---
title: "HMRC Has Sent Me a Loan Charge Settlement Offer: Should I Accept It?"
url: https://taxdisputes.co.uk/2026/11/hmrc-loan-charge-settlement-offer-accept/
date: 2026-11-04
modified: 2026-11-04
lang: en
author: "Tax Dispute Solicitors"
description: "For most people with an unpaid loan charge liability, accepting the offer will cost less than any other route, but you should only sign once the figures have been checked and you understand what you are giving up. A signed settlement agreement is a contract settlement under section 27(7) of the Finance Act 2026, so there is no appeal against the figure you agree. The answer changes if you have already paid more than the settlement amount, or if you have a genuine argument that the loan charge does not apply to you at all."
categories:
  - "HMRC Assessments"
  - "Legal Insights"
  - "Tax avoidance"
tags:
  - "contract settlement"
  - "contractor loan schemes"
  - "disguised remuneration"
  - "HMRC settlement offer"
  - "HMRC Tax Disputes"
  - "loan charge"
  - "loan charge settlement scheme"
  - "regulation 12 SI 2026/821"
  - "regulation 14 SI 2026/821"
  - "regulation 9 SI 2026/821"
  - "Schedule 11 Finance (No. 2) Act 2017"
  - "Schedule 12 Finance (No. 2) Act 2017"
  - "section 14B Limitation Act 1980"
  - "section 25 Finance Act 2026"
  - "section 26 Finance Act 2026"
  - "section 27(7) Finance Act 2026"
  - "section 31A TMA 1970"
  - "SI 2026/821"
image: https://taxdisputes.co.uk/wp-content/uploads/2026/11/hourglass_barristers_chambers-1024x576.webp
word_count: 2423
---

# HMRC Has Sent Me a Loan Charge Settlement Offer: Should I Accept It?

**For most people with an unpaid loan charge liability, accepting the offer will cost less than any other route, but you should only sign once the figures have been checked and you understand what you are giving up. A signed settlement agreement is a contract settlement under section 27(7) of the Finance Act 2026, so there is no appeal against the figure you agree. The answer changes if you have already paid more than the settlement amount, or if you have a genuine argument that the loan charge does not apply to you at all.**

The people asking this are usually former contractors and locums paid through loan schemes ten or fifteen years ago. What surprises them is that the scheme has traps of its own: money already paid above the settlement figure is not refunded, and a counter-offer can cut the time left to accept from 90 days to 30. We explain the background on [our page on disguised remuneration and the loan charge](https://taxdisputes.co.uk/disguised-remuneration-loan-charge-hmrc-tax-appeals-lawyers/).

## What the Loan Charge Settlement Scheme Is

Section 25(1) of the Finance Act 2026 requires the Treasury to "by regulations provide for a scheme under which persons who are liable to pay loan charge amounts may enter into an agreement" with HMRC. The regulations are the Employment and Trading Income etc. (Loan Charge Settlement Scheme) Regulations 2026, SI 2026/821, in force from 5 August 2026. Regulation 8 says HMRC "must make a settlement offer" to anyone it believes is liable, subject to one exclusion covered below. Our [tax litigation practice page](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) describes the HMRC disputes we take on.

The loan charge itself sits in Schedule 11 to the Finance (No. 2) Act 2017 for employees and Schedule 12 for the self-employed. Paragraph 1(1) of Schedule 11 catches a loan that "was made on or after 9 December 2010" where an amount is "outstanding immediately before the end of 5 April 2019". Compared with the 2020 terms and [HMRC's means-based settlements for tax avoidance users](https://taxdisputes.co.uk/2021/05/hmrcs-change-in-approach-on-tax-avoidance-means-based-settlements/), the new terms are generous.

### Want legal advice from Tax Solicitors on your case?
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## How HMRC Works Out the Settlement Amount

Regulation 10 sets out eleven steps. HMRC adds the loans to the other payments and fees under the arrangements, then spreads the total across the tax years in which you received the money. It then calculates the extra income tax and national insurance that would have been due in those years. Because the loan charge taxed years of income in 2018 to 2019 alone, this figure is often lower. Any money HMRC collected earlier, for example under [an accelerated payment notice](https://taxdisputes.co.uk/2026/10/accelerated-payment-notice-can-you-object-to-an-apn/), is dealt with by separate credit rules.

