Frances Ball 12 Apr 2019 12:32pm

MPs demand loan charge delay and inquiry

MPs have called on the government to delay HMRC’s controversial loan charge policy for those who have used a tax-avoidance scheme

A parliamentary debate on the policy was scheduled to take place last week, but was cut short by a water leak through the House of Commons chamber ceiling. Resuming yesterday, MPs from both main parties supported a non-binding motion to delay the loan charge policy.

Yesterday, MPs also backed holding an independent inquiry into the controversial loan charge, which has led to reports of those affected – who include council workers, nurses, and social workers
In late March, it came to light that one individual affected by the loan charge had taken their own life. HMRC referred the incident to the police and to the IOPC, the independent body that oversees HMRC’s complaints.

HMRC’s chief executive Sir Jon Thompson wrote to the Loan Charge All Party Parliamentary Group (LCAPPG) last month to express concerns about the reports of multiple suicides among taxpayers faced with huge tax bills.

The policy requires contractors who used loan-based avoidance schemes to pay retrospective tax on up to 20 years of income in a single year.

Although the motion passed automatically as the government abstained, it remains non-binding. The Treasury minister Mel Stride told the Commons during the debate that “it would not be right” to delay the charge.

“I appreciate that facing any tax bill is unwelcome but it is only right to deal with disguised remuneration”, he said. “Where we fail to do so then we are effectively saying to the 99.8% of other taxpayers who have not been involved with these schemes that we want them to pay more.”

That statement was met with a call of “sounds like a whitewash” from another Conservative MP.

The former defence secretary Michael Fallon criticised the policy, saying, “What feels wrong to some of us is that the equivalent effort does not seem to have been put into pursuing the promoters of these schemes or the employers themselves.

“The entire weight of recovering this so-called tax gap is falling only on the employees.”

A spokesperson for the Treasury confirmed Stride’s stance.