Greg Wright: Failure to suspend the loan charge offends concept of natural justice

Many people have welcomed the Chancellor’s announcement that the loan charge is being subjected to an independent review, following lobbying from more than 200 MPs who have been inundated with complaints from their constituents. The review gives hope to people who are being driven to despair by a policy which has been linked with a number of suicides.Sir Amyas Morse, the former Comptroller and Auditor General and Chief Executive of the National Audit Office (NAO), who is conducting the review, will not have to look far to find evidence of the loan charge’s devastating impact on law-abiding people.But the Chancellor’s failure to suspend the charge while the review takes place offends every concept of natural justice. The evidence collected by The All-Party Parliamentary Group on the Loan Charge (APPG) acts as a devastating indictment of this flawed policy. The loan charge must be suspended while a review into its effectiveness is carried out.The loan charge was introduced in response to the Treasury’s concerns about “disguised remuneration schemes’ which involved individuals being paid through loans, usually via an offshore trust in a low or no tax jurisdiction, which they did not have to repay. According to the Treasury, the loan charge means people paying themselves through loans will have to contribute their “fair share” to pay for our public services. Workers from a wide range of professions have been hit with large tax bills, which in some cases date back to 1999.Anybody who questions the harm being caused by the loan charge should study the following statement, submitted to the MPs, by the wife of a loan charge victim.In the letter to the APPG, the woman states: “My husband is a contractor who, back in 2008, was introduced by a colleague to an umbrella company. He used two arrangements (or schemes as HMRC likes to call them) both created and sold by the same promoter introducer/chartered accountant as being fully compliant with UK tax law and QC approved.“At no point were any risks mentioned by the promoter or the introducer, either verbally or within their sales literature. Under both arrangements, a notable salary was taken by my husband on which income tax and NI was settled via PAYE.”The remaining receipts were paid in the form of loans, which along with other reporting requirements, were clearly reported on her husband’s tax return, the statement says. The benefits in kind tax was duly paid.The introducer and promoter took a “sizeable” fee from her husband for the use of these arrangements.“For these reasons, it is most distressing that some MPs and parts of the media are wrongly stating that contractors caught by the loan charge took most of their salary in loans, for many this is simply not the case.’’ the woman’s statement said.“The demonisation of the loan charge victims is reprehensible. HMRC’s and HMT’s aggressive use of words and the introduction of a deliberately manufactured term ‘disguised remuneration’ is designed purely and simply to fuel this demonisation and turn public opinion against us. There was nothing disguised and reporting requirements were complied with.”“My husband has had no settlement figure from HMRC in respect of his alleged additional tax liabilities, but the figure will be well beyond our capability to meet within anything like a reasonable time frame and without the decimation of our family’s quality of life. “The loan charge will destroy my husband both mentally and financially. As a pensioner he will have to live off the state. The loan charge is retrospective. How can the Government of a civilised nation support the persecution of law-abiding citizens?” Mel Stride, the former Financial Secretary to the Treasury, always maintained that the loan charge was not retrospective.But why should anyone be subject to a policy while its legitimacy is under review by order of the Government? Critics say the charge breaches the rule of law and poses a threat to the mental health of thousands of people.The Government must listen to the will of Parliament and ensure all settlement activity linked to the loan charge is suspended.