Chartered accountants and recruitment agencies were complicit in loan charge scandal, says report

The Loan Charge Action Group (LCAG) said it has found evidence that professional advisers profited from recommending scheme providers or umbrella companies that led to people facing life-ruining retrospective tax bills.

Some accountants referred clients to schemes on an industrial basis, the LCAG said.

In a statement, the LCAG said: “The evidence the Loan Charge Action Group has compiled clearly shows that hundreds, possibly thousands, of accountants were recommending schemes to clients and in many cases, telling them not to use a limited company, but to use the scheme instead. One accountant revealed that one well-known scheme had 450 accountancy firms signed up to recommend it to clients.”

In January, Exchequer Secretary to the Treasury, James Murray, commissioned Ray McCann, former President of the Chartered Institute of Taxation, to lead a new review into the loan charge.

The Loan Charge, first announced in 2016, was designed to tackle historical use of contrived tax avoidance schemes that seek to avoid charges of income tax and National Insurance by disguising remuneration as a form of non-taxable payment, typically a loan.

There was an outcry when thousands of people on modest incomes were hit with life-changing bills due to the charge, after they acted on professional advice.

Changes were made to the loan charge following a review in 2019 which reduced its impact, but the Loan Charge & Taxpayer Fairness All Party Parliamentary Group (APPG) still believes the policy is deeply flawed and has repeatedly called for an independent review.

Commenting on the latest LCAG reports, Steve Packham from the LCAG, said: “It has now been exposed that many accountants and recruitment agencies had a direct role in the Loan Charge Scandal, along with promoters and rogue umbrella companies. There are thousands of people who are facing the Loan Charge simply because they took the professional recommendation of a chartered accountant or a recruitment consultant, who they often did not know was taking a commission for the recommendation.

“People had every right to assume they were being given dependable professional advice. Instead, recommendations were being made cynically, due to the kickbacks these professional advisers were receiving.

“It has also now been exposed that hundreds, if not thousands of accountants, were working directly with promoters to sell schemes and profiting handsomely for doing so.

“Many accountants, including chartered accountants, were not acting in their clients’ interests at all, they were actually acting as salespeople for scheme promoters.

“Yet this has so far been ignored by HMRC, by Ministers and by accounting sector bodies, all of which have chosen to look the other way.”

Mr Packham said it was “even more scandalous that many public sector workers have ended up facing the Loan Charge having been employed through Government and local authority-approved recruiters”.

The LCAG says its report reveals that accountants benefitted financially from recommending schemes and received substantial commissions or fees for doing so. In one case, an accountant asked the promoter by email for their fee to be added on top the promoter’s fee, to which the promoter agreed, according to the LCAG.

Mr Packham added: “Both the Chancellor and the Chief Secretary to the Treasury described those caught up in the Loan Charge Scandal as ‘victims of mis-selling’ then went on to announce a review that fails to investigate the mis-selling and rules out action against those involved in it.

"The involvement of accountants and recruitment agencies must be properly investigated, along with the role of promoters, umbrella companies and employers.”

The LCAG report says that many accountants were working directly with promoters, acting as their salespeople, including hosting events to introduce new clients.

It added: “In some cases, accountants had an ongoing financial interest in the schemes, on top of fees for clients signing up to them, so making money from their clients’ continued use of them.”

Accountants also paid referral fees to clients to recommend the scheme to colleagues to encourage them to recruit more people to join the scheme, thus generating more commission for themselves, the LCAG reports claim.

When the review into the loan charge was announced in January, Greg Smith MP, of the Loan Charge and Taxpayer Fairness APPG, described it as “not only a farce, but it is not actually a review of the Loan Charge, which is what the Chancellor promised”.

Mr Smith added: “This is not the review that was promised nor the review that is so desperately needed and the APPG will continue to push for a genuine inquiry into this scandal.”

The tax policy has affected an estimated 60,000 people and been linked to 10 suicides, the House of Commons was told during a debate last year.

Responding to the LCAG reports, an HMRC spokesperson said: “We’re determined to tackle tax avoidance promoters using all the powers at our disposal – including requiring them to disclose their schemes to HMRC, publishing their details on GOV.UK and sending them notices legally requiring them to stop selling their schemes."

The spokesman added: “Failure to comply with Stop Notices can lead to penalties of up to £1m and criminal prosecution.”

The Government recently consulted on a package of measures to further close in on promoters of marketed tax avoidance, the spokesman added.

The consultation closed in June 2025. Draft legislation was published on July 21, 2025.

The statement added: “The Government commissioned an independent review of the loan charge to help bring the matter to a close for those affected whilst ensuring fairness for all taxpayers. The Government will respond by autumn Budget 2025.”

A spokesman for the Institute of Chartered Accountants in England and Wales told The Yorkshire Post it would not be commenting on the LCAG reports.