Each year's figure is reduced by 10% of the first £50,000 attributed to it and 5% of the next £100,000, and a further £5,000 comes off the total (steps 6 and 8). Under steps 9 to 11, where the result is more than £70,000 below your "loan charge gross liability", the settlement amount becomes that liability minus £70,000. For larger cases that cap decides the outcome, so [how the original loan charge was calculated](https://taxdisputes.co.uk/disguised-remuneration-loan-charge-hmrc-tax-appeals-lawyers/) is worth revisiting.

## Can the Figures in the Offer Be Challenged?

Regulation 9(4) requires the offer to describe the loan charge amounts and connected amounts it covers. Section 27(1)(f) allows estimates, and HMRC's guidance says it estimates promoter fees it does not know. Check each loan value and its tax year against your own records. A loan made before 9 December 2010 falls outside paragraph 1(1)(b) of Schedule 11, so query any that appears. Our [guidance on tax avoidance schemes and COP 8 investigations](https://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/) explains how HMRC builds its picture of a scheme.

There is no statutory appeal against an offer. You correspond with your caseworker, and HMRC's guidance says contacting it does not commit you and that corrected figures come as a new offer. The approach in [our guide to resolving HMRC disputes through alternative dispute resolution](https://taxdisputes.co.uk/2026/01/hmrc-tax-disputes-resolved-through-adr-alternative-dispute-resolution/) applies. Where the sums are large, [a second opinion from a solicitor and barrister](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) costs far less than signing the wrong figure.

## What You Agree to When You Sign

Under section 25(5), "every relevant loan charge amount ceases to be, or will no longer become, payable" once you accept, and you owe the settlement amount instead. Regulation 12 lets HMRC require you to withdraw court or tribunal proceedings about those amounts, agree not to sue HMRC over them and "forgo any claim for a repayment of tax". If you have a live [appeal before the First-tier Tax Tribunal](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/), regulation 12(5) at least stops HMRC requiring you to pay its costs of proceedings it started.

Regulation 13(1) treats the settlement amount "as if they are an amount of tax recoverable as a debt due to the Crown", and section 25(1A) of the Commissioners for Revenue and Customs Act 2005 lets HMRC sue on a contract settlement in the county court. HMRC's guidance offers instalments over up to five years, with interest, much like [an HMRC Time to Pay arrangement](https://taxdisputes.co.uk/2026/04/hmrc-time-to-pay-arrangements-explained/). Missed instalments can lead to [deductions taken directly from your bank account](https://taxdisputes.co.uk/2026/10/can-hmrc-take-money-directly-from-my-bank-account/) or the route described in [our article on whether HMRC can make you bankrupt](https://windinguppetitionsolicitors.co.uk/can-hmrc-make-me-bankrupt-directors-sole-traders-bankruptcy-risks-explained/).

## Money Already Paid: The Rule That Catches People Out

Regulation 14 credits earlier payments against the settlement amount, but only "to no greater extent than discharging" it. Under regulation 14(2)(b), HMRC "may not" credit an ordinary overpayment elsewhere or "repay the amount of the relevant payment". Someone who has paid £60,000 and is offered settlement at £35,000 does not get £25,000 back. Repayment arguments here have a poor record, as [our analysis of the limits of judicial review for disguised remuneration repayment claims](https://taxdisputes.co.uk/2026/07/fluid-system-technologies-v-hmrc-disguised-remuneration-repayment-claims-and-the-limits-of-judicial-review/) shows.

An "advanced payment" is treated differently. Regulation 14(4) defines it as a payment on account or a payment under section 55 or 56 of the Taxes Management Act 1970, and regulation 14(2)(c) allows any excess to be credited or repaid. HMRC's guidance treats accelerated payment notice money this way. How each payment was made can be worth thousands of pounds, so it is the first thing [we review on an HMRC tax appeal](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/). Section 25(4) excludes amounts under a contract settlement made before 1 June 2021.

## Penalties, Other Liabilities and Inheritance Tax

Regulation 12(1)(a) lets HMRC require payment of "additional qualifying amounts". Regulation 12(3) defines these as deliberate and concealed penalties under paragraph 1 of Schedule 24 to the Finance Act 2007 relating to the scheme loans, and other tax assessed or under enquiry on or before 26 November 2025. If HMRC has labelled your conduct deliberate and concealed, [our guide to careless, deliberate and concealed behaviour assessments](https://taxdisputes.co.uk/2026/01/hmrc-behaviour-assessments-careless-deliberate-or-concealed/) explains what it must prove.

