Apply for a refund or waiver from the Disguised Remuneration Repayment Scheme 2020
Check if you qualify for a refund of Income Tax and National Insurance contributions paid, or a waiver of payments being made, in settlement of disguised remuneration scheme use.
The deadline for applications for the Scheme has now passed and we no longer issue applications forms.
This guidance outlines how HMRC will administer the Disguised Remuneration Repayment Scheme 2020 (the ‘Scheme’).
It is intended to help you decide whether you may be eligible for a refund or waiver of voluntary restitution under the Scheme. It also provides information about how to make an application and explains how an application will be dealt with.
Your application will be decided in accordance with the terms of the Scheme as it applies to your particular facts. Nothing in this guidance limits the discretion HMRC has under the Scheme and, should the content or effect of this guidance differ to the terms or effect of the Scheme, the Scheme will apply.
This guidance, along with the Scheme, may be amended at any time.
This guidance is for those who used disguised remuneration schemes between 6 April 1999 and 5 April 2016, from which disguised remuneration loans were made, and settled the outstanding tax due with HMRC, on or after 16 March 2016 and before 11 March 2020. If this applies to you and you paid some or all of the tax or National Insurance contributions voluntarily to avoid the loan charge, you may be eligible for a refund or waiver.
If we think you’re eligible for a refund or waiver, we’ll have written to you inviting you to apply.
Payments that can be refunded or waived
For certain voluntary payments of Income Tax and National Insurance contributions, HMRC may:
- refund amounts that were paid in disguised remuneration scheme settlements
- waive amounts due that you have not paid yet
Voluntary payments of Income Tax and National Insurance contributions may be repaid or waived where they relate to certain 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
These amounts are referred to in the Scheme as ‘voluntary restitution’.
We may also refund or waive interest paid, or due to be paid, in settlement on voluntary restitution.
For a refund or waiver to be made, the settlement date must have been on or after 16 March 2016 and before 11 March 2020.
A ‘reasonable disclosure’ must have been made in either Income Tax Self Assessment returns, or Corporation Tax Self Assessment returns, for each disguised remuneration loan received.
The information disclosed in the returns must have:
- made it clear to us that there was a disguised remuneration loan, and who it was made to
- identified the arrangements or transactions which resulted in the loan being made
- been sufficient for it to be clear that Income Tax and National Insurance contributions were due in relation to that loan
The information could have been provided through more than one return, but these must be the same type of return, that is, 2 or more Income Tax Self Assessment returns, or 2 or more Corporation Tax Self Assessment returns. A reasonable disclosure could not have been made where the information for a loan was provided in a combination of 2 different types of tax return.
The information could also be included in any accompanying accounts, statements or documents which were provided with the return.
If you’re paying your settlement in instalments
We may be able to reduce your future payments by waiving some or all of your instalments.
If you’ve stopped making the payments that were due, you may still need to make some payments to finalise your settlement. We can let you know what you now owe and agree how you can pay those amounts when we process your application.
Amounts that will not be refunded
We’ll not refund any voluntary payments of Income Tax or National Insurance contributions made in respect of amounts paid or contributed through a disguised remuneration scheme if either:
- no loans were made from the scheme
- these amounts relate to a loan which was not outstanding at the date the settlement was made
Adjustment amounts
If you are eligible for a refund or waiver of amounts included in the settlement, this may result in an advantage for tax, National Insurance contributions or interest. You can find out what an advantage is in paragraph 4.1 of the Scheme.
Examples of where an adjustment amount maybe needed:
a) If you’re applying as an individual and entered into a secondary tax planning arrangement where:
- this created an alternative or additional tax charge on the same income on which you paid voluntary restitution
- we were able to recover the tax or National Insurance charged on the secondary planning at the time of your settlement
b) If you’re applying as an employee and:
- you or your employer entered into a secondary tax planning arrangement where:
- this created an alternative or additional tax charged on the same income on which you paid voluntary restitution
- we were able to recover the tax or National Insurance charged on the secondary planning at the time of your settlement
- you had any transitional relief, for settlements reached by 5 April 2017, against investments made through a disguised remuneration scheme
c) If you’re applying as an employer and:
- you or your employee entered into a secondary tax planning arrangement where:
- this created an alternative or additional tax charge on the same income on which you paid voluntary restitution
- we were able to recover the tax or National Insurance charged on the secondary planning at the time of your settlement
- you had any transitional relief, for settlements reached by 5 April 2017, against investments made through a disguised remuneration scheme
We will look at what adjustment needs to be made to offset any advantage and include this in the repayment decision as the adjustment amount. This will then affect the amount that is paid to you, or the amount you will need to repay.
