Richard Coombs, Tax Partner at Bates Weston, looks at the outcry against the retrospective nature of the loan charge, effective from the beginning of April 2019.
You would be forgiven for thinking that now that April has passed then the loan charge is now a done deal and any tax that has arisen as a result of the charge is due and payable.
Whilst that is technically correct, it is only part of the story. The loan charge has taken on a life of its own in recent weeks and the uprising against the unfairness of its retrospective nature has gathered support from over 150 MPs and hundreds, if not thousands, of affected taxpayers.
At the time of writing, I understand that the Loan Charge Action Group is set to launch a judicial review of the legislation and therefore it will be interesting to see how this progresses. One particular aspect of this which will need to be addressed is, in the event that the judicial review finds that the legislation is unlawful, what happens to the many hundreds of taxpayers who have been forced into entering into a contractual settlement with HMRC in order to avoid the loan charge? Legally they have signed an agreement and therefore, strictly speaking, whether the loan charge was lawful or not is irrelevant. The question therefore is what will happen to these clients if the legislation is found to be unlawful? That will no doubt provoke further legal challenge as to whether these contractual settlements are indeed binding – one for the lawyers I think!
Even though the loan charge date has passed, we are still being contacted by people who have either only just found out about it or have yet to deal with it. It is a technically complex area and therefore we advise anyone who finds themselves in this position to seek professional advice as soon as possible.
We are always available for a free initial conversation and so please feel free to contact us if you wish to discuss your case.