If you used a disguised remuneration scheme between the 6 April 1999 and 5 April 2016 and settled the tax due with HMRC between 16 March 2016 and 11 March 2020, you may be eligible for a refund or a waiver.
The Government has produced detailed guidance on eligibility and the application process.
In general terms, voluntary payments that may be repaid or payment instalments that may be waived relate to loans made:
- before 9 December 2010 where HMRC did not have the power to recover the Income Tax or National Insurance contributions at the date the settlement agreement was made
- on or after 9 December 2010 and before 6 April 2016 where:
- you made a reasonable disclosure of your scheme use at a time when HMRC had the power to recover the Income tax and National Insurance contributions
- at the date the settlement agreement was made, HMRC did not have the power to recover the Income Tax or National Insurance contributions
The application process
These are the steps of the application process:
- HMRC will write to you soon inviting you to apply for a refund or waiver
- complete the form HMRC send you, and send it back to them by 30 September 2021
- HMRC will consider your application and they will send you a repayment decision
- if you agree with the decision, you must accept within 2 months of HMRC’s decision
- if you disagree, and would like the decision to be reviewed, you must request a review within 2 months of HMRC’s decision
- if you request a review, HMRC will send you an updated repayment decision which you can either:
- agree and accept – within 2 months of the date of issue of the updated decision
- disagree – the application is terminated
Richard Coombs, Tax Partner at Bates Weston comments:
“The opportunity to apply for repayment or waiver of the Income Tax or National Insurance paid as part of a settlement agreement with HMRC is welcome, but understanding the process to submit a robust application is complex. Whether you are an individual, employee or an employer has a bearing on the application and professional guidance is recommended. In particular, we expect that loans made after 10 December 2010 are unlikely to qualify for a refund as we expect very few clients to have met the minimum disclosure requirements detailed in the legislation, although it is always worth checking. However, for loans made before 10 December 2010 we expect the position to be more straightforward.”
If you would like to talk to our tax team, without obligation, about your own circumstances, please do get in touch with Richard.
Disclaimer: The information contained in this article is generic in nature. You should take no action based upon it without consulting ourselves or an alternative professional advisor. All information correct at time of publication: 27 July 2020
