Ruth Stanier, the Director General at HMRC, corresponded with the Loan Charge All Party Parliamentary Group and told them how the taxpayers can be assisted to settle their current bills in order to save them from the 2019 Loan Charge.
Along with this letter, the HMRC also provided schedules to the Loan Charge APPG. This letter and the attached schedules are a substitute for a hearing in which Ruth Stanier and Mel Stride refused the invitation to appear and reply to the MPs questions on 5th March 2019.
The Loan Charge 2019 was conceptualised to assist taxpayers with incentives so they can easily settle tax bills from their outstanding loans. After the Loan Charge is implemented by 5th April 2019, these bills will be processed as income. It is expected that these charges can make an impact on the behaviour of taxpayers as opposed to focusing on the collection of tax. If the future charges will be higher in comparison to the outstanding historic bills, then the taxpayers can be forced to take action.
Meredith McCammond, in her article about the Loan Charge, recommended taxpayers to settle their existing tax bills with outstanding loans. If they fail to do so, the 2019 Loan Charge will combine all loans and treat them as income while applying the tax rates of the 2018/2019 season.
In the past, the HMRC released several deadlines and encouraged taxpayers for settlement over their tax bills which were owed on outstanding loans. This time, the HMRC has yet again come up with a new deadline for settlement. This deadline is expected to end on 5th April 2019, and thus it represents the last chance for taxpayers to come forward. Tax analysts have noted that the announcement of the deadline indicates that the HMRC has softened its stance on the matter.
Earlier, the demands from the taxman dictated taxpayers to give all the required information pertaining to the settlements by 5th April 2019.
Additionally, the tax payment period for outstanding loans was also changed to provide relief to the taxpayers. In late November 2017, the taxman declared that by the 5th April 2019, taxpayers must settle all their liabilities. However, the recent guidance—published on 4th February 2019—clarified people who have an income which is lower than £50,000 can take benefit from a 7-year time period for the payment of tax on outstanding bills.