Disguised Remuneration Loan Charge Review

Treasury written question – answered on 19th May 2020.

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Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon

To ask the Chancellor of the Exchequer, with reference to page 4 of the Independent Loan Charge Review: report on the policy and its implementation which states that the law on loan arrangements became clear in 2010, for what reasons the Finance Act 2017 included legislation on those arrangements.

Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon

To ask the Chancellor of the Exchequer, with reference to Sir Amyas Morse's Loan Charge review published in December 2019, what discussions his Department had with HMRC on changing loan charge arrangements prior to the introduction of the 2017 Finance Bill.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

Disguised remuneration (DR) schemes have been used since the 1990s.

The Government announced targeted anti-avoidance legislation to tackle DR schemes in a written ministerial statement in 2010, and introduced it in 2011. This aimed to put beyond doubt that DR schemes are ineffective and to discourage their use.

Despite the Government’s attempts to eliminate the use of these schemes it was clear by Budget 2016 that DR schemes continued to proliferate. That is why the Government announced a package of measures to ensure DR scheme users pay their fair share of tax. These measures, including the Loan Charge, strengthened existing rules and aimed to draw a line under the use of DR tax avoidance schemes. This was legislated for in the Finance (No.2) Act 2017.

HMT officials work closely with colleagues on all tax policy, including on the Government’s response to the use of DR tax avoidance schemes and on the introduction of the Loan Charge in Finance (No.2) Act 2017.

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