In February 2021, the Loan Charge APPG wrote to Jim Harra, HMRC’s Chief Executive outlining a number of concerns in relation to contractors’ use of disguised remuneration (DR) schemes whilst they were engaged to undertake work for HMRC. Harra has now published his response which asserts the following:
- That HMRC did not withhold information regarding their contractors’ use of DR schemes from the House of Lords Economic Affairs Committee (EAC);
- That HMRC did not keep the EAC informed of their discovery of contractors use of DR schemes because the committee did not ask to be kept informed;
- That HMRC originally failed to identify the DR scheme usage because the contractors were engaged via an intermediary;
- That is it possible for there to be more than the 15 so-far identified contractors using DR schemes whilst working for HMRC;
- That HMRC’s engagement of DR users does not undermine HMRC’s position of “always clear” that DR schemes are unacceptable.
The reason given for the fact that HMRC did not keep the EAC informed is flimsy at best given that the committee had specifically asked about this and were unsatisfied with HMRC’s response at the time. The other points made in Harra’s letter are as expected, including their re-assertion that HMRC was “always clear” that the use of DR schemes is unacceptable. As we have previously reported, HMRC were “always clear” despite the fact that they did not have legal backing for this position which seems pretty incredible to us!
You can read the Loan Charge APPG’s letter to HMRC here.
You can read HMRC’s response here.