On 20 November, Conservative backbencher Steve Baker drew MPs from across the political parties to a debate in Westminster Hall on the effect of the 2019 disguised remuneration loan charge. Mr Baker argued against the retrospective nature of the legislation and said that HMRC should take more steps against promoters of loan schemes, who ‘are the ones profiting from this misery’.
A group of those affected by the charge have formed the Loan Charge Action Group (LCAG) and mounted a campaign against it. More than 100 MPs have signed an early day motion calling on the government to significantly revise the legislation.
Steve Baker began by saying he believed the retrospective nature of the loan charge undermined the rule of law, as it denied certainty to taxpayers in planning their tax affairs. He argued that the government’s efforts should be focused on those who had enabled and promoted loan schemes, rather than individuals who in many cases might be unaware of the charge. A freedom of information request has revealed that while HMRC has issued about 23,000 loan charge awareness letters since the second quarter of 2018, it believes some 50,000 individuals may be affected.
Mr Baker recommended requiring every advertisement of a DOTAS-registered scheme to be accompanied by a warning that the purpose of registration is to enable HMRC to identify tax liabilities and recover them when such schemes are proven not to work. HMRC should also contact taxpayers individually to make them aware that registration of a scheme does not convey legitimacy.
Labour MP Siobhain McDonagh said that the proposed 20-year reach of the legislation is usually reserved for blatant acts of criminality. Many of those affected had acted in good faith. Ms McDonagh accused HMRC of ‘ruthlessly pursuing hard-working contractors, while rolling over in the face of obvious and aggressive tax avoidance by so many of the UK’s largest corporations’. LCAG analysis of those affected highlighted 68% describing depression, 71% fearing bankruptcy, 31% fearing relationship breakdown and 39% having suicidal thoughts.
Liberal Democrat MP Sir Edward Davey suggested MPs should work cross-party ahead of the report stage of the current Finance Bill to put together a new cl, under which any loan charge would come into effect only after the date of royal assent to Finance (No 2) Act 2017, which introduced the charge.
Economic secretary to the Treasury, John Glen, responded on behalf of the government. He denied that the charge was retrospective, ‘because it sets out Parliament’s intention: payments subject to the loan charge should always have been, and will be, subject to tax’, he stated. He also referred to HMRC’s recent announcements about being prepared to agree manageable payment plans wherever possible, and simplified payment terms for individuals looking to settle their tax affairs before 2019.
On 20 November, Conservative backbencher Steve Baker drew MPs from across the political parties to a debate in Westminster Hall on the effect of the 2019 disguised remuneration loan charge. Mr Baker argued against the retrospective nature of the legislation and said that HMRC should take more steps against promoters of loan schemes, who ‘are the ones profiting from this misery’.
A group of those affected by the charge have formed the Loan Charge Action Group (LCAG) and mounted a campaign against it. More than 100 MPs have signed an early day motion calling on the government to significantly revise the legislation.
Steve Baker began by saying he believed the retrospective nature of the loan charge undermined the rule of law, as it denied certainty to taxpayers in planning their tax affairs. He argued that the government’s efforts should be focused on those who had enabled and promoted loan schemes, rather than individuals who in many cases might be unaware of the charge. A freedom of information request has revealed that while HMRC has issued about 23,000 loan charge awareness letters since the second quarter of 2018, it believes some 50,000 individuals may be affected.
Mr Baker recommended requiring every advertisement of a DOTAS-registered scheme to be accompanied by a warning that the purpose of registration is to enable HMRC to identify tax liabilities and recover them when such schemes are proven not to work. HMRC should also contact taxpayers individually to make them aware that registration of a scheme does not convey legitimacy.
Labour MP Siobhain McDonagh said that the proposed 20-year reach of the legislation is usually reserved for blatant acts of criminality. Many of those affected had acted in good faith. Ms McDonagh accused HMRC of ‘ruthlessly pursuing hard-working contractors, while rolling over in the face of obvious and aggressive tax avoidance by so many of the UK’s largest corporations’. LCAG analysis of those affected highlighted 68% describing depression, 71% fearing bankruptcy, 31% fearing relationship breakdown and 39% having suicidal thoughts.
Liberal Democrat MP Sir Edward Davey suggested MPs should work cross-party ahead of the report stage of the current Finance Bill to put together a new cl, under which any loan charge would come into effect only after the date of royal assent to Finance (No 2) Act 2017, which introduced the charge.
Economic secretary to the Treasury, John Glen, responded on behalf of the government. He denied that the charge was retrospective, ‘because it sets out Parliament’s intention: payments subject to the loan charge should always have been, and will be, subject to tax’, he stated. He also referred to HMRC’s recent announcements about being prepared to agree manageable payment plans wherever possible, and simplified payment terms for individuals looking to settle their tax affairs before 2019.
