our family home of 20 years because I had to downsize two years ago, when I moved from being a self-employed IT contractor to a permanent role due to impending IR35 legislation, and as a result am now on a much lower salary.
To be fair, even if HMRC made me sell my home, after paying selling fees and giving my wife her half of the equity, what I could give to HMRC would still fall woefully short of what they calculate I owe them, so if there is no write off option then what?
When calculating whatI owe, HMRC did so using the maximum possible due under standard PAYE rules.I challenged HMRC on this, saying it was not fair or reasonable as I was self-employed with a limited company.
Had I not been using avoidance schemes, my accountant would have structured my company finances differently but still efficiently (as he had done in years previous) to reduce overall tax liability.
This would mean my actual tax liability for the years in question would be considerably less, meaning we could agree on an affordable settlement and time to pay. However, HMRC refused to move on this point, saying it was my fault for using a tax avoidance scheme and not paying what I should have paid at the time.
So for me, the stress remains, as there is no clear pathway at this time to reach an end point.
David Edwards
Platforms: know your place
If platforms stuck to their knitting they could be profitable. They are nothing other than a utility. Ditch the add-ons – if users don’t understand investments they should choose to do something else. Charles Schwab offers a platform with nil charges in the US. Go and ask them how they make money.
Harry Katz
HA7 Consulting
Some welcome tax news
Contrary to the seemingly cautious ‘glass half-empty’ tone of the article, ‘Tax changes advisers should watch for in 2020’, could it be that all our Christmases came at once? Extra spending on needy social and infrastructure areas, combined with a minimal new tax imposition on the hard-pressed working/middle classes is welcome. Actually collecting taxes due from criminal tax evaders, and web-based tax avoiders is a good start.
Could it be that the pre-Brexit Tory threat of reducing corporation tax has actually served two purposes: encouraging the European Commission to seriously renegotiate an amended treaty (as long as the UK didn’t competitively reduce corporation tax), while providing a tax-take buffer that nobody will actually notice as there is no change?
In addition, let’s not forget that after we have stopped contributing to the EU coffers, in 2021 we should have more cash available.
I’m actually very hopeful for 2020/21 but only time will tell. My glass is half-full, how is yours? Happy New Year.
Clive Fox
Sympathy avoidance
The government is wise to implement all but one of the recommendations of the loan charge review. It is important that tax avoiders be treated fairly.
Workers who benefited from disguised remuneration schemes were doubtless delighted to discover they could receive almost their full income without paying any income tax on it.
While it is understandably emotionally and financially difficult for many to pay the loan charge to rectify this avoidance, it is hard for ordinary taxpayers to have any sympathy for them.
David Pearson
