Thousands feel betrayed after MPs fail to hold vote over amendment to 'punitive' loan charge - Greg Wright

The respected tax barrister, Keith Gordon, described the lack of a vote over New Clause 31 of the Finance Bill as marking a sad day for those who believe Parliament is there for the greater good.

According to the Loan Charge All Party Parliamentary Group, (APPG) New Clause 31 would have led to the removal of the “retrospective and punitive” loan charge for anyone who did not deliberately evade tax.

Supporters said it would have merely restored the underlying tax position that existed in law at the time. Incredibly, New Clause 31 was not called for a vote, despite the fact that 54 MPs had signed the amendment and many others had expressed concerns about the loan charge.

The Government has challenged the assertions made by the APPG, but surely putting the clause to the vote was the only way of discovering the will of the House of Commons?

As a long-standing observer of the loan charge, I’ve always been surprised that the Labour front bench hasn’t dedicated more resources to attacking the Government’s record over this controversial policy.

Surely Sir Keir Starmer could have skewered the Tories over the loan charge at PMQs? Many of the people hit by the loan charge are natural Labour supporters.

A number of Labour MPs have spoken out against the loan charge, including Ruth Cadbury, the co-chair of the Loan Charge APPG, who continues to believe that the loan charge undermines the rule of law.

Labour MP Andrew Gwynne said on Twitter: “Shame that NC31 which I co-signed on the scandalous loan charge issue wasn’t put to a vote. The SNP NC1 for a ‘review’ was put to a vote. It was defeated. This issue is such an injustice for all those affected. Come on Parliament, we can do better than this!”

However, some campaigners believe Labour could have done more to challenge the Government over the loan charge.

A member of the Loan Charge Action Group told me: “I feel betrayed by Labour because of the previous level of support offered by so many MPs to their constituents to stand up for the little guy in this unjust situation.”

A spokesperson for the Labour Party said: “The Tories have an eighty-seat majority and the issue is how they’ve voted. Labour has continually expressed concern about the impact of the loan charge, particularly for those who were forced into these arrangements by employers.

"Earlier this month we were proud to support an amendment that would have forced the government to conduct a review. The review we wanted was blocked by the 319 Conservative MPs who voted against it.

“A review could have looked at how fairly HMRC has implemented the policy, especially whether HMRC would have provided reasonable flexibility around repayment plans with the aim of avoiding business failures and individual bankruptcies. This is even more important given the impact of the pandemic.”

Last year, Sir Amyas Morse’s review into the loan charge said there was a clear public interest in preventing the use of loan schemes to avoid tax.

It upheld the principle of taxpayers being responsible for their tax affairs. But it also concluded that the loan charge went too far – overriding taxpayers’ statutory protections by applying an “unprecedented” 20 year look back period and failing to adequately consider the serious distress it would cause to some of those affected.

The Government said it recognised the concerns raised in the review about the fairness of some aspects of the loan charge. To address them, all but one of Sir Amyas’ recommendations have been accepted by the Government.

The APPG and its large number of supporters believed further protection was needed, which is why New Clause 31 was tabled.

The failure to hold a vote over this emotive issue has left thousands of people with a deep sense of betrayal. As Emma Lewell-Buck, the Labour MP for South Shields observed, the loan charge scandal has ruined too many lives.

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