Treasury committee has no plans to look at loan charge 'in the near term'

The Treasury Committee has decided to not do any work on the loan charge in the near term despite concerns raised by MPs that loan promoters are targeting NHS staff, according to a letter sent by the committee’s chairman.
MPs said loan schemes are being “openly advertised” to NHS staff, care workers, social workers, and teachers.MPs said loan schemes are being “openly advertised” to NHS staff, care workers, social workers, and teachers.
MPs said loan schemes are being “openly advertised” to NHS staff, care workers, social workers, and teachers.

In a letter to Philip Dunne MP, Mel Stride said the committee had decided to focus on other areas, such as the economic impact of coronavirus.

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.

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Last year, a review conducted by Sir Amyas Morse recommended a series of reforms to ensure fairer treatment of those affected, including more protections for the most vulnerable.

While the review concluded there was a public interest in preventing the use of loan schemes to avoid tax and in maintaining the principle of taxpayers being responsible for their tax affairs, it 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 some of those affected.

The Government said it recognised the concerns raised in the review and accepted all but one of the recommendations.

However, the Loan Charge All Party Parliamentary Group has warned that the loan charge has failed to stop the growth of loan schemes.

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MPs said these schemes are being “openly advertised” to NHS staff, care workers, social workers, and teachers.

The APPG said on Twitter: “We think the best way to clamp down on tax avoidance scheme promoters is to make them liable for any tax deemed avoided.”

In a statement on Twitter, the Treasury said: "We want to ensure taxpayers no longer fall victim to unscrupulous promoters of tax avoidance schemes."

The Treasury has outlined a number of measures which it says will make it easier for HMRC to stop promoters in their tracks.

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The APPG said the Government had finally admitted that people mis-sold schemes by unscrupulous promoters are victims, and these promoters are still promoting schemes.

It added: "Yet they face no action whilst their scheme users face ruin, bankruptcy and breakdown."

In his letter to Mr Dunne - which is in response to an appeal from one of Mr Dunne's constituents for the Treasury Committee to carry out further work on the loan charge - Mr Stride said: "The Treasury Committee has not decided to do any work on the Loan Charge in the near term. The Committee has decided to undertake a number of major inquiries, which are the focus of our work at this time.

"In relation to the pandemic, these include inquiries into the economic impact of coronavirus – which is scrutinising the government’s actions in this area, and tax after coronavirus

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– which is seeking to explore reforms that may be made to the tax system, in the knowledge that spending at this time has greatly increased public debt.

"The Committee is also undertaking an inquiry into decarbonisation and green finance, and I am sure the Environmental Audit Committee will be interested in reading our report in due course.

"The Committee has also been inquiring into UK customs policy in preparedness for the end of the transition period, and has launched an inquiry into economic crime. We have held regular evidence sessions with the Bank of England and have been scrutinising the associated bodies of HM Treasury."

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