Sir Keir Starmer has raised concerns about the impact the loan charge has had on people’s livelihoods, in a letter – seen by The Yorkshire Post – to the tax barrister, Keith Gordon.
The Labour leader said: “Many people face substantial payments for schemes they were often inadvertently forced into by employers or poorly advised by accountants.
“The impact in far too many cases has been extremely serious, in some cases leading to distressing financial and personal harm.
“We believe HMRC has urgent questions to answer about the handling of this issue and to ensure enforcement is fair and proportionate.”
The loan charge was introduced to tackle loan schemes, which were considered non-compliant disguised remuneration arrangements. It is essentially a tax charge on these loans taken out on or after 9 December 2010 and outstanding on 5 April 2019.
Starmer added that the way in which HMRC enforced the loan charge is “why we supported an amendment to last year’s Finance Bill”, as it would have forced a review of the impact by an independent panel within six months.
However, this was “shamefully” voted down by the Conservatives who are “still looking to avoid scrutiny of their handling of the issue.”
Therefore, he said: “I’ve instructed my Shadow Treasury Ministers to scrutinise this legislation closely and improve it, with the help of loan charge campaigners, to prevent anything like this happening again.”
Following the publication of Starmer’s letter, the Loan Charge Action Group (LCAG) has written to the leader of the opposition party to take up his offer to work with campaigners.
In its letter, seen by Contractor Weekly, LCAG said: “Without changes to the loan charge, there will be many further bankruptcies in addition to the serious risk of further suicides.
“To date, there have been seven suicides confirmed as being related to the loan charge, an issue that has been raised in parliament but disregarded by ministers and HMRC who have shown a callous lack of regard for people’s lives.”
The group added that there seems to be “considerable opposition” to the charge despite 115 parliamentarians signing an open letter to the Prime Minister and Chancellor calling for an independent review and suspension of it.
In response, Keith Gordon said: “I have long been prepared to work with any MP of any political affiliation in order to resolve this issue.
“I am glad that the Labour front bench now seems prepared to address the unfairness caused by the loan charge and wider problems within the tax system that the loan charge has highlighted. I look forward to working with them in order to reinstate fairness within the system.”
Andy Chamberlain, Director of Policy at self-employment trade body, IPSE, said: “It is good news that the Labour Party is piling pressure on this government and ensuring the loan charge scandal does not pass out of political memory.
“As we have highlighted in the past, HMRC’s approach has caused enormous distress to thousands of contractors across the UK and also failed to target the true villains of the piece, the people who actually promoted disguised remuneration schemes.
“It is right for Labour to push government on this to ensure both that policies are enforced fairly and proportionately, and also that there is never a repeat of this disastrous mess.”