Boris Johnson has delivered on his promise and ordered a review of the controversial Loan Charge. Having previously described it as “superficially unjust” in the Conservative Party leadership race only a few months ago, Mr Johnson announced last week in Prime Minister’s Questions that the Government will conduct a “thorough review.”
The Loan Charge is a retrospective tax impacting reportedly 50,000 or more individuals who took out disguised remuneration schemes dating back to 6th April 1999, which paid their earnings through tax-free loans.
However, given that many contractors were mis-sold these loans and took them out on the understanding that they did not need to pay income tax and National Insurance Contributions on them, the Government has been criticised for expecting thousands of individuals to settle huge tax bills in one go.
MP David Davis, for example, recently said it is “an injustice that has to be put right.” Mr Davis is one of 200 MPs from various parties who – before the new Prime Minister was announced – wrote to Mr Johnson and his opponent, Jeremy Hunt. Many of these letters outlined the importance of suspending the tax, which was introduced on 5th April 2019 and has reportedly led to several individuals affected committing suicide.
Confirmation that a review will take place has been welcomed by most, but Steve Packham, Spokesperson for the Loan Charge Action Group, made it clear that “without a suspension, any review is meaningless and more lives are at risk.” In response to the news, Mr Packham also went on to say that “the issue is in Boris’ hands and to avoid further tragedy, he needs to act now and suspend the Loan Charge.”
After ignoring pressure to delay the introduction of the charge earlier this year, a Government led by the previous Prime Minister, Theresa May, set contractors a deadline of 30th September 2019 to disclose the full details of the loans to HMRC.
The tax office has said it has written to around 40,000 people that it believes must repay this tax. However, with HMRC itself stating that another 10,000 individuals are implicated, contractors are advised to think carefully about whether the charge could apply to them.
With individuals being pursued by HMRC for hundreds of thousands of pounds in certain cases and the tax office hoping to raise £3.2bn from it, the fact that the new Prime Minister, who spoke of the “very very difficult issue” has bowed to mounting pressure was welcomed by the Loan Charge All Parliamentary Party Group (APPG).
That said, the cross-party group did stress “the loan charge review MUST be independent” of HMRC and the Treasury, while the Government last week said it will publish further details regarding the review in “due course.”
This is all well and good but what of those (me included) that have been bullied into settlement with the threat of pay up or face the loan charge..
Settlement is nothing more than pay the tax on the loans, in the years drawn, plus interest. Oh…. And sign his to say that you were a tax cheat and will not come and ask for this money back.
I had to sell my home in order to finance the settlement. My mental and physical health would not allow me to continue fighting on.
I once again feel cheated.
That’s very troubling to hear, Sam. And as another comment points out, it seems there is a lack of focus on the parties that promoted these loans. Should you not be aware of the campaign against the charge, it might be worth getting in touch with The Loan Charge Action Group. In addition to lobbying against the tax, the group also has links with counselling and further support.
Wouldn’t trust the Right Honourable, self-serving piece of shist to organise a piss-up in a brewery especially with the help of the rest of the trough eaters.
And what of those of us who did pay taxes that were due at the time without trying to avoid them?
Can we have a refund?
You sound really uninformed on this matter.
There were thousands of people who were forced into these contracts as a condition of employment; (and didn’t even get the tax breaks, that were kept by the scheme promoters — nor did they know they were on any kind of scheme). And these were some of the lowest earning workers; (not high flying tax dodgers you seem to think — but social workers, temp workers etc).
As for you as a righteous tax payer who “paid what you owed” please explain in what capacity. Was that as a PAYE employee receiving paid holiday, sick pay, maternity / paternity pay, dental plan, training and pension? Or were you operating a Ltd company being taxed over what a PAYE individual would be with none of the benefits?
As a freelance with a ltd company, the risks were well known and only the greedy were tempted.
The scheme was undoubtedly big but it certainly wasn’t clever. Unfortunately the best we can hope for is exteneded time to pay and a lower interest rate. Maybe the government would better spend their efforts on brining to book the people who set up and promoted these schemes in the first place.
The Government’s certainly under increasing pressure to focus on the promoters of these loans, Andy – and rightly so. That said, given so many have shut down and disappeared, it remains to be seen how many will be investigated.