Take the high moral ground and meet the loan charge campaigners, Chancellor - Greg Wright

The new Chancellor, Rishi Sunak, will face plenty of demands on his time as he prepares to present his first Budget. But there are still good reasons for him to find a window in his diary to meet members of the All Party Parliamentary Loan Charge group (APPG), which now has more than 200 members.

It’s hard to think of any other issue which unites so many MPs and peers across the political divide. In a letter to Mr Sunak, members of the indefatigable APPG make a request to meet the Chancellor as a matter of urgency to place their case for further reform.

The fact that Parliamentarians such as Stewart McDonald, the SNP spokesperson for defence, and Bim Afolami, the ‘0ne Nation’ Tory MP for Hitchin and Harpenden, have decided to join the APPG is a sign of the breadth of opposition to the charge.

According to the APPG, this all reflects continuing concerns that “this legislation undermines the Rule of Law, removes normal taxpayer protections and applies punitive settlement terms without actually providing any closure regarding the underlying tax disputes”.

The letter added: “In certain circumstances, the current policy could result in taxpayers having to both repay the full value of their loans and also be charged life-changing sums of tax on the same loan amounts by HMRC.”

It added: “The recent report by Sir Amyas Morse concluded that the Loan Charge was neither proportionate nor fair.”

Sir Amyas decided that retrospection should be limited to 2010 – originally the loan charge looked back to 1999.

The letter added: “The 2010 date was chosen by Sir Amyas as, in his opinion, this was when the law was ‘made clear’ that loans made by employer to employee via a third party were no longer acceptable.

“However, in our opinion and in the opinion of many experts whom we have met and corresponded with, the legislation announced in 2010, and enacted in 2011, was anything but clear.

“The legislation was also entirely silent regarding other arrangements that either did not involve an employee-employer relationship, or did not involve a third party.”

It continued: “Such arrangements continued after 2010 and were still actively being recommended by professional advisers as they were not subject to this 2011 legislative change.”

The MPs and peers all believe that taxpayers must pay tax which is due according to the law.

But the letter states: “We support legislation to close loopholes, and we are aware that much more needs to be done in this area.

It added: “But, we do not believe that ordinary people should be subject to retrospective legislation in any cases where the law was not clear at the time and people were acting on the basis of professional advice as to what was allowed.

“Disallowing these people from having any right to appeal HMRC’s opinions via the normal tribunal and court process undermines the rule of law.”

A Treasury spokesperson said: “We recognised the concerns raised by the Loan Charge Review and responded decisively by accepting all but one of its recommendations. More than 30,000 people are estimated to benefit from these changes, around 11,000 of whom will be taken out of scope of the charge altogether.”

So why should Mr Sunak set aside time in his hectic schedule to meet the APPG?

Firstly, it will show that he is willing to confront this troublesome issue with an open mind. Concerns about the loan charge are not going away. In fact the opposition is becoming deeper.

A bold re-think – taking on board the APPG’s objections – would finally bring closure to a subject which has caused, to quote Sir Amyas Morse, “serious distress” to taxpayers who might have been considered natural supporters of the Conservative Party.

Secondly, it will mean he can do battle with real tax avoiders from the high moral ground

The reforms outlined by the APPG would ease the suffering of thousands of law-abiding people who have never attempted to avoid their duties as taxpayers.

With the loan charge scrapped, Mr Sunak can turn his fire on the real villains who enjoy lavish lifestyles while depriving the Treasury of taxes to support essential services.