Loan charge threatens to destroy businesses and poses threat to wellbeing of thousands of people, say campaigners

AT least 175 MPs are calling on the Government to suspend a controversial policy which critics say has been linked with a number of suicides and undermines the rule of law.

MPs have written an open letter to Jesse Norman about the loan charge.
MPs have written an open letter to Jesse Norman about the loan charge.

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One Yorkshire businessman who has been affected by the loan charge told The Yorkshire Post that it could destroy his business.

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He said: “If the loan charge does come into play, there is a question mark against whether the business can continue and this will then put 400 people, plus their families at risk.

“We have never paid a tax bill late and we have always paid in full what is owed. The retrospective loan charge isn’t just affecting contractors, but business and people’s livelihoods associated with that.”

An open letter from the APPG, which has attracted 175 signatures, calls on the new Financial Secretary to the Treasury, Jesse Norman, to announce a delay to the imposition of the loan charge and an independent review.

The loan charge was introduced in response to the Treasury’s concerns about “disguised remuneration schemes” which involved individuals being paid through loans, usually via an offshore trust in a low or no tax jurisdiction, which they did not have to repay.

According to the Treasury, the loan charge means people paying themselves through loans will have to contribute their “fair share” to pay for our public services.

Workers from a wide range of professions – including locum doctors and nurses – have been hit with unexpected tax bills of up to tens of thousands of pounds dating back to 1999.

The APPG letter states: “Many Conservative MPs have criticised the loan charge as well as MPs from other parties. As you will be aware, there have been suicides of people affected by the loan charge.

“With the huge anxiety thousands of people are facing, we believe that a pause and a review is vital and the right and responsible thing to do.

“You must take notice of the huge weight of concern amongst MPs, including many in your own party.”

The letter states that debates on the loan charge held in the House on April 4 and 11 showed that the loan charge in its current form is not supported by a majority of MPs.

The letter adds: “We urge you, as Cheryl Gillan MP said, to listen to and act upon the will of the House.

“We urge you to announce a six-month delay today to give peace of mind to thousands of people and their families and to allow for a proper review.”

The conclusion to the APPG’s report into the loan charge states: “In the vast majority of cases examined, these arrangements were not entered as aggressive tax avoidance, but after professional advice.

“A substantial number of people, especially in the public sector, did not even understand their pay involved loan payments. Worst of all, the evidence seen and heard by the APPG shows there is a clear risk to the mental welfare of people facing the loan charge, including a known suicide risk.”

Another Yorkshire businessman who faces the loan charge said: “I am one of the 100,000 people who have been unwittingly caught in the 2019 loan charge.”

The man added: “I am a 58-year-old honest law-abiding man who has been caught up in this whole loan charge fiasco.  It’s already had a massive impact on my health, it’s ruining my life and will have dire consequences for me and my loved ones.  I live in fear of not only losing any savings I had, but assets I own that I was relying on as I approach retirement.”

The man said he was contacted in 2011 by a provider offering a ‘a hassle-free way of conducting my business’ which he was told was HMRC compliant.

He added: “They had many positive references about their services.  I’m not stupid.  I regard myself as an intelligent individual and not the kind of person who would be easily taken in by any kind of financial scam.

“HMRC states that ‘it’s always been wrong”.  It may have been known within the four walls of the HMRC buildings, but it has only very recently been communicated to me and 100,000 others like me. How was I to know if HMRC don’t tell me? Why didn’t they tell me as soon as they received my first tax return in 2012? Everything was declared. To date HMRC and the Government has refused to commission an independent review. If they are so sure of their position, why are they so scared to commission an independent review?”

Another businessman who faces the loan charge said: “Why did HMRC wait many years to tell me if they knew something wasn’t right? In this country, we are brought up to trust the professionals and look where that has got me.”

Mel Stride, Mr Norman’s predecessor, had said there was a commonly held misconception that the loan charge is retrospective.

A HMRC spokesman has previously stressed that suicide is a complex issue and there is rarely a single cause.

A Treasury spokesperson said: “The loan charge means that people who paid themselves through loans, often from offshore trusts, will have to contribute their fair share to pay for our public services. Some individuals are facing large tax bills, often as a result of using these schemes over a number of years or receiving large sums through the schemes.

“HMRC understands that tax bills are stressful and is committed to providing affordable payment arrangements and the enhanced support more vulnerable customers may need.”