Loan charge is Post Office scandal all over again, says Sammy Wilson MP

“Suddenly, he was made to feel like he was a criminal who had deliberately tried to avoid paying tax. He killed himself. The girls were in tears as they told us the story. We were in tears as well. One of the girls said, ‘My dad was hounded to his death’.

In his role as co-chair of The Loan Charge and Taxpayer Fairness All Party Parliamentary Group, Mr Wilson is determined to secure justice for people whose lives have been thrown into chaos by a controversial tax policy which has been linked with 10 suicides. The new Labour Government announced at the autumn Budget that there would be a further independent review of the loan charge, following a long-running campaign by MPs and peers who have denounced the policy as draconian.

The loan charge, which was announced by the then Conservative Government in 2016, was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not re-paid to avoid income tax. There was an outcry after thousands of people on modest incomes were hit with large and unexpected bills, after acting on professional advice.

Changes were made to the loan charge following a review by Lord Morse in 2019 which reduced its impact, but the APPG still believes the policy is deeply flawed. Last year, Mr Wilson told the House of Commons there were “frightening parallels” between the loan charge and the Horizon IT scandal, which saw Post Office branch managers handed criminal convictions after faulty Fujitsu accounting software made it appear as though money was missing.

The APPG has written to the Chancellor Rachel Reeves thanking her for announcing the review but stressing that it must be fully independent of the Treasury and HMRC.

Mr Wilson told The Yorkshire Post: “We’re pleased the Government has announced the review, but what we want to ensure is that we avoid what happened with the Morse review where it was set up to ensure it obtained the outcome the Treasury and HMRC wanted. HMRC and the Treasury had far too much influence on it. At the end of the day, we didn’t get to the bottom of the issues.”

Mr Wilson added: “Until the review has published its report, there should be no further action taken against taxpayers in connection with the loan charge. It’s estimated that 40,000 taxpayers are still in the system with regards to facing the loan charge. The Government must focus on the whole supply chain including suppliers who caused this situation to come about, as well as looking at HMRC’s role.”

"The Morse review’s terms of reference were very restrictive; it only looked at the individuals who were affected,’’ he added. “It missed out the real people who needed to be investigated, namely the suppliers, the people who drew up the schemes, the people who sold them and the employers who benefited from them and in some cases forced people into them.

"I would like the review to start as soon as possible, but we must ensure the review deals with these issues. Speed is not the most important thing; consideration of what needs to be included in the review is much more important.”

The APPG believes the review must cast a critical eye over the accountants and the individuals who sold the schemes and ultimately profited from them.

“The evidence must not just be from the individuals affected by the loan charge,’’ said Mr Wilson. “In many cases, people were in effect forced into getting involved in schemes linked to the loan charge. They were told by employers, ‘If you want to work for us you have got to get paid in this way. Some people actually phoned up HMRC to see if the scheme was legitimate and were told it was OK.”

Mr Wilson added: "If we’re going to get to the bottom of this scandal we believe evidence should be given under oath and in public by civil servants and former Ministers and also those who promoted and recommended schemes.

"That’s also why there should be no further pursuit of people affected by the loan charge. Why keep hounding people if a proper public inquiry will show that the demands being made of them are unjust, unrealistic and should never have been made in the first place? They have not pursued any of the promoters, they have not pursued the accountants who gave advice or the tax advisers or the employers. But they have pursued the individuals who were impacted by this.”

A spokesperson told The Yorkshire Post that the Government recognised that concerns continue to be raised about the Loan Charge, adding: “The Government will honour its commitment to hold an independent review of the Loan Charge to help bring the matter to a close for those affected whilst ensuring fairness for all taxpayers.”

The APPG believes politicians and civil servants must be held accountable for what it describes as a profound policy failure.

"New victims are being created every day with people still entering these schemes,” said Mr Wilson.

“Any review will be totally flawed if it doesn’t widen its scope to include the behaviour of promoters and tax advisers who in some cases just disappeared into the ether, as well as the wholesale failure of the whole loan charge and HMRC’s approach, which has not stopped this problem.”