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Official review for controversial loan charge

Chancellor Sajid Javid has announced an independent review of the controversial loan charge that applies to disguised remuneration schemes.

HMRC was authorised by parliament to pursue individuals and companies that used the schemes dating back to 1999.

The aim of the measure was to crack down on individuals who received income through such loans instead of through salary, and avoided paying income tax.

Earlier this year, up to 50,000 people who were thought to have been paid through the schemes were warned they could face huge tax bills.

They were issued with a 5 April 2019 deadline to either settle or declare their tax bills, or face a 45% charge on all loans advanced through the schemes.

Concerns were raised over the policy's effect on individuals, who were being penalised for using what was a legal scheme at the time.

As a result, Javid has commissioned an independent review into whether or not retrospective tax bills are the best way to deal with the issue.

Jesse Norman, financial Secretary to the Treasury, said:

"Disguised remuneration schemes are highly-contrived attempts to avoid tax, but it is right to consider if the loan charge is the appropriate way of tackling them.

"The Government fully appreciates the concerns expressed about the loan charge by individuals, campaigners, and MPs."

The Treasury has asked former auditor-general Sir Amyas Morse to conduct the review, with his findings expected in mid-November 2019.

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