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Loan Charge

Volume 662: debated on Tuesday 2 July 2019

6. What estimate the Government have made of the number of promoters of loan schemes subject to the 2019 loan charge who have been convicted; and if he will make a statement. (911679)

10. What assessment he has made of the effect of the 2019 loan charge on people working in the (a) public and (b) private sector. (911684)

The loan charge tackles so-called disguised remuneration arrangements, which use loans to avoid tax. It applies in the same way to people in the public and the private sectors. A tax information and impact note published in 2016 and a report on disguised remuneration published in March 2019 both considered the impacts.

What more can be done to tackle the promoters of loan schemes who gave workers and businesses assurances, even though the Treasury had made it clear that the schemes were unacceptable? Should they not be brought to book? Have any of them been convicted yet?

My right hon. and learned Friend is absolutely right and HMRC will continue to take firm action against those who promote tax avoidance schemes. As he will know, and I think has been made public, it currently has more than 100 promoters under civil inquiry. It is important to be clear that although there are no criminal offences of promoting or marketing tax avoidance schemes specifically, HMRC may conduct criminal investigations and make referrals to prosecuting authorities where, for example, there is evidence that promoters have deliberately misrepresented the facts to it.

Perfectly innocent working people are caught in a terrible trap here and there have already been several suicides. HMRC said that

“teams are trained to identify customers who are anxious, worried or need extra support to ensure they get the help they need.”

Will the Minister confirm whether those people have had that training? Will a dedicated helpline be set up to help people who are under huge stress?

The hon. Gentleman is right that there is stress, but he should also be clear that a large number of people have been systematically using those means to avoid paying tax, and the potential amount payable is more than £3 billion. He should be protective of the tax base more widely when he reflects on those matters. He is right that HMRC is taking careful steps to ensure that it protects and supports those who may be in genuine difficulty, and those who have other personal concerns can of course be referred to outside agencies.

The reality is that many people caught up in the loan charge scandal were effectively mis-sold schemes that they were told had been QC vetted and were perfectly legal. That is underlined by the fact that no criminal charges are being pursued against any of the individuals who sold the schemes. Is it not time for this fresh Minister to take a fresh look at the Treasury’s approach to all this?

I think that my right hon. Friend misstates the case. A disclosure of tax avoidance number was associated with a large number of those cases. The people knew that they were in schemes that were potentially suspect. Every person is responsible for signing off their own tax return. I trust that my right hon. Friend will be reassured by the fact that recently six individuals were arrested on suspicion of promoting fraudulent loan charge arrangements. That speaks to a wider picture.

20. Economic crime defrauds the Exchequer of countless billions in revenue. Two and a half years ago, the Ministry of Justice launched a call for evidence on corporate liability for that. Incredibly, as of this morning, it says it is still analysing the evidence that it received. Clearly, cracking the problem is critical to the Treasury’s funding public services. What are Treasury Ministers doing to wake their colleagues up? (911694)

I can only admire the ingenuity of a man who can crowbar a question about the Ministry of Justice, unrelated to the loan charge, into this issue. Let me point out to the hon. Gentleman that regardless of what may be the case on that, HMRC is taking tens of billions of pounds, relating to avoidance and evasion matters, that are due. He should be very grateful and delighted about that.

The loan charge all-party group claims evidence for four suicides relating to the loan charge and HMRC has referred itself with respect to one. When I asked a parliamentary written question on the assessment the Treasury had made of the impact of the loan charge on the mental health of the people subject to pursuit, the answer was, to put it mildly, less than satisfactory. Will the Minister now tell us what effect the Treasury believes its policy has had on the mental health of all the people subject to pursuit in both the public and private sectors?

May I put on record my surprise that a former chairman of the Public Accounts Committee, with its concern for the public finances, should take that view? Some people may have been very adversely affected in mental health terms and we must protect them at all times using all proper measures. HMRC is attempting to do that. However, there is a much larger number of people who are simply seeking to avoid paying tax due.

People were told that they could work particular jobs if they took on this way of remuneration. Will that be considered? Will the Minister take on board what the right hon. Member for Putney (Justine Greening) said and just take a fresh look at this issue?

I remind the hon. Gentleman that there were other signs that indicated to people that they were in tax avoidance schemes—for example, a very low or relatively low effective rate of tax. The signs were there and people would have been right to pick up on them. Even if they were mis-sold, that does not have a bearing on the question of whether tax is now due.