Policy paper

HMRC operational activity during the new independent review of the Loan Charge

Published 23 January 2025

Introduction

This briefing explains the operational activity that HM Revenue and Customs (HMRC) will undertake during the new independent review of the Loan Charge (‘the review’), for customers who have used disguised remuneration (DR) tax avoidance arrangements.

New independent review of the Loan Charge

The government announced a new independent review of the Loan Charge at Autumn Budget 2024.

The terms of reference for the review have now been published by the government. They explain what the review will consider.

The review commenced on 23 January 2025 and will be led by the reviewer and his team, independent of government and HMRC.

Questions about the scope of the review or the terms of reference should be directed to HM Treasury. HM Treasury can be contacted by email or by phone on 020 7270 5000.

Decisions about the operation of the review are a matter for the reviewer and cannot be answered by HMRC. Contact details for the reviewer have been published by HM Treasury.

HMRC will be writing to customers who have outstanding amounts relating to their use of DR arrangements by mid-March 2025 to:

• assign them a named HMRC contact
• set out whether HMRC think the DR arrangements they used will be considered by the review or not
• explain what the next steps are for customers

HMRC will write to customers based on the information we hold about them. If customers don’t think this is correct, they should tell the named contact included in their letter.

Important

HMRC won’t be able to tell customers exactly how they may be affected until both:

• the review is complete, and the findings are published
• the government issues its response to any review recommendations

HMRC will then write to customers again to update them on next steps.

For other general DR enquiries, customers can continue to contact HMRC on 0300 322 9420.

HMRC’s operational approach

1. Customers who have used DR arrangements that HMRC believe will be considered by the review

After the initial letter, during the review HMRC will not contact customers that our information suggests have only used DR arrangements that will be considered by the review, unless:

• there are important matters such as statutory deadlines or litigation deadlines that we need to meet
• customers tell us that they want to progress their case

Customers with outstanding amounts relating to their use of DR arrangements, who have not settled with HMRC:

• may want to consider making an upfront payment to stop further late payment interest being charged on that amount
• can still settle with HMRC if they want to - HMRC will finalise a settlement with anyone who wants to do so during the review period

Where customers have finalised their tax position for the Loan Charge with HMRC but have not yet paid in full, HMRC will write to these customers to let them know what the review means for their current agreement.

2. Customers who have used DR arrangements that HMRC believe will not be considered by the review

HMRC will continue to engage with customers who are still to fully settle their avoidance liabilities. Customers may want to consider making an upfront payment to stop further late payment interest being charged on that amount, whilst HMRC progress their case.

3. Customers who have used multiple DR arrangements, only some of which HMRC believe will be considered by the review

HMRC will contact customers where our information suggests they have used a mixture of avoidance arrangements, some of which will be considered by the review and some of which will not be.

For DR arrangements that we believe will be considered by the review, after the initial letter, HMRC will not contact customers about these arrangements, unless:

• there are important matters such as statutory deadlines or litigation deadlines that we need to meet
• customers tell us that they want to progress their case

HMRC will write to customers again to update them on next steps once the review is complete and the government has issued its response to any Review recommendations.

HMRC will continue to engage with customers to finalise their tax positions for DR arrangements that HMRC believe will not be considered by the review.

Customers who would prefer to wait and finalise their tax positions for all their DR arrangements at the same time, can ask HMRC to pause this work until the review is complete.

Where a pause is requested for arrangements that will not be considered by the review, HMRC will not issue assessments nor close any enquiries to finalise the amounts due for these arrangements, unless there are important matters such as statutory or litigation deadlines we need to meet.

Interest

HMRC is required to charge interest on late payments by law. We charge it on a daily basis, from the date amounts were due until the date they’re paid. This means that late payment interest will continue to build up on tax owed during the review.

Customers who have entered into an agreement to pay the Loan Charge may still want to continue making agreed payments to stop the amount of interest building up.

If we later find there’s no additional tax to pay, we will refund upfront payments (provided customers don’t have other tax debts). We’ll also pay repayment interest on the amount we refund.

Loan Charge legislation

HMRC won’t know if the amount of tax that customers need to pay will change until after the review has concluded and the government has responded to its recommendations. The Loan Charge legislation remains in force whilst that process takes place.

Independent advice


Customers with a tax adviser may want to talk to them about the terms of reference for the review and the letter HMRC will send to them about this.

For customers who do not have a tax adviser, free advice is available from organisations such as TaxAid and Citizens Advice.

TaxAid can give tax advice to people on low incomes. For example, they can help check that a tax bill is right and deal directly with us, if needed.

Citizens Advice can help people work out ways to pay the tax they owe.