Loan charge: MPs call for Public Accounts Committee to probe tax policy linked with suicides

The Loan Charge, first announced in 2016, was designed to tackle historical use of contrived tax avoidance schemes that seek to avoid charges of income tax and National Insurance by disguising remuneration as a form of non-taxable payment, typically a loan.

The letter from the APPG to Sir Geoffrey Clifton-Brown MP, the chair of the PAC, states that thousands of people, mainly contractors, locum and freelance workers, found that they faced huge unexpected tax bills due to the loan charge, for using arrangements that were recommended to them by professional advisers, “including Chartered Accountants, with HMRC not warning those who began to use the schemes not do so and only then contacting them years later to say they had retrospective tax demands”.

“This whole approach has had a huge personal impact on the individuals and families involved. The recent report of the McCann Review into settlement terms included the heart-breaking news that an eleventh person has killed themselves facing the Loan Charge and associated action.

“There have also been documented attempted suicides, also reported by HMRC to the Independent Office of Police Conduct as well as bankruptcies, divorces and breakdowns, as well as loss of careers and incomes, all of which have an impact on the public finances.”

The MPs letter to the PAC states that HMRC and Treasury predictions about the loan charge “since 2016 have been remarkably incorrect, which appears to have left a significant gap in budget forecasting, which is especially troubling in the current challenging economic and fiscal climate. In addition, much of the information provided and published has been partial, misleading and in some cases, highly questionable.

“A recent Freedom of Information request to HMRC has revealed details about the amount of money HMRC has spent pursuing those caught up in the Loan Charge Scandal, compared with the amount of money it has actually recovered from individuals affected.

“The response explains that since it came into force in 2019 HMRC has only achieved an extraordinarily low 800 settlements with individuals facing the Loan Charge – and ten years on from introducing the controversial measure to Parliament, some 32,000 individuals have cases that are unresolved according to the Government’s own figures.

“This is a catastrophic failure of the Loan Charge and HMRC’s whole approach regarding this issue.”

“For a measure and approach that has been defended on the basis that it would bring it considerable tax revenues, this is extraordinary.”

The letter from the APPG said that although the recent McCann Review of settlement terms was not a review of the Loan Charge itself – which is what the Loan Charge and Taxpayer Fairness APPG has called for – Ray McCann, the former President of the Chartered Institute of Taxation, was “highly critical of HMRC for this approach and its clear failure”.

The letter, which has been signed by the APPG’s co-chairs Sammy Wilson MP and Greg Smith MP alongside co-chair Emily Darlington MP, continues: “Nonetheless that review was devised to try to bring cases to a close, not to hold HMRC to account and thus far, they have not at all been held to account for this fiasco.”

In response, Sir Geoffrey Clifton-Brown MP said in a statement for The Yorkshire Post: “The PAC has taken evidence on this important issue in the past, and the committee could potentially look at it again.

“We will consider the APPG's submission carefully,’’ he added.

Responding to the letter, an HMRC spokesperson said: “Following the 2025 Loan Charge Review, the Government agreed a new settlement offer, and we are working with our customers to help bring this matter to a close.”

A spokesman stressed to The Yorkshire Post that HMRC has been “open and honest with the Public Accounts Committee and Parliament about the loan charge”.

The spokesman also highlighted the fact that senior officials regularly engage with MPs to answer their questions.

In January 2025 an independent review of the loan charge was commissioned by the Labour Government. The review was published at Budget 2025, alongside the Government’s response.

The Government announced that it is accepting all but one of the review’s recommendations and in some areas is going further, including writing off £5,000 of each individual’s liability in addition to the review’s recommendations. The review recommends that the Government introduce a settlement opportunity to encourage those who have not settled their position with HMRC to do so.

The Government said the settlement opportunity will substantially reduce the amount that people affected by the loan charge have to pay.

Where people decide to settle, most individuals could see reductions of at least 50 per cent in their outstanding loan charge liabilities and an estimated 30 per cent of individuals could be able to settle without paying anything, the Government said.