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UK: Opportunity for refund, voluntary tax payments for certain employment-related loans

UK: Opportunity for refund, voluntary tax payments

HM Revenue & Customs (HMRC) will refund certain voluntary tax payments made on or after 16 March 2016 with respect to certain employment-related third-party loans. The loan charge will not apply to loans advanced between 1999 and 2010 and some loans made between December 2010 and April 2016. Employers and other relevant parties can potentially claim a refund of any voluntary payments already made.

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Summary

The loan charge introduced by the Finance (No 2) Act 2017 enabled HMRC to tax employment-related third-party loans made since April 1999 that remained outstanding as of 5 April 2019, regardless of whether relevant time limits had expired.

Criticism led to an independent review of the loan charge, and recommendations made in December 2019 prompted HMRC to reconsider the charge.

Finance Act 2020 introduced the “disguised remuneration repayment scheme” that enables taxpayers with loans advanced between 6 April 1999 and 8 December 2010 to reclaim the tax paid voluntarily as part of settlements with HMRC. The entitlement is extended to those who received loans between 9 December 2010 and 6 April 2016 when reasonable disclosure was made in relevant tax returns. HMRC has established a process for how to claim a refund of the amounts of tax voluntarily paid.


Read an August 2020 report prepared by the KPMG member firm in the UK

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