ICAEW states ‘Lessons must be learned’ from loan charge controversy
The Institute of Chartered Accountants in England and Wales (ICAEW) has stated that ‘lessons must be learned’ from the controversy surrounding the loan charge.
The loan charge, which came into effect on 6 April this year, added a 45% non-refundable charge on all loans advanced through the scheme. Unless the individual had agreed with HMRC to settle their tax affairs by 5 April. The charge mainly affects freelancers and agency workers.
The ICAEW said that part of the problem is that many of the people affected are low paid. Whilst being persuaded by their employers to join the loan charge scheme. As a result, many are now facing bankruptcy.
Sir Amyas Morse, the former Chief of the National Audit Office (NAO), is currently heading up an independent review into the controversial loan charge. Which is due to be published by the middle of November.
In a letter to Sir Morse, the ICAEW stated: ‘While there were some taxpayers using disguised remuneration schemes for the sole purpose of avoiding tax, some taxpayers were misled into such arrangements or had little choice but to accept them and thought the arrangements were in order.
‘We suggested that HMRC should take a ‘sympathetic and flexible approach’ to resolving such cases. Rather than looking to make the taxpayers concerned bankrupt.’