If it wasn’t for the Brexit merry-go-round, then another political hot potato would be getting a lot more coverage than it currently is. The Loan Charge scandal, unlike Brexit, is uniting Parliamentarians against a draconian policy that has been slammed by MPs and peers as undermining the rule of law and costing lives, writes Steve Packham, Spokesperson and co-founder of The Loan Charge Action Group.
An extraordinary 276 MPs, from all political parties, have supported a suspension or scrapping of the retrospective Loan Charge. With such huge concern amongst our decision-makers, it is hard to believe that this policy hasn’t been amended and revoked. This shows that, in reality, it is the unaccountable and out-of-control HMRC who are really in charge here and it is they who are desperately and illegitimately trying to thwart the will of Parliament, something that needs an investigation in itself.
The support of so many MPs is, refreshingly, as a direct result of people power, of lots of Davids and Davinas fighting back against the unaccountable Goliaths of HMRC and the Treasury. As people attended constituency surgeries and protests in Westminster, more and more MPs became aware and the Loan Charge scandal is now regarded as a fiasco of bad policymaking, inadequate scrutiny and disinformation.
The Loan Charge Action Group, the group representing the thousands of people and families facing the Loan Charge, was formed in early 2018. Many ordinary contractors had started to receive brown envelopes demanding eye-watering sums for ‘tax’ that has never been legally proven to be due, for arrangements that were never illegal. Arrangements that people had been advised and encouraged to use, to avoid the flawed ‘IR35’ legislation and the administration and costs of running a limited company.
Our campaigning and the support of many excellent MPs and the Loan Charge APPG finally led to the Government conceding a Loan Charge review, chaired by former Comptroller and Auditor General of the National Audit Office, Sir Aymas Morse. This happened after the now Prime Minister was asked publicly if he would commit to a review. It will report in mid-November.
There are still concerns, though, as to whether the review will be the genuinely independent review needed. First of all, the Secretariat is made up of HMRC staff, who therefore are unlikely to be objective about the role and conduct of their own organisation, something that must be fully and properly examined. Secondly, a Freedom of Information request exposed that the Terms of Reference of what is supposed to be an independent review was actually drawn up by HMRC and the Treasury. So they clearly attempted to stitch up the review before it had even begun. More hopefully, though, Sir Amyas has stated that he will decide on the remit of the review and he will be the one making decisions, so we can only hope this is true and that it is based on the evidence.
It remains a huge concern, in any case, that despite being forced to announce a review, the Treasury and HMRC are still refusing to suspend the Loan Charge (which will be due in January 2020) and related activity, including the legally and morally questionable ‘Accelerated Payment Notices’ which give HMRC a near-absolute right to pursue people for sums that have never been proven, and only allow an appeal after an individual has paid up. So you might be able to challenge a bill you were forced to pay and have it overturned, but that would be little consolation if you’ve already sold your home or been made bankrupt.
Tragically, but inevitably, the Loan Charge has led to seven confirmed suicides, something that both the Government and HMRC were warned would happen and have shamefully ignored. The All-Party Parliamentary Loan Charge Group have been sent evidence of these tragic and unnecessary deaths and have sent this evidence to Sir Amyas’ review. A few weeks ago, there was a moving vigil at HMRC when family members handed in a letter begging Sir Jonathan Thompson to avoid further tragedies, a plea he coldly ignored.
Even now, knowing that seven families have lost loved ones, the Treasury and HMRC are refusing to stop pursuing people, something which MPs have described as callous and reckless. It also looks as though this refusal may form part of a legal case into Misconduct in Public Office.
At least the review gives the many thousands of people facing the Loan Charge some hope. Yet at the same time, the same forces in HMRC and the Treasury are seeking to attack contractors and freelancers with a new weapon, the so-called IR35 ‘off-payroll rules’, known as the Off-Payroll Tax. This reform is something that the current Government intends to introduce next April, yet already contractors, many also facing the Loan Charge, are being told they won’t be needed after December.
On top of the unpayable demands due to the Loan Charge, many people now face losing their jobs and livelihoods and this means that contractors cajoled into paying monthly ‘time-to-pay’ instalments will no longer be able to do so, nor pay the Loan Charge. So the Government’s latest policy would perversely actually make it impossible for the Loan Charge to succeed. This latest blow, part of this Government’s unfathomable ‘war on contracting’, will also cause even more anxiety and stress, which could lead to further tragedies.
So the Government and HMRC created this whole mess, through bad legislation, wrongly pursuing genuine contractors and freelancers for imagined underpayment of tax, when contractors have none of the security or benefits of employment. Now, not only are they refusing to clean up the catastrophic mess of the Loan Charge, they seem hellbent on making it worse. This from a Chancellor who in the past said that the “silly” IR35 legislation should be repealed. If there is a General Election, as seems likely, then contractors and freelancers must make sure their voice – a voice of several million UK workers – is heard.
For now, we hope that the Loan Charge Review will properly look at the evidence before it, the evidence of a major national scandal and one that has cost lives. Brexit may inevitably be proving very difficult to resolve but the Loan Charge scandal could and must be and with such overwhelmingly support for doing so in Parliament, the Government must listen. Lives and the reputation of the UK as a fair country depends on it.
If you have been impacted by the Loan Charge, for more information and support, please contact the Loan Charge Action Group.