FOI finding shines a light on the number of contractors in need of support following Loan Charge scandal
A Freedom of Information (FOI) request submitted to HMRC by the Telegraph has found that the tax office has referred over 300 taxpayers to the Samaritans since September 2022.
The Telegraph reports that HMRC began working with the Samaritans once connections had been made between 10 suicides and the Loan Charge scandal.
The revelation is a reminder of the damage caused by the Loan Charge, which continues to affect contractors seven years on from its introduction.
Continued inaction over umbrella regulation
In the past, some contractors were paid via loans or in other ways that do not attract tax deductions. These methods were never previously considered to be tax-avoidant.
However, HMRC now considers this a method of tax avoidance, and is seeking to recover unpaid taxes on the fees paid in this manner via the Loan Charge. The Telegraph estimates that around 60,000 contractors were affected by the policy.
With all income treated as if it was earned in a single tax year, the Loan Charge means that many of the affected contractors have been left with unpayable bills – with some liabilities running into the hundreds of thousands.
The Loan Charge scandal has been back in the spotlight this year, following the Horizon scandal. Leading MPs have debated the Loan Charge in the House of Commons, calling for a review of HMRC’s conduct over the controversial policy and in its dealings with affected contractors.
Similarly, many MPs and industry experts have called on the government to regulate the umbrella sector to help stamp out tax avoidance schemes, which continue to pose a risk to millions of flexible workers.
Referrals symptom of HMRC ‘hounding’
An HMRC spokesperson, quoted in the Telegraph, said the department had been working with the Samaritans to ensure that it was “identifying and supporting all taxpayers who need extra help” and “extra support to manage their tax affairs”.
But speaking to the Telegraph, Steve Packham – one of the founding members of the Loan Charge Action Group – said the move was symptomatic of the way HMRC “hound people and issue unpayable demands”, including in relation to the Loan Charge.
“The Loan Charge Action Group has supported many people expressing suicidal thoughts or intent”, Packham said. “The number of HMRC referrals to the Samaritans would have been much higher had LCAG not operated its volunteer helpline for three years”.
“With 40,000 people still facing the Loan Charge, we are deeply worried about what the impact will be”, Packham said. “Rather than relying on charities like the Samaritans, HMRC and the Government must accept responsibility and change their approach before more lives are ruined”, he concluded.
If you are affected by the Loan Charge, the Loan Charge Action Group has published some advice from an accredited counsellor on dealing with any feelings of stress you may be experiencing; you can read it here.
If you’re struggling, you can speak to a Samaritan at any time, any day of the year. Call for free on 116 123, or email jo@samaritans.org.
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