How to finally close the door on the tragic loan charge scandal - Greg Wright

For the last 20 months, The Yorkshire Post has campaigned relentlessly on behalf of honest, law-abiding people - including frontline NHS workers - who have been hit with life-changing and unexpected tax bills due to the loan charge.

We have always argued that these people were victims of unprincipled promoters who believed they were above the law. HM Treasury clearly shares this belief.

In a Tweet to promote measures which aim to make it easier for HMRC to stop scheme promoters, HM Treasury said: “We want to ensure taxpayers no longer fall victim to unscrupulous promoters of tax avoidance schemes.”

There appears to be no doubt in the Treasury’s mind that people who have been driven to despair by dishonest promoters deserve to be supported and not vilified.

The Loan Charge All Party Parliamentary Group, (APPG) which has provided compelling evidence of the lasting harm caused by the loan charge, said on Twitter: “Finally the Government admits that those mis-sold schemes by unscrupulous promoters are VICTIMS. This includes those facing the unjust loan charge.

“The same promoters are STILL promoting schemes. Yet they face no action whilst their scheme users face ruin, bankruptcy and breakdown.”

It appears MPs, the Treasury and HMRC are singing from the same hymn sheet. So how do we stop this sort of scandal from happening again? The way ahead has been mapped out by the Loan Charge APPG in a written submission to the House of Lords’ Economic Affairs Committee.

In its submission, the APPG said: “We support the principle of taking action to close down schemes and pursue those behind the schemes, and indeed have been consistently calling for the Government and HMRC to take decisive action to stop the promotion of loan schemes and pursue those involved.

“However, we are concerned that so far all the Government has announced are principles and little in the way of actual legislative change to tackle this problem.”

The inconvenient truth is that the loan charge has simply failed to stop the promotion of disguised renumeration schemes. Far from it.

To quote the APPG’s submission: “The reality – as any web search will show – is that similar tax planning arrangements are still being promoted today.

“Many of these schemes are advertised as ‘legal’, ‘compliant’, ‘tax efficient’ etc and there remains the danger that people will unwittingly sign up to use these arrangements, and then find themselves with a large retrospective tax demand in the future.”

This evidence tallies with my own experience of reporting the loan charge. I’ve been inundated with messages from loan charge victims who were told that the schemes were “QC approved” and “HMRC compliant” by promoters who later vanished into thin air.

The APPG submission states: “The reality, as exposed by Freedom of Information requests, is that there have been no arrests or prosecutions, never mind convictions, of anyone for promoting or selling the schemes that are now subject to the loan charge.”

“The APPG believes that a simple principle should be adopted and introduced into law, that where HMRC demonstrates that a scheme is a form of contrived tax avoidance, that doesn’t comply with legislation and the intent of Parliament, that those who operated such schemes should be the ones liable for tax avoided through it.

“We believe this is the simplest and clearest way to stop those seeking to profit from mis-selling dubious schemes.”

This approach must be accompanied by Government action to address the need for a proper definition of self-employment, contracting and freelancing and for this to be recognised in law, according to the APPG.

Such clarity would help to close down the market for loan schemes which left victims with huge retrospective tax bills.

The disgraceful individuals behind these schemes must be punished. Only then can we slam the door on this terrible, tragic saga forever.

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