Chief executive of HMRC ‘strongly rejects’ claim it issued a misleading press statement

Last week, HMRC issued a press notice stating that four men and one woman have been arrested on suspicion of fraud in connection with promoting arrangements designed to get around paying the loan charge.

The loan charge was introduced to tackle what the Treasury described as disguised remuneration schemes. In an independent review of the loan charge, Sir Amyas Morse, the former head of the National Audit Office, concluded the schemes were a form of tax avoidance but made a series of recommendations about the design of the charge and its impact on those in its scope.

In a post on Twitter, the Loan Charge All Party Parliamentary Group said the release was “conflating arrests for alleged fraud with those who entered into loan schemes”.

In his letter, to the APPG, Jim Harra Chief Executive and First Permanent Secretary at HMRC said: “I strongly reject the APPG’s recent allegation on Twitter that HMRC’s press release announcing the arrests of five individuals suspected of committing a fraud was misleading.

“One of the key findings of the independent loan charge review was that HMRC needed to do more to keep the public informed about arrangements that it is concerned about.

“We are hugely concerned about so-called ‘loan busting’ schemes and believe we have a duty to warn the public about them. Those most at risk are the very customers the APPG was formed to support.

Mr Harra added: “The press notice does not suggest users of disguised remuneration schemes are also committing a fraud. It clearly states the promoters have been ‘arrested on suspicion of fraud in connection with promoting arrangements designed to get around the loan charge’.

“It also warns people to steer clear of any schemes that make improbable claims to significantly lower their tax bill. I’m disappointed that instead of amplifying this important message, the APPG has chosen to criticise us unduly.”

In response, the APPG has written a letter, in which it said it supported justified HMRC action “in any and all such cases, including in this one.”.

The letter, which is signed by the group’s co-chairs, Sir Ed Davey, Ruth Cadbury and Sir Mike Penning, said: “However, we are concerned and disappointed that the HMRC press release suggests it is about so-called “disguised renumeration” and gives the misleading impression that it is of promoters of schemes subject to the loan charge, for promoting/selling such schemes, when this is not the basis for the arrests.

“In reality, there have so far been no arrests, prosecutions or convictions of anyone or any company that promoted loan schemes now subject to the loan charge, for promoting/selling such schemes.

“The reality remains that those who promoted, sold and recommended loan schemes now subject to the loan charge have not been asked to pay a penny for doing so; whereas those they promoted, sold and recommended the schemes to are facing huge, and in many cases life- ruining, bills.

“We do, however, welcome action on new schemes, which falsely seek to get round the loan charge. We have been informed of several schemes being promoted to vulnerable people claiming that the scheme will remove liability for the loan charge and we will continue to urge action to close down such schemes, something we have seen little of so far. “