CAMPAIGNERS plan to march on Westminster next month to urge Prime Minister Boris Johnson to scrap the loan charge, a controversial policy which critics say breaches the rule of law and poses a threat to the mental health of thousands of people.
On Wednesday September 11, members of the Loan Charge Action Group are due to hold a mass demonstration, where they will call on Mr Johnson to honour a commitment made at a hustings event to suspend and review the charge.
In a statement released on Twitter, the action group said: “We need this to be our biggest protest yet.”
It has also been revealed that the specialist tax firm, Forbes Dawson, has written to the Financial Secretary to the Treasury Jesse Norman to request an urgent independent review of the 2019 loan charge and HMRC’s approach to settling cases. Today, Craig Whittaker, the Calder Valley MP, became the 214th Parliamentarian - and 84th Conservative - to sign an open letter to Mr Norman calling for a suspension and review of the loan charge.
A woman whose husband is facing the loan charge, told The Yorkshire Post: “My husband has stopped discussing the amount with me, but it’s £150,000 plus.
“His personality has changed completely. I am devastated for him and feel totally helpless as his wife. He queried the legitimacy of the scheme just before he entered it and was told it was completely legal. He declared the scheme on ALL of his tax returns.”
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 - including locum doctors and nurses - have been hit with tax bills of up to tens of thousands of pounds dating back to 1999. The All-Party Parliamentary Group on the Loan Charge (APPG) argues that the charge is retrospective and overrides taxpayer protections - claims which have been disputed by the Treasury.
At a hustings event, Boris Johnson, said of those affected by the loan charge: “It seems superficially unjust that they should be retrospectively pursued... they need an independent review”.
In a letter to Mr Johnson, Ross Thomson MP, reminded the new Prime Minister that “like myself you are uncomfortable with the retrospective nature of the legislation and signed my letter to the Chancellor earlier this year”.
The letter added: “The reality is that if the policy continues unamended, there will be many bankruptcies at a significant cost to the taxpayer. Some individuals affected will be unable to work again ..The human impact, which is becoming increasingly apparent, will be serious.”
Opponents of the loan charge include Sir Vince Cable, the former leader of the Liberal Democrats, who said in a letter to Chancellor Sajid Javid: “This is a punitive measure and - particularly because it extends 20 years back - it is unfair. The legislation primarily targets the individuals rather than the advisers and companies that sold or encouraged the schemes (several of whom it would be difficult to pursue as they are either offshore or no longer exist).
“The impact is substantial for many of the affected families and settling with HMRC would be life-changing. They are contractors and freelances who do not have regular protections and benefits such as holiday and sick pay or pension contributions and are more financially vulnerable.”
Sir Vince’s letter added: “There have been accounts of HMRC aggressively pursuing people, putting significant pressure on individuals.
“Despite HMRC’s insistence that they do not intend to bankrupt individuals, the reality is that many are facing bankruptcy, insolvency or the loss of their home to settle the debt which includes penalties and interest.”
The former Conservative Party leader Iain Duncan Smith has written to Mr Johnson calling for a review of the charge.
In his letter, Mr Duncan Smith said: “Thus far the retrospective loan charge has caused numerous businesses to close, forced some to lose their jobs and livelihoods and has also pushed several into bankruptcy.
“Many have faced tax bills of well over £100,000 leading to some risking homelessness. The loan charge APPG has reported that in a recent poll over 40 per cent (of people affected by the charge) have contemplated committing suicide.”
To support their case the APPG has collected 820 impact statements from people affected by the “draconian” loan charge.
Mel Stride, the former Financial Secretary to the Treasury, always maintained that the loan charge was not retrospective.
Earlier this year, he said: “HMRC very, very rarely has a situation where somebody is placed in bankruptcy. HMRC has publicly stated that nobody will lose their primary residence as a consequence of settling their loan charge liability.”
A Treasury report said: “The Government considers that the rationale for this charge is clear and robust, and has been consistently clear there is no intention to change the relevant legislation which has been enacted by Parliament.”
There is no sign that the Government will suspend or review the loan charge, despite opposition from a growing number of MPs.
The Treasury said: “The Government is clear that the legislation is not retrospective. It does not change the tax position of any previous year, the tax treatment of any historic transaction, or the outcome of any open compliance checks.”
An HMRC spokesman said previously: “We have committed to giving people as long as they need to pay the loan charge as we completely understand that facing a large tax bill can be difficult and stressful." If people are worried, they should get in touch with HMRC on 03000 599110.