When Sir Amyas Morse completed a review of the Loan Charge, his recommendation was that a new tax should not apply after December of 2010. This created an issue where contractors who had settled on a voluntary basis would have now done so without any reason.
HMRC implemented a Refund Scheme to try and make up for this. The deadline for the application for this refund has almost arrived, and applications must be delivered by the deadline of September 30th 2021.
If you made a voluntary payment to HMRC and they did not have the power to recover the income tax and NIC through an open enquiry, then this refund is meant to make up for that issue as well. This refund process might also apply to loans that were made between December 9th of 2010 and April 5th of 20016. If “reasonable disclosure” was made on the returns and the payment was done voluntarily, this might make the loan eligible for the same refund process.
How is Reasonable Disclosure Defined?
This important factor is defined as the provision of information that is sufficient to identify that a loan was made and to who it was made to. The transaction or arrangement that created the loan must be clear, and HMRC will need to be able to identify the income tax and NIC that was due per the arrangement.
This is a high bar that has been set, and this is causing issues with tax authorities surrounding these applications since the repayment process that was allowed at the time did not always track all of these details. There are various exemptions that surround this kind of disclosure requirement, from mental incapacity to death. Settlements must also have been agreed upon jointly if there are many people involved in a contract or deed.
If you have made your application for this refund process, HMRC must write to you and advise if it has been accepted or rejected. The refund value that you are due will be included in the documentation. Contractors will have no right of appeal for these refund determinations.
You will have to make this refund request by the deadline of September 30th, as there is no grace period for this request type. You should plan to succeed and have the right documentation on hand in the case that HMRC requests it from you. If you need assistance from a specialist, you are advised to get it so that you have the best chance of getting your money back that you should not have been asked to pay.
