Remuneration Scheme Loan Demands
The Financial Conduct Authority has observed demands being made for people to repay loans, or purported loans, originally provided through disguised remuneration schemes. These schemes historically paid contractors, consultants and agency workers via loans instead of standard salaries to avoid tax, a practice tackled by HMRC through the loan charge.
Enforceability and Third-Party Sales
Many affected borrowers dispute their liability and challenge whether the debts are legally enforceable, particularly after original providers sold the loans to third parties. If a debt is unenforceable, borrowers cannot be forced to pay or have assets seized without a specific order. Parties seeking payment may ask the FCA to agree to a Validation Order, which is formal permission required before such loans can be enforced. The FCA stated that agreement is not guaranteed, and if a Validation Order is required but withheld, the debt remains unenforceable.