Loan scheme money often passed through an offshore trust, which can carry inheritance tax charges. Section 26(1) and regulation 15 provide that unpaid inheritance tax on that trust ceases to be payable if it arises "before the end of the period of 3 months beginning with the day the settlement offer was made". Later charges are not covered. Our [overview of inheritance tax under the Inheritance Tax Act 1984](https://lexlaw.co.uk/solicitors-london/inheritance-tax-past-present-and-future/) explains how those charges arise.

## Counter-Offers and the 30-Day Trap

Regulation 9(7)(c) allows HMRC to make a further offer where an earlier one has expired, been withdrawn, or "been rejected (or a counter-offer to it has been made)". Under regulation 9(9) a further offer stays open for 30 days, against the 90-day minimum for the first. HMRC can also withdraw an offer by written notice. A letter proposing your own figure can lead to a replacement offer and a month to decide, so treat the exchange as a formal negotiation of the kind covered in [our guide to alternative dispute resolution with HMRC](https://taxdisputes.co.uk/2026/01/hmrc-tax-disputes-resolved-through-adr-alternative-dispute-resolution/).

We raise errors as requests to correct specific inputs, and we ask HMRC to confirm the acceptance deadline for any revised offer in writing. Regulation 9(7)(b) lets HMRC extend time, "including after a settlement offer has expired", so ask for an extension in writing while figures are being corrected. Where HMRC refuses a correction and a large sum turns on it, get [a second opinion on the merits](https://lexlaw.co.uk/legal-second-opinion-solicitor-barrister/) before deciding.

## When Is Rejecting the Offer the Better Choice?

If you do not accept, HMRC's guidance says the full liability and interest fall due under its normal processes. Rejection makes sense only where the liability itself is open to challenge, for example a loan made before 9 December 2010 or doubt over whether HMRC assessed in time. Under regulation 2, an amount never assessed becomes "final" once "the period specified by an enactment for HMRC to assess that amount" has expired. See [our explanation of HMRC discovery assessments](https://taxdisputes.co.uk/2026/05/hmrc-discovery-assessments-explained/).

Weigh the cost of fighting against the discount you lose. As [our article on recovering legal costs from HMRC](https://taxdisputes.co.uk/2026/10/can-you-recover-legal-costs-from-hmrc-if-you-win/) explains, rule 10 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 means a win does not ordinarily bring your costs back. HMRC's guidance also gives only 90 days to engage once an appeal is notified, so notifying the tribunal can shorten your window.

## Employers, Personal Service Companies and Directors

Regulation 9(5) lets an offer to an individual cover amounts owed by the employer, and an offer to an employer cover its employees. HMRC's guidance says it pursues an employer that still exists first, but asks a sole director of a personal service company to settle once the company appeals. A company that cannot pay faces the steps in [our directors' guide to HMRC winding up petitions](https://windinguppetitionsolicitors.co.uk/can-hmrc-wind-up-my-company-directors-guide-to-winding-up-petitions/), and its directors should understand [HMRC joint liability notices under Schedule 13 Finance Act 2020](https://taxdisputes.co.uk/2026/03/schedule-13-finance-act-2020-comprehensive-guide-to-hmrc-joint-liability-notices/).

Section 25(2)(b) excuses HMRC from making an offer to anyone it "reasonably suspect[s]" is or has been "a promoter or introducer" under Part 7 of the Finance Act 2004, or a director or shadow director of one. Some contractors were paid to refer colleagues, and HMRC may argue that made them introducers. If former colleagues have offers and you do not, this may be why, and our [page on tax avoidance scheme investigations](https://taxdisputes.co.uk/tax-avoidance-cop-8-investigations-solicitors-london/) explains HMRC's approach.

## Does Settling With HMRC Stop a Claim Against the Adviser Who Sold the Scheme?

Many people searching this assume settlement ends everything. Regulation 12(1)(c) concerns claims "against HMRC" only, and regulation 12 says nothing about advisers or promoters. Our view is that accepting does not of itself release a claim against the person who advised you to join. A fixed settlement figure can make the loss easier to value, although the adviser may argue you should have settled sooner. Our [guide to claims for negligent tax scheme advice](https://professionalnegligenceclaimsolicitors.co.uk/negligent-tax-scheme-advice-claims-explained/) and our article on [suing a tax adviser over HMRC penalties](https://professionalnegligenceclaimsolicitors.co.uk/can-you-sue-a-tax-adviser-over-hmrc-penalties/) explain how these claims are valued.

