MPs must put right “injustice that is a stain on this country and our democracy”
It’s hard to imagine, amidst all the challenges of COVID-19 and Brexit and with politics feeling as divided as it ever has in this country, that one issue could unite MPs across the political spectrum, but that is what has happened with the Loan Charge. A remarkable 235 Parliamentarians have joined the Loan Charge All-Party Parliamentary Group, which considering this is on the face of it, a technical tax issue, is extraordinary, writes Greg Mulholland, Loan Charge campaigner, campaign director for the Loan Charge Action Group.
In the Report Stage of the Finance Bill today (1st July), this issue hits the political mainstream with a cross-party amendment tabled by senior cross-party MPs, to seek to put right a profound injustice and deal with a policy that Parliament passed without understanding what it was doing. Many MPs, from all parties and all down the country, have so far had the courage to speak up. The question is now, will MPs have the courage to vote to put right this injustice or will they follow the whip in the hope of some junior frontbench role.
For those who haven’t heard of the Loan Charge, it is a bit of legislation quietly snuck through Parliament (without any honest account of what it really meant or the devastating impact it would have) and pushed through not by the Government, but by the UK’s out-of-control tax authority, HMRC. It was brought to tackle ‘disguised remuneration schemes’ because HMRC had for years failed to do so. The idea was that payroll loan schemes, that had proliferated as a way round the confused and flawed IR35 legislation, could be stopped through a new charge to tax the loans as income.
No-one would have objected, had this been brought in to actually stop such arrangements going forward and the Loan Charge Action Group and MPs fully support clamping down on such schemes. The problem is that HMRC were cynical and greedy and decided that they should be allowed to go back years to demand tax without having to ever legally prove it was due and so the retrospective Loan Charge passed into law.
HMRC clearly told ill-informed Ministers that this was a great way of avoiding the ‘inconvenience’ of allowing citizens to defend themselves in court (inconvenient, perhaps, to tax collectors, but a basic plank of a fair judicial system in any free country). What they failed to tell Ministers (and have tried to cover up ever since) is that the Loan Charge would hit thousands of ordinary hardworking individuals, that it would cause a mental health crisis affecting tens of thousands of people, that it would cause bankruptcies and that it would, inevitably, lead to suicides. All this, at the same time, of course, that HMRC was agreeing sweetheart deals and being soft on the disgraceful tax avoidance of large corporations.
The first news of tragic suicides came out in 2018. By autumn 2019 it had been confirmed that seven families had lost loved ones facing the Loan Charge. Despite being forced into commissioning an ‘independent’ review, there was an extraordinary lack of compassion shown by Ministers when Loan Charge suicides were raised in Parliament, which they now have been on numerous occasions.
That seven people have taken their own lives, as a direct result of a cruel and grotesquely undemocratic policy is shocking enough, but what is remarkable is that the suicides are not the most shocking part of this whole, shameful episode.
I am proud to have served as a Member of Parliament for 12 years and I have to say, that in all that time I have never seen anything quite as rotten as the Loan Charge Scandal. Ministers and senior HMRC Officers, senior civil Servants have wantonly and deliberately misled Parliament and deceived journalists. Ministers can perhaps use the excuse of not being on top of their brief or simply taking at face value what they are being told by HMRC, presuming HMRC are being honest (and it is odd the way some Treasury Ministers seem to think their job title is ‘Spokesperson for HMRC’, rather than being in charge of them and watching over their work). However, the profound dishonesty displayed consistently, deliberately and defiantly by senior HMRC officers and their press office is a national scandal and one that urgently needs a proper independent inquiry.
HMRC have deliberately given a false impression of the impact the Loan Charge would have on people, of their own (appalling) treatment of taxpayers, of the average sums being demanded from people and about the reality, as they well knew, that people facing the Loan Charge would be forced into bankruptcy, would have to sell their homes and would kill themselves.
The culture of dishonesty starts at the top and includes senior officers deliberately misleading Parliamentary committees and the press office tweeting what are demonstrably dishonest tweets, about of all things, a case where a suicidal person (that HMRC knew to be suicidal) was made bankrupt, had her house repossessed and her locks changed.
Everyone thinks people should pay their tax, but the utterly unethical and ruthless – and actually dishonest – approach taken by HMRC to cover up their own failures and the cruel, unjustifiable reality of the Loan charge is a disgrace and something that should be subject to proper, full investigation.
The latest development is that MPs have published a damning report showing that the supposedly ‘independent‘ review was nothing of the sort and that HMRC and the Treasury nobbled and directed it from start to finish.
So today (1st July) it’s time MPs stood up to be counted and decided if it is more important to right a serious wrong that Parliament unwittingly passed or whether they want to curry favour with their party whips; whether they are more interested in helping constituents, or getting a junior job on the frontbench; whether they went into Parliament to parrot lines given to them by party advisers or whether they went into Parliament to tackle injustice.
The Loan Charge is an injustice that is a stain on this country and our democracy. It is time MPs told the Government and an out-of-control and unethical HMRC that this is one injustice that now they intend to put right.