However, only a small proportion of those who applied for a refund have received any cash, meaning hundreds of taxpayers face a longer wait for their money to be returned.

HMRC has so far refunded, or waived, £3.6 million to 50 taxpayers who paid the loan charge, at an average of £72,000 each, a Freedom of Information request submitted by The Daily Telegraph has revealed.

As of April 2021, HMRC had received almost 1,850 applications for a refund, but The Daily Telegraph reported that it has taken longer than anticipated to process repayments due to the complex nature of the settlements.

The final figure that HMRC will have to pay back to taxpayers is therefore expected to rise.

In 2019, the UK Government commissioned a review of the loan charge, designed to tackle tax avoidance, which resulted in a narrower scope under which HMRC could demand more tax be paid.

Under the new rules, anyone who had entered into the “disguised remuneration schemes” before December 2010 was exempt from the charge, meaning some taxpayers were entitled to a refund.

The review concluded the loan charge policy had gone “too far” and failed to consider the serious distress it would cause the 50,000 taxpayers affected.

The remuneration schemes paid workers’ salaries in the form of loans which were never intended to be repaid and meant they paid less income tax and National Insurance. Employees were able to take home up to 100% of their salaries, although they paid fees to scheme promoters.

Many of those affected were average-to-low earners working on freelance contracts as nurses or IT consultants, who said they were pressured into the arrangements by pushy salesmen.

The loan charge still applies to anyone who entered into the schemes from 2011 without declaring them.