EIM47183 - Finance (No 2) Act 2017: part 3A: 2019 loan charge reporting requirement: introduction

In order to verify the level of compliance with the 2019 loan charge (see EIM47000 et seq), Part 3A of Schedule 11 to the Finance (No. 2) Act 2017 sets out a requirement for taxpayers who have used disguised remuneration loan schemes to provide HMRC with information in relation to the loan (“loan charge information”).

There are 4 separate conditions which can result in a person being required to provide loan charge information to HMRC.

If any of these apply, the employee to whom the original loan or loans were made must provide the information to HMRC. The employer or the third party lender who made the loan are not required to report the information. The lender must, upon receiving a request from the employee or the employee’s personal representatives, provide information to the employee, or the employee’s personal representatives, in order that they can comply with their requirement to report loan charge information.

The loan charge information must be provided between 5 April 2019 and 1 October 2020. The legislation provides for penalties to be charged where an individual fails to make a report where required.

Paragraph 35A sets out the conditions which need to apply for an individual to be required to provide loan charge information to HMRC.

Paragraph 35B defines who an “appropriate third party” is for the purposes of the reporting requirement and provides that they must, upon receiving a request from the employee or the employee’s personal representatives, give information regarding the loan to the employee, or the employee’s personal representatives, who is required to report it to HMRC.

Paragraph 35C requires the employee or their personal representatives to provide information relating to the loan charge to HMRC between specified dates.

Paragraph 35D details the information which needs to be provided to HMRC. Paragraph 35E gives the Commissioners for HMRC power to amend the requirements of paragraph 35D.

Paragraph 35F enables penalties to be charged in cases where a person fails to provide loan charge information. It details provisions for initial penalties and penalties for continuing failure to comply.

Paragraph 35G provides for penalties to be charged in certain circumstances where inaccurate loan charge information is supplied.

Paragraph 35H details circumstances where there is a reasonable excuse for a failure to comply with paragraph 35C so that a penalty under section 35F will not apply.

Paragraphs 35I to 35K contain provisions for assessment of a penalty, appeals against decisions that a penalty is payable and the subsequent enforcement of any penalty.