Loan charge victim 'contemplated ending their own life', MPs are told as pressure grows for independent review

Shadow Financial Secretary to the Treasury James Murray has called for a new independent review into the loan charge and  tougher action against scheme promoters who have left their victims, including NHS workers, with life-changing tax bills.

Mr Murray told The Yorkshire Post that it “was basic good governance and common sense” to see that the approach being taken by the Government to the loan charge is going badly wrong.

He said: “We want to see the Government pursue the promoters behind these schemes and recognise that ordinary people are facing huge bills due to the loan charge and personal harm.

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“This is not really about party politics. It’s about having a tax system that is fair and doing the right thing for people who are being very seriously impacted by the loan charge.”

The Loan Charge and Taxpayer Fairness All Party Parliamentary Group has written to the new Financial Secretary to the Treasury, Lucy Frazer, arguing that the key conclusion of the Morse Review, that the law was clear from December 2010, is fundamentally flawed.

The loan charge, announced by the Government in 2016, was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid to avoid income tax.

In 2019, a review conducted by Sir Amyas Morse concluded that the design and delivery of the loan charge didn’t get the balance right between tackling tax avoidance and protecting the rights of taxpayers and, in some cases, had caused serious distress to the individuals affected.

Following the review, the Government announced that the charge would apply to loans taken out on or after 9 December 2010, rather than from 1999.

The review has not ended the controversy. The Loan Charge and Taxpayer Fairness All Party Parliamentary Group has written to the new Financial Secretary to the Treasury, Lucy Frazer, arguing that the key conclusion of the Morse Review, that the law was clear from December 2010, is fundamentally flawed.

It calls for “a fresh and fully independent review of the loan charge, independent of HMRC and the Treasury”.

Mr Murray said: “It’s about having an independent review to restore trust. The Morse review should not be the final word on the matter.

“We feel the Morse review is a roadblock to getting a fair solution. People have been victims of bad professional advice and mis-selling.

“The Government should be going after the promoters who were driving people towards these schemes. There is a strong feeling that the promoters are getting away with it while people in everyday jobs are victims of mis-selling.

“It’s linked to broader concerns about the Government’s approach to tax avoidance. We need a structural step change rather than a piecemeal approach. The promoters have not been pursued with anything like the same ferocity as the individuals who got involved in these schemes after taking professional advice.”

The Government needs to move away from its ‘whackamole’ approach, to tackling tax avoidance, according to Mr Murray.

He added: “When one tax avoidance scheme closes, it seems another one opens up.”

Last week, in response to concerns about the loan charge, Financial Secretary to the Treasury, Lucy Frazer, told MPs: “I know that this is an issue that concerns many Members. We did legislate as a result of that (Morse review). As a result of the review, 30,000 individuals benefited. In fact, 11,000 were removed from the loan charge.”

Yesterday. Liberal Democrat MP Sarah Green pressed for action as she raised concerns over the loan charge, which has been linked with a number of suicides.

Speaking in the House of Commons, the MP for Chesham and Amersham said; "One of my own constituents recently told me they’re a ‘totally nervous wreck’ and have contemplated ending their own life on numerous occasions.

“In light of the heavy toll the loan charge is taking on the lives of those facing it, will the Government commit to a fresh and independent review of the loan charge?”

Treasury minister Lucy Frazer replied: “There has already been an independent review carried out by Lord Morse and the Government accepted all but one of those recommendations.

“HMRC does have a helpline but, of course, it is important to continue to ensure that we look after those who are most vulnerable.”

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I go to bed wishing I didn’t wake up, says contractor affected by loan charge - ...

A Government spokesperson recently told The Yorkshire Post: “The Loan Charge was introduced to ensure those who used disguised remuneration tax avoidance schemes paid their fair share of income tax and national insurance contributions. It is only right that we continue to tackle these type of avoidance schemes as they deprive our public services of vital funding."

“We encourage anyone who is worried about paying the Loan Charge to contact HMRC so they can help. HMRC are committed to working with taxpayers to enter manageable payment plans to spread their tax liability and ensure that they are affordable.”

"Sir Amyas Morse led an independent review into the policy in 2019 and concluded that it was right that the loan charge remain in force. The Government recognised concerns around its impact, which is why it accepted all but one of the recommendations made, leading to significant changes in legislation."

"Sir Amyas Morse made clear in his report that his recommended changes to the Loan Charge policy applied to both individuals and employers, unless otherwise specified, as Finance Act 2017 did not draw a distinction between the two.

"HMRC will take action against schemes marketed as enabling contractors to pay less tax than they should. Contractors who are worried that they have been offered such a scheme can contact HMRC.

"Around 20 promoters have moved out of promoting altogether in the last six years due to HMRC activity.

"In November 2020 HMRC launched an awareness campaign “Tax Avoidance – Don’t get caught out” targeted at contractors in the IT, medical and oil and gas industries where promoters are particularly active. This campaign advises taxpayers how to spot avoidance schemes, including those promoted by umbrella companies, explains the risks involved and where people can get more information to enable them to make informed choices if they want to leave an avoidance scheme.

"Draft guidance on GOV.UK shows how the government is tackling tax avoidance promoters."