HMRC estimate that there are approximately 61,000 people directly affected by the loan charge, based on actual cases identified.
These individuals who received disguised remuneration as loans on or after 6 April 2016, which were not repaid by 5 April 2019, were required to declare the loan charge on their 2018/19 tax return. They were given an extended period to do this – until 30 September 2020.
Where no tax return was submitted for 2018/19, HMRC has issued determinations to those individuals.
Where the 2018/19 tax return was submitted, but it did not include the loan charge, or HMRC believe that an inadequate amount of loan charge was included, it is now raising discovery assessments.
HMRC use the discovery route where the normal enquiry window for a tax return has closed, which it has done for the 2018/19 tax returns, even for those submitted up to 30 September 2020.
The discovery powers allow HMRC to open a tax return for enquiry for up to four years after the submission deadline, or six years if the tax loss is due to careless behaviour by or on behalf of the taxpayer, or 20 years where there is a deliberate error.
The discovery assessment may not be accurate or valid, in which case it should be appealed alongside a request to postpone the tax due.
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