Loan charge victims need fair resolution and full investigation, urge MPs
The controversial tax avoidance clampdown was introduced in the 2016 Budget to address tax loss from ‘disguised remuneration’ schemes.
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Your support makes all the difference.A fair resolution and “full independent investigation” is required for the loan charge to avoid “another Horizon scandal”, according to MPs.
The controversial tax avoidance clampdown has affected an estimated 60,000 people and been linked to 10 suicides, the Commons was told.
DUP MP Sammy Wilson said there are “frightening parallels” between the loan charge and the Horizon IT scandal, which saw more than 700 Post Office branch managers handed criminal convictions after faulty Fujitsu accounting software made it appear as though money was missing.
I would ask the minister to grasp this nettle and ensure that we don't have another Horizon scandal.
Mr Wilson and other MPs tabled a parliamentary motion on the loan charge that warned many people are facing “unaffordable demands”, there is the “risk of further suicides” and that a review conducted by Lord Morse was “limited and not genuinely independent” of the Treasury and HMRC.
They called on the Government to work with all parties to find a “fair resolution and for a full independent investigation, including into the conduct of HMRC”.
MPs supported the non-binding motion, but Treasury minister Nigel Huddleston said he did not believe the case had been made for another review.
The loan charge is an anti-avoidance measure introduced in the 2016 Budget to address tax loss from what the Treasury called a variety of “disguised remuneration” schemes.
Under such schemes, individuals – often freelancers or self-employed contractors – were paid via a third party in the form of loans, replacing part or all of their salary.
Due to loans not incurring income tax, the Government decided that those entering into such schemes, which dated back to 1999, had been skirting their tax payments and demanded income tax to be paid on the full amounts received over that period.
Following the review by Lord Morse, the Government agreed to reduce the tax bill of 30,000 people caught up in the loan charge.
They know they have done wrong. And they have known it for some time. And they have known the consequences of the death of people and enormous harm to people, and yet they have continued to do the same thing over and over again.
Mr Wilson, co-chairman of the all-party parliamentary group (APPG) on the loan charge and taxpayer fairness, said it appeared as if HMRC is going after people who they regard as “easy targets” rather than the promoters of such schemes.
The MP for East Antrim also said the loan charge should be repealed as it is “not fit for purpose”, before saying: “I would ask the minister to grasp this nettle and ensure that we don’t have another Horizon scandal.”
Conservative MP Greg Smith (Buckingham), another co-chairman of the APPG, said he has been left feeling “profoundly troubled” by “one of the most significant crises faced by British taxpayers” in his living memory.
He said: “The loan charge has and is still haunting thousands of our constituents across the whole country, bringing with it a train of despair and destruction that should weigh heavily upon HMRC and indeed all of us in this House.”
Mr Smith said a “fair settlement” is needed for the victims of the loan charge, adding it must take into account “reality” and understands that people acted in good faith and took professional advice.
Conservative former minister Sir Desmond Swayne claimed HRMC had pursued a “vendetta” against the victims and said MPs were “culpable” for not having spotted and examined the consequences of measures approved in 2017.
Conservative former cabinet minister Sir Jacob Rees-Mogg added it was “right to say that those of us who were here in 2017 should be appalled that this was able to get through without being noticed, without being stopped”.
He said: “We are here to seek redress of grievance from an overmighty executive which abuses its power.”
Tory former cabinet minister Sir David Davis, on HMRC previously referring itself to a watchdog over suicides, said: “That is as close as you get when dealing with Government departments to a confession.
“They know they have done wrong. And they have known it for some time. And they have known the consequences of the death of people and enormous harm to people, and yet they have continued to do the same thing over and over again.”
For Labour, shadow Treasury minister Darren Jones said: “I urge the Government to learn the lessons of other scandals, stop burying their heads in the sand, for the minister to be brave and to do the right thing.”
Mr Huddleston said the schemes were “never legitimate, they were always tax avoidance”, but noted there are “some people who are being deceived and forced into errors that are completely inappropriate”.
He said: “Those are many of the cases we’ve heard today. It’s still important that we keep this principle though that the ultimate responsibility lies with those individuals but the way we go about making sure that tax affairs are straightened is really important, that we make sure we do the right thing.”
Mr Huddleston said HMRC does seek, where possible, to collect revenue from employers and later told MPs: “I don’t believe the case has been made for another review, I stand ready always to listen but that review (by Lord Morse) stood up well … it was thorough, significant and 19 of the changes were implemented, so a hugely impactful review.”
Mr Huddleston said HMRC has made 10 referrals to the Independent Office for Police Conduct where a person has taken their life, adding HMRC has conducted internal investigations.
He added: “Nine of the 10 investigations have concluded and although no misconduct was found, HMRC is taking forward organisational learning from these matters to further strengthen the support provided in identifying individuals who need extra help.”
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