Why Liz Truss is right to be appalled by the loan charge scandal - Greg Wright

The loan charge was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid to avoid income tax.

Boris Johnson’s administration announced a review in 2019 after the policy left thousands of people on modest incomes with large and unexpected tax bills.

In December 2019, the Government unveiled a package of changes to the charge in response to Sir Amyas Morse’s review, but critics - including the tireless Loan Charge and Taxpayer Fairness All Party Parliamentary group (APPG) - still believe the policy is flawed and punitive.

Outside the world of politics, opponents of the loan charge have included Richard Coles, the respected broadcaster, who called on the Tory party leadership contenders to find a resolution to the loan charge as an urgent priority “before more families are destroyed”.

If, as expected, Liz Truss triumphs and becomes the next occupant of 10 Downing Street, there are good reasons to believe that the loan charge could be re-examined.

Ms Truss was questioned about her stance on the loan charge at a hustings event hosted by Croydon Conservatives. The questioner highlighted the reports of suicides linked with the policy and asked Ms Truss if she would commit to a “genuinely independent review” and resolve this issue before more people take their own lives.

Ms Truss did not dodge the question. She said: “It is appalling to hear about that and the way the whole situation has been handled has been very poor in my view and we’ll look at what we can do on that specific issue.”

If she wins the leadership contest, Ms Truss said she would also make sure that “as part of our tax review” there would be a re-examination of IR35, the off-payroll legislation, which campaigners say has directly led to many contractors being mis-sold arrangements which are now subject to the loan charge.

These comments, were of-course, made at a hustings event and do not constitute a commitment to scrap the loan charge.

But if Ms Truss wins the leadership contest she can make her mark, and win votes, by announcing a wholesale review of the loan charge policy.

She could also embrace constructive proposals promoted by the APPG to find a fair resolution.

To quote the latest letter to the Chancellor from the APPG: “The loan charge is not only a disastrous policy, that has now led to several people taking their own lives, it is also a failed policy on every level.

“It was supposed to stamp out the promotion, mis-selling and use of ‘disguised renumeration’ schemes, yet the reality is that the usage of such schemes has actually increased.”

The last words on this troubling saga must go to Gayle, who was mourning the loss of her beloved father when I met her in 2019.

He was a kind, loving man who was adored by his family. But, in the final months of his life, he felt consumed by shame, despite being a model citizen who would never dream of trying to avoid paying taxes.

He died by suicide in late 2018. Gayle told me her story because she wanted the world to know about the terrible impact of the loan charge.

Gayle said: “They should treat people as human beings and not label them as tax avoiders. Many, many people did not go in with the intention of avoiding tax. They took professional advice. My dad always took advice and he trusted them. I hope nothing like this ever happens again.”

“I see people at protests and it looks like it’s broken them. They are still very lovely but they are just broken, just like dad was.”

If Ms Truss triumphs, she has an opportunity to finally close the door on this tragic saga.