Act like a statesman over the loan charge, Mr Sunak - Greg Wright

At a time when the Government’s reputation is in tatters, the Chancellor Rishi Sunak can show he is a statesman by listening to the wise counsel of one of the largest all party Parliamentary groups.
The Chancellor must display compassion and wisdom over the loan charge, says Greg WrightThe Chancellor must display compassion and wisdom over the loan charge, says Greg Wright
The Chancellor must display compassion and wisdom over the loan charge, says Greg Wright

Mr Sunak must order HMRC to reach “reasonable” settlement terms to people facing life-changing tax bills in connection with the loan charge.

Members of the Loan Charge All Party Parliamentary Group have written to Mr Sunak proposing what they describe as a fair and affordable settlement opportunity that taxpayers could enter into without admitting wrongdoing.

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To quote the letter, “This would not only remove the nightmare and reduce the very real risk of self-harm and mental breakdown for many people, but it would also give HMRC a far better chance of concluding settlements and bringing in disputed tax revenue, rather than resulting in many bankruptcies.”

According to the MPs, the reality of the current “settlement terms” being offered by HMRC is that they are grossly unfair and punitive, “rather than being about reaching a reasonable and fair agreement that enables people to pay an affordable amount both in total and in terms of monthly payments”.

The letter continues: “The payment terms that HMRC are insisting on are often far harsher than those imposed on people guilty of criminal offences such as fraud and theft.”

The APPG, one of the largest in Parliament, has also called for a delay of the loan charge declaration from the end of September 2020 to the end of January 2021, to allow a six month period for such voluntary settlement agreements to be agreed.

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Any settlement must surely recognise that, in many cases it was the promoters of the scheme who benefited the most. It is clearly unfair to demand all the disputed tax from the scheme’s user. Many of the promoters - the real villains in this story - are living the high life.

Over the last year, I’ve been contacted by dozens of distressed, law abiding people whose lives have been changed forever by the loan charge saga, including Gayle, who is mourning the loss of her dearly loved father.

He took his own life in 2018. He was a consultant engineer in his late sixties, who had been informed that he faced the loan charge, and an unexpected bill of around £50,000.

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.

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A substantial number of people, especially in the public sector, did not know or understand that their pay arrangements involved loans.

The people affected by the loan charge just want the nightmare to end, so they can get on with their lives.

A woman who is facing the loan charge, said on Twitter: “Loan charge victims’ lives have been on hold too long now, we all need closure to be functional and productive members of society. Rishi Sunak needs to realise that the loan charge won’t generate the revenue HMRC have promised.”

A Government spokesperson stressed that it was the view of HMRC that loans made through these schemes have always been taxable.

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The spokesman added: “The Government will continue to tackle this and other forms of tax avoidance vigorously. HMRC has to be fair to all taxpayers, and this includes those who have already settled their use of DR (disguised remuneration) tax avoidance schemes with HMRC or have never used tax avoidance schemes in the first place.”

"As set out in HMRC’s Litigation and Settlement Strategy, they will only settle for an amount that is consistent with the law.”

“The Government has already extended the deadline for individuals affected by the Loan Charge to submit their 2018/19 Self Assessment tax return to 30 September 2020.”

Collecting taxes for services we take for granted will always be a thankless job.

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However, if - as the MPs’ letter states - the settlement terms are simply unpayable for most people, how will the current strategy serve the public interest?

Mr Sunak can display wisdom and courage by ordering HMRC to offer taxpayers lower and affordable settlements. Other losses can then be pursued from the promoters.

This approach could finally close this sad chapter and reinforce Mr Sunak’s reputation as the most capable member of this troubled Government.

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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