Sajid Javid, The Chancellor of the Exchequer, has commissioned an independent review of the Disguised Remuneration Loan Charge.

The Loan Charge, first announced in 2016, targets those who used so-called disguised remuneration schemes to avoid tax as far back as 1999. HMRC aims to recover losses from the arrangements as contractors have to either settle their tax affairs or face penalties by the deadline, which was last month.

According to the UK government, the loan charge remains in force during the review, in line with current legislation.

“The government is clear that disguised remuneration schemes don’t work and their use is unfair to the 99.8% of taxpayers who did not use these schemes,” the government stated. “However, the government recognises that concerns have been raised about the Loan Charge policy as a mechanism for drawing a line under these schemes.”

The Loan Charge has faced criticism from MPs as well as contractor and freelancer organisations.

Last month, several contract and freelance organisations, wrote a letter to Javid and Prime Minister Boris Johnson, calling on them to stop the Loan Charge.

The independent review will be led by Sir Amyas Morse, former Chief Executive and Comptroller and Auditor General of the National Audit Office.

The review will focus on the impact of the Loan Charge on individuals who have directly entered into disguised remuneration schemes. The review will report and provide independent recommendations to the government by mid-November.

The government said that it would consider and respond to the outcome of the Review once it has concluded.

Julia Kermode, Chief Executive of the Freelancer & Contractor Services Association, commented: “It is welcome news that the Chancellor has commissioned an independent review into the loan charge which is having a devastating impact on the lives of many innocent contractors who were unwittingly lured into these toxic schemes and I would like to fire a note of caution to the Government that these schemes will continue to pop up until they shut them down once and for all, particularly when the off-payroll reforms come into effect in the private sector in April 2020.”

“Contractors have been lured into dodgy schemes because they would have faced a drop in their incomes once forced onto the payroll by public sector firms in 2017 when they made blanket ban decisions on hiring contractors,” Kermode said.

Dave Chaplin, CEO and Founder of Contractor Calculator, also commented, “We are delighted to see the Prime Minister sticking to his word and ordering an independent review into the Loan Charge.  We sincerely hope Sir Amyas Morse collates evidence from all parties and cuts through the considerable amount of misleading rhetoric that has been published so that those responsible can be held to account for the damage done to the victims.”