Why Labour must act to protect NHS workers who have been dragged into one of worst mis-selling scandals in history - Greg Wright

Are we witnessing one of the worst mis-selling scandals in history?

Labour’s frontbench team is due to meet with the Loan Charge Action Group (LCAG) after Sir Keir Starmer was warned that ordinary people are being pushed towards bankruptcy and suicide.

Growing numbers of anti-loan charge campaigners and MPs certainly believe so. There is no end in sight to the misery caused by the activities of unscrupulous tax scheme promoters who appear to believe they are above the law.

Labour’s frontbench team is due to meet with the Loan Charge Action Group (LCAG) after Sir Keir Starmer was warned that ordinary people are being pushed towards bankruptcy and suicide.

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I continue to receive evidence of the terrible emotional and financial distress inflicted by rogue advisers and unethical umbrella companies. I’ve been contacted, for example, by a woman, who told me she had previously faced the loan charge, and is now in despair after receiving further correspondence from HMRC.

She said she had received a letter informing her that HMRC is now investigating another locum role she occupied which supposedly used “disguised remuneration”.

The woman said: “This was for four months working within the NHS from 2018 to 2019. I am absolutely floored by this. How can the agencies still be using these umbrella schemes and not letting us know what will happen?

“I have emailed the agency to discuss this but the umbrella company that they used is now dissolved. I had got really close to ending it last year what with this and the pandemic.

“Thankfully I reached out and was diagnosed with PTSD and I have had therapy and medication.”

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.

Following a public outcry, after thousands of people on modest incomes faced life-changing tax bills, the Government commissioned a review into the policy in 2019. The review has not ended the controversy.

In its letter to Sir Keir, the LCAG claims that people facing the loan charge are victims of mis-selling.

There is overwhelming evidence that people were told, in writing, by professional advisers and by the promoters of these arrangements that the schemes were tax law compliant and QC approved.

The LCAG letter states: “Some people even asked HMRC about them and HMRC did not tell them not to use them at the time, despite their claims that they “were always clear” that they did not work.”

There is plenty of testimony to support the LCAG’s claim that the loan charge has been a spectacular failure in stopping the promotion and operation of these types of schemes.

The Government has said it is right that it continues to tackle avoidance schemes as they deprive public services of vital funding.

A spokesman said: “HMRC are committed to working with taxpayers to enter manageable payment plans to spread their tax liability and ensure that they are affordable.”

Many people affected by the loan charge have been unimpressed with HMRC’s performance.

One Yorkshire businessman said; “We are at our wits end. Have made literally zero progress in over a year despite multiple attempts to do so.

“In the absence of any sort of progress or compassion from Government, opposition or HMRC I feel our only option is to try to settle, even if we have to sell the house.

“We just can’t bear the weight of this constantly hanging over us. I rue the day I ever asked a qualified accountant to give us advice.”

There is no sign of any movement in the Government’s position. So the ball is in Labour’s court. Labour can take the high moral ground by pressing for the creation of a specialist task force to root out these rogue umbrella firms, who often operate in plain sight.

The individuals behind them should be banned from acting as directors. Labour must demand that the accountants who directed workers to these schemes are disciplined by their professional bodies.

Cleaning up this shadowy world will be a Herculean task. But failure to act will condemn thousands of honest people to years of mental torment.

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