Boris Johnson must heed 224 MPs who fear loan charge saga will have a terrible ending - Greg Wright

As the Dominic Cummings affair has illustrated, a thumping Parliamentary majority cannot protect a Prime Minister from critical voices inside his own party.
David Davis has been a long-standing opponent of the loan charge.David Davis has been a long-standing opponent of the loan charge.
David Davis has been a long-standing opponent of the loan charge.

If the mutterings of dissent grow loud enough, a Government can change course rapidly. Last week, it was revealed that overseas health and care staff will be exempt from paying a surcharge to use the NHS after the Prime Minister came under pressure from within his own party and Labour to change his mind.

Boris Johnson and Sir Keir Starmer sparred over the issue in the Commons, with Mr Johnson insisting that because of the money it raised, charging NHS and care staff was “the right way forward”.

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But after reports of a gathering Tory rebellion, there was a speedy reversal. If the Prime Minister is willing to conduct a U-turn over this policy, in the face of reports of opposition from his own benches, why can’t he scrap the loan charge, a controversial policy which is opposed by 234 Parliamentarians, including more than 100 Conservatives?

The Loan Charge All Party Parliamentary Group includes MPs who rarely agree about anything else. You will find MPs on the right of the Tory Party listed alongside the latest member, Claudia Webbe, the Labour MP for Leicester East, who describes herself as a socialist. So why are so many MPs calling for a re-think over the loan charge?

Perhaps the Loan Charge APPG Twitter feed puts it best: “Many people face huge retrospective loan charge bills despite these never being legally proven on top of loss of livelihoods from COVID19. Despite the crisis HMRC are still pursuing people.”

“Over 220 MPs are asking for a major rethink and that is blatantly being ignored by the Government,’’ said a man who is facing the charge. “I have discovered that my last scheme promoter is still going. I see no reason to keep living if I will be a slave to the state for the rest of my life.”

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Last year, a review led by Sir Amyas Morse made recommendations about the design of the loan charge and its impact on those in its scope.

The review found that disguised remuneration schemes are a form of tax avoidance and that it was right for the Government to try to tackle them.

However, evidence uncovered by the Loan Charge All-Party Parliamentary Group found that, in the vast majority of cases, these arrangements were not entered as aggressive tax avoidance and were often a condition of employment, especially in the public sector.

Law abiding people who trusted their advisers are facing life-changing sums. One case quoted to me was for a sum of £225,000.

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Former Brexit Secretary David Davis has claimed that writing off the “damaging” loan charge would cost a relatively trivial amount when compared with the billions of pounds being provided by the Treasury to support businesses during the pandemic. Mr Davis also had a killer question for Jesse Norman, the Financial Secretary to the Treasury.

He said: “Originally the Treasury forecast that they would raise £3.2bn from this policy, less than £2.5bn from employees. What does he estimate he will now raise?”

Mr Norman said: “The Treasury will have published its estimate at the time of the original tax information that was published.

“I understand the passion he (Mr Davis) brings to the issue, but I would remind him that 99.8 per cent of taxpayers do not engage in disguised remuneration schemes and the fact that we are supporting people across this country in their jobs and in their livelihoods is not in itself a reason to let people who owe tax off the tax that is due.”

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So at the end of this Parliamentary exchange, the listener had no clearer understanding of the amount the loan charge was expected to raise.

We must not forget that seven suicides were reported to the Loan Charge APPG in the last Parliament. The Morse review found the charge had caused “serious distress” to some of the people affected by it.

As a first step to rebuilding his battered credibility, the Prime Minister must heed the prudent voices of MPs who fear the loan charge saga will have a catastrophically bad ending.

Editor’s note: first and foremost - and rarely have I written down these words with more sincerity - I hope this finds you well.

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