A December 2020 review of the Loan Charge by the House of Lords Economic Affairs Finance Bill Sub-committee (the Committee) reveals that HMRC have not sufficiently improved practices following the Morse Review. London Tax Network Ltd provided evidence to the Committee and were quoted in the follow up letter to the Financial Secretary to the Treasury, Jesse Norman.
The recommended actions suggested by the Committee (and paraphrased from the letter) include:
- A review of the definition of reasonable disclosure to reflect what would have been deemed reasonable at the time of disclosure. This change should be made retrospective to the date that the relevant provisions of the Finance Act 2020 took effect, so that those cases already considered and rejected under the current ‘reasonable disclosure’ interpretation are all subject to review.
- HMRC must be transparent about the principles it applies in settling individual cases, to address the evidence we heard on the inconsistency with which it applies the Loan Charge to different taxpayers.
- HMRC should extend the time available for taxpayers to elect to spread payments to 31 December 2021.
- HMRC should be clearer about the process for obtaining refunds of voluntary restitution payments, and should
more generally improve communications and seek to reduce complexity. The Government should also extend the time allowed to claim a refund to 31 December 2021.
- For pre-December 2010 schemes, HMRC should clarify its intended approach to ongoing enquiries and consider
closing down open enquiries for years before 2010-11 without further action.
- HMRC should communicate directly with taxpayers whom it has identified would benefit from the concessions made following the Morse Review, but have not claimed them, to ensure as far as possible that no-one misses out on the changes that are intended to benefit them.
We hope that these changes are implemented to the benefit of those affected by the retrospective nature of the Loan Charge.