Background 

A charge on disguised remuneration (DR) loans, known as the loan charge, came into effect on 5 April 2019 to tackle the use of DR schemes.   

An independent review reported on the policy and its implementation in December 2019. However, the government believes “there are ongoing concerns that warrant further scrutiny”. It has commissioned Ray McCann to lead a new review “to provide a fresh perspective on the matter”. 

Purpose of the review 

The overarching objectives of the review are to: 

• bring the matter to a close for those affected;
• ensure fairness for all taxpayers; and
• ensure that appropriate support is in place for those subject to the loan charge.  

The government has asked McCann to: 

• examine the barriers preventing those who have not already settled and paid their tax liabilities in full from reaching resolution with HMRC; and 
• recommend ways in which they can be encouraged to settle with HMRC. 

HMRC activity 

HMRC has explained the operational activity it will undertake during the review.

By mid-March 2025, HMRC will write to taxpayers who have outstanding amounts relating to their use of DR arrangements to:

• assign them a named HMRC contact;
• set out whether HMRC thinks the DR arrangements they used will be considered by the review; and
• explain what the next steps are for taxpayers. 

If HMRC thinks that a taxpayer’s DR arrangements will be considered by the review, HMRC will not contact the taxpayer during the review except in limited circumstances. The taxpayer can still settle with HMRC if they wish. HMRC will contact the taxpayer after the review has ended to confirm their position.

HMRC will continue to engage with taxpayers where it does not think the DR arrangements will be considered by the review. 

HMRC says that, in both cases, the taxpayer may want to consider making an upfront payment to limit interest charges. 

Multiple DR arrangements

The position is more complicated where a taxpayer has used multiple DR arrangements, some of which will be considered by the review, and some not. HMRC will proceed on the basis set out above, continuing to engage with the taxpayer for those arrangements not considered by the review, and only contacting the taxpayer in limited circumstances for those arrangements considered by the review. 

Should the taxpayer prefer to wait and finalise their tax positions for all their DR arrangements at the same time, they can ask HMRC to pause its work until the review is complete.

Timetable for the review

The review was first announced at the Autumn Budget 2024. 

McCann will present his recommendations to the government by summer 2025 and will publish his findings in a report at a time to be determined by the government. 

The government will publish its response to the review by the Autumn Budget 2025.

Further information

• Written statement made to Parliament by the XST
• Government press release
• Terms of reference
• Policy paper explaining HMRC’s operational activity
• HMRC guidance on reporting and accounting for the loan charge
• McCann delivered ICAEW’s 2024 Hardman lecture, focusing on the government’s efforts to regulate the tax profession.