Freedom of Information (FOI) requests by the Loan Charge All Party Parliamentary Group reveal that astonishingly HMRC withheld vital information from Parliament, including when questioned by the House of Lords Economic Affairs Finance Bill Sub-Committee in November 2018. The FOI requests concern HMRC’s engagement of contractors who were using disguised remuneration (DR) schemes, despite HMRC themselves being clear that such schemes are apparently unacceptable. Yet the reality is, far from ‘being clear’ that these schemes ‘did not work’, HMRC itself was using contractors who were using such schemes right up to 2020, even after the Loan Charge was introduced to Parliament and long after the Loan Charge legislation had been passed.
The FOI requests show HMRC being elusive in answering straight forward questions, discussing amongst themselves how best to tackle an “elephant in the room”, yet refusing to acknowledge the apparent “elephant in the room” nor state what it refers to. The FOIs also reveal:
- In November 2018, HMRC discovered that five contractors had been identified as having a history of using DR schemes and that one of those five was still engaged by HMRC at the time. This was not shared with the House of Lords Economic Affairs Sub-Committee, despite the correspondence between the Committee and HMRC on this very matter at the same time.
- HMRC failed to inform the House of Lords Economic Affairs Sub-Committee (EAC) about their use of contractors engaged in DR schemes, despite it being clearly something that the Committee should have been informed about, having previously asked about it in a formal Committee meeting and in four follow-up letters. It seems from the wording of emails, that a decision was taken within HMRC to withhold this information.
- Two of the five DR scheme contractors originally identified in 2018 (but withheld from the EAC) actually had used DR schemes whilst working for HMRC, which means that HMRC wrongly concluded that they had not. This was discovered in October 2020. As a result, HMRC misled a Parliamentary Committee by giving the impression (intentionally or not) that they had no records of contractors using DR schemes whilst working for HMRC; whereas in fact they did, but had failed to properly establish and certify this.
The Loan Charge APPG suggests that there must be a full and genuinely independent investigation into the matter, not conducted by HMRC or the Treasury, and that proper consideration needs to be given to whether any HMRC officials have breached the Civil Service Code. From reading the report and FOIs in full, it does seem that an independent investigation is certainly necessary as there is currently no credible explanation for HMRC’s elusiveness. You can read the full report here and the accompanying letter to Jim Harra, HMRC Chief Executive here.