grilling

HMRC Grilled: Why Haven’t They Pursued Loan Scheme Promoters?

Over the years there has been a lot of talk about HMRC’s commitment to pursue promoters of tax avoidance schemes, however it seems that nothing has been done to tackle loan scheme promoters and MPs are demanding to know why.  The Loan Charge and Taxpayer Fairness APPG has written to Jim Harra, HMRC’s Chief Executive, pointing out that HMRC has been dishonest about the failure to pursue promoters of schemes.

Freedom of Information requests reveal the shocking truth that a deliberate decision was made by senior HMRC officials not to conduct a review into promoters, preferring instead to continue blaming and persecuting individuals affected by the loan charge.  This was an intentional decision made so that individuals did not perceive themselves to be off the hook.  However, these individuals should never have been on the hook if HMRC had collected the tax and NICs from the scheme promoters, as they should have done.

HMRC have often given the impression that they actively pursuing scheme promoters, for example:

  • When answering a parliamentary question in January 2021, then Financial Secretary to the Treasury Jesse Norman MP confirmed: “The Government and HM Revenue and Customs (HMRC) are committed to continuing to tackle promoters and operators of tax avoidance schemes. This includes challenging the entities and individuals who promote disguised remuneration loan schemes.”
  • In it’s official response to the independent loan charge review, published December 2019, it was confirmed that “the Government and HMRC are determined to continue to tackle promoters of tax avoidance schemes”.  Using the word ‘continue’ suggests that there has already been work undertaken to tackle promoters.
  • In October 2019 Penny Ciniewicz, Director General of Customer Compliance at HMRC, told the Treasury Select Committee that: “We have more than 100 current investigations into promoters, and we’re keeping a very close eye on the market for avoidance. We are spotting schemes as they emerge and we’re tackling them.” 

In addition, the letter points out a shocking revelation that a senior HMRC official actually rejected the idea of a review into the role of promoters as they wanted to continue to blame individuals.  This is truly outrageous and has been a key part of their propaganda throughout the implementation of the loan charge policy.

MPs are now seeking answers from HMRC’s Chief Executive to the following:

  1. How can you credibly state HMRC is being tough on promoters, when internal emails revealed by FOI show that HMRC are not pursuing promoters for promoting schemes now subject to the Loan Charge?
  2. Could you please explain why HMRC took the extraordinary decision not to conduct a review of promoters, because it might have shown that individuals were not to blame, in the way HMRC has always tried to suggest?
  3. Considering that you were copied into the email where this decision (by Carol Bristow) was discussed, can you confirm that you supported this decision and strategy?
  4. Can you please confirm that only those who used the loan schemes are being pursued to pay the tax which HMRC claim has been avoided and that those who promoted, enabled, operated, and profited from the loan schemes have not paid any of the disputed tax?

The APPG’s letter , signed by co-chairs Sammy Wilson MP and Greg Smith MP, and vice chair Baroness Kramer goes on to state:

We are clear that MPs and peers have been given a misleading picture of the reality of the HMRC position regarding promoters of loan scheme are in (now it is clear they have not been pursued for promoting loan schemes, nor asked to pay any of the disputed tax arising from use of the schemes they sold). We believe that this has been deliberate and should be investigated as part of a full and wider (independent) investigation into the clear campaign of disinformation surrounding the Loan Charge.

A commentator on twitter suggested that HMRC has: “orchestrated a callous strategy to punish those least able to defend themselves whilst allowing those who profited most to escape all accountability whatever the human cost.”  The human cost referred to is the number of very sad incidences of suicide which have been linked to the loan charge.  

 

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