Example 1
Company 1 is eligible for a refund of £10,000.
There is an adjustment amount of £1,000.
The amount repayable to Company 1 = £9,000.
Where an applicant is eligible for a refund, any adjustment amount will reduce the amount that is repayable.
Example 2
Company 2 is eligible for a waiver of £10,000 and a refund of £1,000.
There is an adjustment amount of £1,500.
The amount to which Company 2 is eligible for a refund is offset against the adjustment amount, this reduces the amount repayable to Company 2 to £0 and leaves an adjustment amount balance of £500.
As a condition of granting the waiver of £10,000, Company 2 will need to agree to pay the £500 adjustment amount in the Scheme Legal Documentation. This will reduce the total amount Company 2 now needs to pay by £9,500.
The application process
What happens next:
- We’ll write to you inviting you to apply for a refund or waiver.
- You should complete the form we’ll send you, and send it back to us by 30 September 2021.
- We’ll consider your application and when we have all of the information we need we’ll send you a repayment decision.
- If you agree with the decision, you must accept within 2 months of our decision.
- If you disagree, and would like the decision to be reviewed, you must request a review within 2 months of our decision.
- If you request a review we’ll 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
- Once we have received your acceptance, we will prepare and provide you with legal documentation to sign.
You can provide us with the details of how you’d like any refund to be made with your acceptance.
If at any stage you need more time or have any questions, tell us by contacting us by phone on: 03000 534 226.
Who can apply
Only the person (signatory), or persons (signatories), who signed the settlement agreement can make an application, regardless of who paid the settlement amount or amounts.
However, there are 3 exceptions to this:
- if a signatory has died, their personal representative can apply
- if a signatory lacks the mental capacity needed to make an application, their deputy can apply
- in certain circumstances, where a settlement agreement has been replaced with another, those who signed the replacement agreement can apply
If more than one person signed the agreement, then they must all jointly apply.
If your company was a signatory to an agreement and it’s been struck off the Company Register and dissolved, it must be restored to the Company Register to be able to make an application for a refund or waiver. You may wish to seek professional advice before taking any action to do this.
If a signatory company is insolvent, the application can be made by the insolvency practitioner acting for the company.
The deadline for applications for the Scheme has now passed and we will no longer be issuing applications forms.
After you apply
If we need more information
We may ask for additional information to make sure you receive the right amount of refund or waiver. If we need more information, we’ll write to you to tell you what we need and the date we need it by.
If you want to withdraw your application
If you decide during the application process that you do not want a refund or waiver, you can change your mind and withdraw the application. We only need one person’s request to withdraw the application, so you should talk to any other applicants before taking this step.
You can withdraw your application by contacting us by phone on: 03000 534 226, or by email at: ca.loancharge@hmrc.gov.uk.
Repayment decisions
We’ll contact you about our decision.
If you’re eligible for a refund or waiver, we’ll tell you:
- the amounts on which you are eligible
- anything which will reduce any refund, for example, adjustment amounts
If we decide that you’re not eligible for a refund or waiver, we’ll tell you why.
You’ll need to tell us whether or not you accept our decision within 2 months and we will give you a form for you to do this.
If more than one person or persons are applying jointly, the form will need to be sent by each applicant or by all of the applicants jointly. This will mean you must all agree whether or not to accept our decision.
If you do not agree with the repayment decision
If you do not agree with our decision, you can ask us to review it within 2 months of the date the decision was issued. Write to us and tell us:
- your details so we can identify the repayment decision we sent you
- why you want a review
- why you think our repayment decision is wrong
- about any correction you want us to make to the repayment decision
We’ll let you know if we need any more information and when we need it by.
After a review
We’ll send an updated repayment decision within 2 months of receiving your review request.
The updated decision can confirm our repayment decision or vary it.
If you want to accept the updated refund or waiver amount you should follow the guidance for accepting a repayment decision. We must receive your acceptance within 2 months of the date the updated repayment decision was issued.
If you do not accept the updated decision, you cannot ask for a further review. However, if you think we’ve made a mistake in our updated decision, you should write back explaining why you think that decision is wrong.
