Government Must Answer Urgent Loan Charge Questions

The Loan Charge and Taxpayer Fairness APPG has written to the new Financial Secretary to the Treasury, Lucy Frazer QC MP, with 10 key questions on the Loan Charge that need answering, as they tackle some of the key reasons why the Loan Charge is fundamentally flawed, as well as unfair.

The letter, sent from the three Co-Chairs of the Group – Sammy Wilson MP (DUP), Greg Smith MP (Conservative) and Mohammad Yasin MP (Labour) – comes shortly after HMRC confirmed that there have now been eight suicides of people facing the Loan Charge.

The important letter raises key points that so far the Treasury and HMRC have not addressed. These include:

  • That the key conclusion of the Morse Review, that the law was clear from December 2010, is fundamentally flawed.
  • That the reality of the Rangers Supreme Court Ruling in 2017 crucially determined that employers, not employees, are liable for any tax deemed to be due, something which HMRC have admitted they cannot find any legal precedent to overturn.
  • That a court judgement ruled that HMRC cannot retrospectively transfer liability to employees.
  • That HMRC failed to collect PAYE from agencies when they should have done.
  • The reality that no loan scheme promoters have been prosecuted for promoting loan schemes nor asked to pay any of the disputed tax.
  • That HMRC interfered in the selection of experts to advise the Morse Review and have since given an incorrect account of the process.
  • The fact that the Loan Charge denies citizens the right to go to court to challenge it
  • The fact that HMRC’s have failed to honour the Morse Review recommendation regarding voluntary restitution of payments by taxpayers who are no longer subject to the Morse review due to the changes in the Finance Act 2020.

The APPG points out that Loan Charge was not properly scrutinised by Parliament when introduced, nor does it have any relevant or justified legal basis.  It should never have been passed and the Government must now rectify this by announcing legislative change, as well as instructing HMRC to pause any enforcement of the Loan Charge and associated Accelerated Payment Notices.

Given all of the outstanding serious issues, combined with the suicides, there must surely be a fresh and fully independent review of the Loan Charge, one that is properly independent of HMRC and the Treasury.  The Loan Charge APPG have called for this and it is backed by the opposition parties as well as many Conservative MPs.  146 Parliamentarians have so far signed a letter to the Prime Minister and the Chancellor calling for a new review and a fair resolution to the Loan Charge issue.  This is a large number of MPs and we wonder how long the government intends to keep on ignoring the issues?

It is a travesty that this flawed legislation continues to be allowed to operate unchallenged despite it being fundamentally flawed from a legal perspective, the suicides, the devastating financial consequences to innocent people, and the very long list of problems.  It’s nothing short of a scandal and we fully support the APPG in calling out the government.


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