Time is usually the bigger problem. Section 2 of the Limitation Act 1980 gives six years, and section 14A(4)(b) can extend this to "three years from the starting date" when you first had the knowledge needed to sue. Section 14B then bars any action brought more than fifteen years after the negligent act or omission, so a claim over advice given in 2011 runs out during 2026. See [our explanation of the limitation period for professional negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/what-is-the-limitation-period-for-a-professional-negligence-claim/) and [our page on negligent tax advice claims](https://taxdisputes.co.uk/professional-negligence-negligent-tax-advice-sue-accountant-claims/).

## The Deadline That Actually Governs Your Position

Regulation 9(8) keeps an offer open for "90 days, or such longer period as the Commissioners may reasonably determine, beginning with the day the offer is made", so the clock starts on the letter's date. HMRC's guidance says most people can accept until their liability becomes final or their appeal is notified to the tribunal, whichever is earlier, and 90 days applies where either has already happened. Rely on the deadline in your own letter. If it has passed, [our article on late appeals against HMRC](https://taxdisputes.co.uk/2026/09/late-appeals-against-hmrc-is-it-too-late/) explains what can still be done.

A second clock may also be running. Section 31A(1) of the Taxes Management Act 1970 requires an appeal against a closure notice or assessment "within 30 days after the specified date". If that passes, the amount may become final under regulation 2 and close your window. Section 49(2) allows a late appeal if HMRC agree or "the tribunal gives permission", which is discretionary, as [our article on late HMRC tax tribunal appeals](https://lexlaw.co.uk/solicitors-london/late-hmrc-tax-tribunal-appeals-medpro-martland-your-options/) explains. If HMRC turns to bankruptcy, read [our guide to breathing space and HMRC bankruptcy action](https://windinguppetitionsolicitors.co.uk/breathing-space-can-it-stop-hmrc-or-another-creditor-making-you-bankrupt/).

## How We Can Help

We check loan charge settlement offers line by line against the statutory calculation, identify payments that qualify as advanced payments, and deal with HMRC caseworkers on corrections and extensions. Where the liability itself can be challenged, we advise on appeal and represent clients before the tribunal. We do not offer free legal advice or legal aid, and we generally take on substantial matters. Our [disguised remuneration page](https://taxdisputes.co.uk/disguised-remuneration-loan-charge-hmrc-tax-appeals-lawyers/) describes this work.

We are dual qualified solicitors and barristers with chambers in Middle Temple, next to the Royal Courts of Justice. We offer a fixed fee advice conference with both a solicitor and a barrister, where we can review your offer, your payment history and any claim against your former adviser together. To begin, complete [our case assessment form](https://taxdisputes.co.uk/legal-case-assessment/).

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*This article is for general information only and does not constitute legal advice. You should take specific advice on your own circumstances before acting on any settlement offer.*

### Frequently Asked Questions (FAQs)

How long do I have to accept a loan charge settlement offer?
Regulation 9(8) of SI 2026/821 keeps a first offer open for 90 days from the day it is made, or longer if HMRC reasonably decides. HMRC's guidance says most people can accept until their liability becomes final or their appeal is notified to the tribunal, whichever comes first. A further offer is open for only 30 days under regulation 9(9).

Can HMRC withdraw a loan charge settlement offer?
Yes. Regulation 9(7)(a) allows HMRC to withdraw an offer by written notice. HMRC can also extend the acceptance period under regulation 9(7)(b), even after the offer has expired, so a written request for more time is worth making while figures are being corrected.

Will HMRC refund me if I have already paid more than the settlement amount?
Usually not. Regulation 14(2)(b) provides that an ordinary payment above the settlement amount can be neither credited against other liabilities nor repaid. An excess advanced payment, meaning a payment on account or under section 55 or 56 of the Taxes Management Act 1970, can be credited or repaid under regulation 14(2)(c).

Do I have to withdraw my tax tribunal appeal to settle?
HMRC can make withdrawal a condition of the offer under regulation 12(1)(b), on terms it proposes. Regulation 12(5) prevents HMRC from requiring you to pay its legal costs in proceedings it brought against you.