barbed wire & bird

HMRC’s Deceit Regarding Loan Scheme Convictions

HMRC’s Chief Executive Jim Harra has been accused of deliberately deceiving the Treasury Select Committee at an oral evidence session last month.  

In response to questioning about whether HMRC has pursued promoters of loan schemes, Harra said the following:

“I believe that in recent years we have successfully prosecuted or convicted about 20 promoters of tax avoidance schemes, which will cover the full range of marketed schemes. But nowadays, about 90% of all marketed avoidance is in employment taxes such as disguised remuneration”.

According to the Loan Charge Action Group, this is a deliberately misleading answer.  They say Harra will know that none of the convictions he refers to are related at all to the promotion of schemes now subject to the Loan Charge or what HMRC calls “disguised remuneration”.

Allegations

The same misleading information has been given out in both letters and in answers to Parliamentary questions on the Loan Charge, stating:

“Since 2016, more than 20 individuals have been convicted for offences relating to tax evasion or fraud where arrangements have been promoted and marketed as tax avoidance.  These have resulted in over 100 years of custodial sentences being ordered and 9 years of suspended sentences”.

HMRC have been asked, including via Freedom of Information requests, to give information about these oft-quoted convictions and whether any are for promoting the schemes subject to the Loan Charge.

Analysis of applicable convictions

LCAG has undertaken research and found 22 convictions which relate to tax evasion or fraud related and were promoted or marketed as tax avoidance.  The reality is that NONE of these convictions (see full list in LCAG letter here) has anything at all to do with the Loan Charge.  To refer to them when asked directly about what action has been taken against those who promoted  the schemes subject to the Loan Charge is therefore deliberately deceitful, and is dishonest.

HMRC’s conscious decision NOT to pursue promoters

Furthermore, LCAG has evidence that HMRC consciously decided not to purse loan scheme promoters.  As detailed in a FOI response, Carol Bristow, HMRC Individuals Policy Director in CustomerStrategy and Tax Design Group said this in an email to others senior officers, including Mr. Harra, on 23rd 8 August 2019:

“I too wondered whether a review into the role of promoters in avoidance would actually provide us with some helpful interest and support for our work on promoters.  In the end I concluded any review on promoters would be used to claim that individuals were not accountable and so the loan charge was wrongly directed at them”.  

This was a clear decision made by senior HMRC officials to specifically not review the role of promoters, preferring instead to solely focus on individuals.

Time for some answers! 

LCAG has collated this evidence and and submitted it to Harriet Baldwin MP, Treasury Select Committee Chair, to request they hold HMRC to account.  Specifically, the Treasury Select Committee has been asked to:

“stop HMRC (and Treasury Ministers) from continuing to get away with giving the false impression that HMRC has pursued the promoters of loan schemes”

Certainly, here at IWORK we have been covering this topic for years and we agree that HMRC cannot be allowed to get away with such deceit.

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