If we do not accept there’s been a mistake made and you want to complain, you can raise your concerns through our complaints procedure.
If you accept the repayment decision
You’ll need to confirm in writing if you want to accept the refund or waiver. You need to do this within 2 months of the date we issued the repayment decision.
You can tell us if you want any refund to be fully or partly set off against outstanding tax you owe us. If you’re due a refund and it should go to one person, we need to know their:
- name
- address bank details
If the refund should go to more than one person, we need the same details for each payee and the amounts or proportions each of them should get.
If we do not get your acceptance or a review request
If we do not get either an acceptance or request for a review within 2 months of the date of issue of the repayment decision, we may terminate your application. If you cannot reply within the 2 months, it’s important for you tell us why and to discuss whether you can have more time by contacting us by phone on: 03000 534 226.
Amended repayment decisions
We may amend a repayment decision, or an updated repayment decision if, for example, we’ve made a mistake in the repayment decision we sent to you.
We can only do this up to the date your application is finalised. A different process applies if we find out afterwards that we’ve overpaid you.
An amended repayment decision gives you the same options as a repayment decision. You can accept our amended repayment decision or ask for a review. We will provide you with a form to do this.
Legal documentation and other conditions
If you’re eligible for a refund or waiver, and you’ve accepted the repayment decision, certain conditions will need to be met before any refund is made, or waiver is granted.
The conditions will be determined based on your specific circumstances, although in all cases any refund or waiver will be conditional on the applicant and HMRC entering into a new agreement which reflects the repayment decision. This new agreement is referred to as the legal documentation.
When we receive your written acceptance of the repayment decision, we’ll send you an agreement to sign which will record the changes that are to be made to your settlement agreement. The agreement may also include additional conditions that must be agreed to for you to receive the refund or waiver you’re eligible for.
Once we have reviewed your application, we will tell you, as soon as possible, about any other conditions which need to be met, this will be additional to completing the legal documentation.
The additional conditions we expect to be met include:
- where you are eligible for a refund, you will need to confirm how the amounts are to be paid and give the relevant payment details for all recipients
- where there is an adjustment amount, a refund or waiver may be conditional on you agreeing in the legal documentation to pay it, or a part of it
Once all of the conditions are met, your application will be treated as having been fully and finally determined. This means that you will not be eligible for any other refund or waiver of voluntary restitution relating to the same settlement agreement under the Disguised Remuneration Repayment Scheme 2020.
If we refund or waive too much
If, after making a refund or waiver, we find out that we’ve overpaid you, we’ll write to you to let you know.
We can only do this up to one year from the date the:
- documentation for a waiver became legally binding
- refund is made
If you realise that you’ve been overpaid before this, you should let us know.
Tax or other implications
A refund or waiver under the scheme may carry tax or other implications which you will need to consider. You may wish to seek professional advice before making a decision on whether to complete or finalise your application.
You can get information about customer support from the HMRC issue briefing: settling disguised remuneration scheme use and paying the loan charge guide.
For Inheritance tax
Refunds and waivers of Income Tax and National Insurance contributions will not change the calculation of Inheritance Tax included in the settlement you reached with us. This means there’s no Inheritance Tax to refund as a consequence of the Scheme.
There may be an occasion where there’s additional Inheritance Tax to pay. If the settlement you reached with us was on the basis that payments to HMRC were treated as the trustee’s expenses, the payments reduced the amount on which Inheritance Tax is, or was, due. Where any of these payments are refunded, the amount previously treated as the trustee’s expenses will be reduced, meaning there may be additional Inheritance Tax to pay. The additional Inheritance Tax will be adjusted for in the calculation of your refund.
If any assets including money and outstanding loans have remained in trust following the settlement with HMRC, inheritance tax charges may arise in the future.
Where an application is made or assumed by a personal representative, any refund or waiver may affect the assets of the estate on which Inheritance Tax is due.
Corporation Tax and Income Tax
The amounts refunded or waived, that have been previously treated as an allowable deduction in calculating the profits chargeable to Corporation Tax or Income Tax for any period, or for which relief was instead given in settlement, may be a taxable receipt.
Last updated 2 December 2021 + show all updates
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The deadline for applications for the Scheme has now passed.
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There has been a number of changes made to the guide.
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First published.