Q: My client has arranged for their company to process the ‘loan charge’ in relation to all of their outstanding loans from an EFRBS scheme, as well as paid the company the tax and employee NIC (to avoid the benefit in kind). Does this mean everything is resolved now, concerning the tax and reporting liabilities for the EFRBS?
A: The client still has a number of obligations remaining. I have outlined these below, alongside the potential penalties.
Reporting outstanding disguised remuneration loans to HMRC
Details of all the outstanding loans must be reported to HMRC before 1 October 2019 using their online service. This applies irrespective of how the loan charge has/has not been processed.
You can access the form via the guidance at: https://www.gov.uk/guidance/report-and-account-for-your-disguised-remuneration-loan-charge#how-to-report-a-disguised-remuneration-loan
Failure to report to HMRC by this deadline will result in the following penalties:
an initial penalty of £300
further daily penalties of up to £60 a day for as long as the information remains outstanding, up to a maximum of 90 days
a penalty not exceeding £3,000 for each inaccuracy deliberately or carelessly included within the information provided, or discovered after the information has been submitted and you do not tell HMRC
Including details of outstanding disguised remuneration loans within Self-Assessment Tax Returns (SATR)
The client also needs to include the details within their 2018/2019 SATR. This is subject to the usual deadline of 31 October 2019 for paper returns, or 31 January 2020 for electronic returns.
As the company has processed the loans through payroll, the client will receive details of this within their P60, which should be included in the employment pages. A new box has been added in the 2019 employment pages (SA102) which must be completed.
In association with Croner Taxwise
Image designed by Freepik