Why the loan charge APPG inquiry could protect hundreds of thousands of contractors - Greg Wright

WHENEVER a scandal causes misery for thousands of law-abiding people, there are always cries of “never again”.
The purpose of the APPG’s new  inquiry is to examine how contracting and freelance working  should operate, be remunerated and taxed fairly and appropriately.The purpose of the APPG’s new  inquiry is to examine how contracting and freelance working  should operate, be remunerated and taxed fairly and appropriately.
The purpose of the APPG’s new inquiry is to examine how contracting and freelance working should operate, be remunerated and taxed fairly and appropriately.

Regular readers of this column will be familiar with the large numbers of honest people who have contacted me because their lives have been ripped apart by the loan charge.

The work of an indefatigable group of MPs provides hope that history will not be allowed to repeat itself.

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The Loan Charge All Party Parliamentary Group (APPG) has launched an inquiry looking at how contracting and freelancing should be remunerated and taxed to stop another loan charge scandal.

Seven suicides were reported to the APPG in the last Parliament. Last year, I had the privilege of meeting Gayle, who was mourning the loss of her beloved father.

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.

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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.

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, it concluded that the loan charge went too far because it overrode taxpayers’ protections by applying an “unprecedented” 20-year look back period.

The policy also failed to adequately consider the “serious distress” it would cause some people, the review concluded. The Government said it recognised the concerns raised in the review and accepted all but one of the recommendations.

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However, the APPG has warned that the loan charge has failed to stop the growth of loan schemes. The APPG said these schemes are being “openly advertised” to NHS staff, care workers, social workers, and teachers.

The purpose of the APPG’s new inquiry is to examine how contracting and freelance working should operate, be remunerated and taxed fairly and appropriately.

But it has an even more ambitious goal; it aims to devise a strategy to stop tax avoidance schemes from being promoted or even existing.

The APPG believes the inquiry is of “fundamental importance” to avoiding another loan charge scandal and the best way to stop the promotion and use of disguised remuneration schemes.

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It could also help to ensure that contracting and freelancing is recognised in legislation.

To quote Ruth Cadbury MP, the co-chair of the Loan Charge APPG (Labour): “It has become clear that one of the issues that led to the loan charge scandal is a lack of clarity over how contracting and freelancing should be structured, taxed and remunerated.

“This is partly the fault of unclear legislation and partly as a result of the many different and complex ways this important kind of working is paid.”

Sir Mike Penning MP, co-chair of the Loan Charge APPG (Conservative), added: “As well as highlighting the injustice of the loan charge, the loan charge APPG also wishes to stop any repeat of the loan charge scandal.

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“As well as pursuing those who mis-sell schemes we also want to see proposals to properly structure contracting and freelancing.”

Freelance workers and contractors are expected to play a major role in helping the UK’s economy recover from the crippling impact of the pandemic.

Now is the perfect time to stage this type of inquiry because it could help to protect hundreds of thousands of honest people from unscrupulous individuals who become wealthy on human misery.

If Boris Johnson’s Government is truly the champion of small businesses, it will act on the inquiry’s conclusions.

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