Two taxpayers who attempted suicide while facing loan charge make heartfelt plea to Minister

The loan charge, announced by 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. The policy was amended after a review in 2019, which reduced its impact, but critics still believe the policy is flawed and punitive.

A spokesman said the Government recognises the loan charge is a very important matter for many individuals. The statement added: “Ministers have been considering this since taking office and will provide an update in due course.”

During the meeting, Mr Murray heard from two social workers, one nurse who supported the country throughout COVID, an investigation officer working for the police force and four individuals who had performed IT consultancy services for different industries, one of whom is an ex-RAF Pilot.

A follow up letter to Mr Murray from the APPG states: “Four of the witnesses were placed into umbrella companies through their agencies and the umbrella companies recommended that they use the arrangements now subject to the loan charge.

"Four of the witnesses had chosen to work through umbrella schemes (whether following professional advice or not) because of concerns about the IR35 legislation (and ironically, professional advice that they might be at risk of challenge from HMRC if they did not use the recommended arrangements). As with the vast majority of those affected by the Loan Charge Scandal, these are not people who set out to avoid tax and this was not their motivation for using umbrella companies and the associated remuneration schemes offered/recommended. They all used the schemes that they did because they wanted to be compliant with the law.

It continues: “All of these people had taken and then followed professional advice, from either their work agencies or trusted advisers (which included chartered accountants, as well as accredited tax advisers).

"In all eight cases, the individuals cannot possibly pay the sums being demanded. They simply do not have the money HMRC is demanding of them. They never actually had much of what HMRC claims should have been paid in tax, because they paid a significant proportion of their remuneration in fees to the promoters/operators of the schemes (on the basis that these scheme providers were ensuring compliance AND paying the necessary tax due). HMRC also has levied interest, penalties and in some cases inheritance tax meaning that the already unaffordable bills become even larger – and even more unfair and draconian considering that they were given professional advice to use them and clear assurances of legitimacy and compliance.”

"Four of the witnesses broke down whilst giving testimony, because they became so distressed going through their case and how they have been treated and the impact the whole situation has had on them.

“Two of those in attendance had attempted suicide. These are presumably two of the thirteen such people that HMRC admitted to knowing about (and referring to the Independent Office of Police Conduct) in their letter to the APPG dated 29 March 2023 in reply to a letter we had sent on 16 February 2023. One individual pointed that according to HMRC the successful and unsuccessful suicide attempts since 2017 amount to 33 which is an annual rate of 4 per year.

“Another individual broke down when he explained that his teenage son’s suicide note included how his father had “been distant” with him, something that he attributes to his pre-occupation with attempts to resolve the financial problems caused by the Loan Charge.

“Two of the individuals explained how they were having to sell their family home as a direct result of the demands HMRC has made of them. This is contrary to the HMRC rhetoric that they will not force anyone to sell their home.”

Several of the individuals told the meeting that they were still being sent adverts for schemes, that are still being marketed and mis-sold. The Loan Charge legislation was supposed to stop this, but has comprehensively failed as well as targeting the wrong parties, the letter states.

The APPG letter continues: “We thank you again for arranging this meeting and hope you will continue to engage with people affected by the loan charge scandal.”

An HMRC spokesperson said: “We appreciate there’s a human story behind every tax bill and we take the wellbeing of all taxpayers seriously.

“We recognise dealing with large tax liabilities can lead to pressure on individuals and we are committed to supporting customers who need extra help. Our message to anyone who is worried about paying what they owe is: please contact us as soon as possible to talk about your options.”

"The support we have in place to help people settle their previous tax avoidance includes offering payment by instalments: these arrangements are based on what the taxpayer can afford, and there’s no upper limit over how long we can spread payments.

“We are committed to identifying and supporting customers who need extra help with their tax affairs and have made significant improvements to this service over the last few years.   

“The extra support available can cover a range of circumstances, for example because of difficulties caused by their emotional state, mental health, confidence, capability, and disability. We have training for all advisors on how to identify customers who need extra support and provide reasonable adjustments to meet their needs.”