The group wants to provide what they call “a fair and final resolution” to give closure both to taxpayers facing the charge and also to HM Revenue & Customs (HMRC).

The proposal, sent in a letter to Chancellor Rishi Sunak and Lucy Frazer QC MP, the financial secretary to the treasury, calls for HMRC to offer a settlement opportunity for those facing the Loan Charge and those who have had to settle to avoid it, with taxpayers paying “an affordable proportion” of the tax that HMRC believes is owed.

The proportion would “also reflect the fact that people were victims of mis-selling” and also that “it is unfair… when promoters and advisers who recommended schemes and in many cases agencies and umbrella companies were all involved and profited”, a statement said.

It went on to say that the proposed settlement opportunity would not be intended “for individuals who knowingly took a risk with a tax avoidance scheme, but for contractors and freelancers – gig economy workers – many of whom were either inadvertently dragged into these schemes or who were inadequately advised of the risks. These people are now facing unaffordable and often life-changing tax bills”.

In addition, an acknowledgement should be put forward that “HMRC failed to adequately warn taxpayers and failed to close down schemes at the time so cannot reasonably demand all the disputed tax retrospectively”, the statement said.

The professionals supporting the initiative contend that a resolution to the Loan Charge issue is in the interests of all parts – “for the tens of thousands of families facing the Loan Charge (and those who have settled to avoid it) but also in the interests of HMRC and the government, for both of whom the Loan Charge has become a seriously problematic issue”, the statement said. 

“We look forward to presenting the proposal to the Loan Charge and Taxpayer Fairness All-Party Parliamentary Group (APPG)… We will work with HMRC, the treasury, the APPG and others to find a way to resolve this issue and allow everyone to move on,” the statement said.

Loan schemes – otherwise known as ‘disguised remuneration’ schemes – are used to avoid paying Income Tax and National Insurance.

People who have used these schemes have had their salary paid in loans. This generally means that the person receiving money from a loan scheme gets to keep it all. And they don’t pay any tax on this money, even though it’s clearly income.

The loan charge works by adding together all outstanding loans and taxing them as income in one year.

An estimated 50,000 people have used a loan scheme that will be affected by the loan charge. 

The loan charge was announced at Budget 2016. The charge is applied to disguised remuneration loans that were outstanding on 5 April 2019.

Leading the tax and accounting sector group is specialist tax solicitor Sarah Gabbai of McDermott, Will and Emery.

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