Raymond Doherty 22 Aug 2019 11:05am

Westminster demonstration against loan charge organised

The Loan Charge Action Group (LCAG) has called for a “mass demonstration” on Westminster next month

Prime minister Boris Johnson needs to be reminded of his “hustings promise to suspend and review” the loan charge, said the group. It wants its “biggest protest yet” to take place on 11 September.

Pressure is mounting on the government to take action on the highly controversial charge. Just this week Conservative Party allies of Johnson, including MP Iain Duncan Smith, publicly backed a review.

The loan charge came into effect on 6 April and applies to anyone who used so-called disguised remuneration schemes. The legislation added a 45% non-refundable charge on all loans advanced through the schemes – some of them dating back to 20 years ago – unless the individual had agreed with HMRC to settle their tax affairs by midnight on 5 April.

However, many of the 50,000 people caught up in the issue are low paid, such as nurses and social workers, and were persuaded by their employers to join the schemes. Many of them are facing bankruptcy. Yet, at the time the schemes were set up, HMRC did not question their legitimacy.

The impact of the charge has been so serious that a number of suicides have been reported in connection with the tax. HMRC reported itself to a police watchdog over one case in March.

While campaigning for the Conservative leadership, Johnson said that the policy needed “a proper independent review”. He had also signed a letter urging the then chancellor Philip Hammond to delay the charge.

The LCAG says its has over 3,000 members, including NHS workers, teachers, public sector agency staff, power, gas and oil industry contractors, as well as IT, digital and banking sector specialists.

In response, a government spokesperson said, “Disguised remuneration schemes are tax avoidance arrangements that seek to avoid Income Tax and National Insurance contributions (NICs) by paying scheme users their income in the form of loans, often routed offshore. The loans were never intended to be repaid, so they are no different to normal income and are taxable.

“The loan charge is designed to tackle this tax avoidance and ensure everyone pays their fair share. It builds on more than two decades of HMRC action to challenge these schemes.”