Members of Parliament have called for the Loan Charge policy to be suspended while a review into its effectiveness is carried out.
The All-Party Parliamentary Group on the Loan Charge said it welcomed the review which is being carried out by former Comptroller and Auditor General of the National Audit Office, Sir Amyas Morse, but stated that to be a genuine review it must take evidence from people facing the Loan Charge and be free of Treasury interference.
The review is set to be concluded in November but the Treasury has made clear that the Loan Charge will remain in effect during this time, angering some campaigners.
Read more: Loan Charge review to be carried out
There is also concern about how genuinely independent the review process will be, with MPs saying the investigation must be carried out without the input of Treasury staff.
The Loan Charge APPG had written to the Chancellor of the Exchequer saying that three things must be the case, when the review was announced:
1. The review must be genuinely independent of the Treasury and HMRC
2. The review must take evidence from outside parties including those facing the Loan Charge
3. All settlement activity, enforcement & penalties must be suspended pending the outcome of the review and the implementation of the recommendations
Read more: Loan Charge has caused widespread fear and distrust - MPs
A statement from the APPG, which is chaired by Edward Davey MP, said: The Terms of Reference of the review have been published and how the review will work. It will
take place in a relatively short time scale, reporting in mid-November.
The review does make clear that, unlike the whitewash Treasury report, it could recommend changes (legislative changes) to the Loan Charge. The Government would then consider any
such recommendations. This is positive, but the APPG is calling on the Government (and an subsequent Government) to agree to implement the recommendations in full.
The scope, however, seems unnecessarily narrow and focused on the Loan Charge itself, not the wider issues of whether the Loan Charge undermines the rule of law by imposing HMRC’s opinions of the operation of various tax legislation. Opinions that have not yet been tested by the courts. It leaves out the APN’s that HMRC have issued en masse and which have been battled over for many years.
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"It leaves out the fact that HMRC opened investigations many years ago and then did nothing year after year. So the review must look at the whole history of the Loan Charge and HMRC’s conduct around it, something that has been strongly highlighted by many individuals and tax professionals as well as in the APPG’s Loan Charge Inquiry Report
"The review guidance does make clear that settlements are on hold till the review concludes, however it appears to state that taxpayers need to decide now if they will settle, regardless of
whether they have agreed settlement figures from HMRC. If they are settling then they don’t have to complete the additional Loan Charge disclosure by the end of September, if they are not settling then they do have to complete the disclosure. This disclosure carries the threat of penalties for not properly disclosing. If the taxpayer is unsure whether they will, or if they even
can settle, then they are in limbo. This is contradictory and unfair."
Sir Ed Davey MP, Chair of the Loan Charge APPG (Liberal Democrat) said: “Finally the Government has done the right thing and announced a review, to be led by Sir
Amyas Morse, which must now be a properly independent, genuine review to examine all aspects of the Loan Charge Scandal.
“We welcome Sir Amyas’ appointment and believe he will seek to carry out a proper and independent review.
"The Loan Charge APPG are concerned, however, as to how independent it
will actually be, so we are writing to Sir Amyas and the Prime Minister demanding that there is no Treasury or HMRC involvement beyond them supplying evidence, otherwise it will neither
command confidence nor resolve the serious issues around this deeply controversial policy.
“The review also must be evidence based with those facing the Loan Charge and sector professionals asked to give evidence and we will be sending Sir Amyas the hundreds of case
studies that we have, to ensure this happens”.