Loan charge scandal: Many people have suffered depression, MPs warn
A cross-party Parliamentary group has claimed that measures announced by the Government in response to the McCann review will not provide a fair resolution for thousands of people affected by the loan charge.
In a letter to Dan Tomlinson, Exchequer Secretary to the Treasury, members of the All-Party Parliamentary Loan Charge & Taxpayer Fairness Group say it is “manifestly unfair” that those who settled with HMRC to avoid the Loan Charge, with the threat of much higher HMRC demands, now face having done so on worse terms than those who did not.
The letter also expresses concern about the fact that the Government has decided to impose a £70,000 limit for reductions, which Mr. McCann did not suggest “and which fundamentally changes what the implementation of the review recommendations will do”.
The MPs called on the Government to drop the £70,000 limit from the Finance Bill and implement the McCann Review recommendations in full.
Greg Smith, co-chair of the APPG, said: “We have written to both the Exchequer Secretary to the Treasury and to Ray McCann asking to meet and also expressing our real concerns about the way the Government is substantially watering down the McCann Review recommendations.
“The Government had claimed that Ray McCann would have the final say, yet instead they have imposed their own limit on settlement reductions, which fundamentally changes how the recommendations will affect many people.
“The reality is that this whole exercise, which was only a review of settlement terms and not a review of the Loan Charge Scandal, will not resolve thousands of cases nor the wider issue, so the Government will fail by its own justification of not commissioning a proper and genuinely independent inquiry, which they said was to bring matters to a close.
“Although some people will be able to move on, there will be many who simply cannot, due to the contrived, biased and unfair terms of reference and now the Government writing its own recommendations. We will continue to push for a proper just resolution for all affected and the genuinely independent inquiry needed into this whole scandal.” The letter from the MPs highlights the fact that many people facing the Loan Charge are retired or approaching retirement. It adds: “In addition there are many people who have lost work over recent years due to the impact of the Covid pandemic and lockdowns, some were excluded from Government support and others have lost work or seen pay levels reduce considerably due to the roll-out of the flawed IR35 off-payroll rules to the private sector in 2019. There are also a considerable number of Loan Charge victims that have lost jobs and careers due to the direct impact and of facing the Loan Charge and action from HMRC. Many people have had breakdowns, depression and anxiety and others have experienced mental and physical illness related to the stress of their situation.
“Others have seen marital and family breakdown and the inevitable impact on their finances, including in numerous documented cases, where a marriage has broken down as a direct result of the impact of the Loan Charge. The assumption, therefore, that these people with larger liabilities are ‘rich’ and have the money to pay is clearly false and to proceed on that basis, knowing the mental health impact and the suicide risk, is also dangerous.”
Responding to the MPs’ letter, a HM Treasury spokesperson said: “We launched this review, independently led by Ray McCann, to bring this matter to a close for those affected whilst ensuring fairness to all taxpayers. Ray conducted a thorough and comprehensive examination of this issue, and we have accepted all but one of his recommendations in full. In some places, we have gone further than the review recommended, including writing off an additional £5,000 from people’s remaining liability, meaning around 30% of individuals could have their liabilities entirely written off.”