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Loan Charge

Volume 664: debated on Tuesday 1 October 2019

3. If he will make it his policy to suspend the 2019 loan charge for the duration of the review of that charge commissioned by his Department. (912449)

5. If he will make it his policy to suspend the 2019 loan charge for the duration of the review commissioned by his Department of that charge. (912451)

9. What (a) support and (b) financial relief he plans to provide to people subject to the 2019 loan charge during the duration of the independent review of that charge. (912455)

14. If he will make it his policy to suspend the 2019 loan charge for the duration of the review of that charge; and if he will make a statement. (912461)

17. If he will suspend 2019 loan charge repayments for the duration of the review of that charge. (912465)

18. If he will make it his policy to suspend the 2019 loan charge for the duration of his Department’s review of that charge. (912466)

The Government have listened to concerns expressed across the House about the loan charge, and, as the House will know, an independent review is now in progress under the leadership of Sir Amyas Morse. While it is under way, it is right for the loan charge to remain in force and for the Government to implement legislation on which the House agreed. The review will conclude by mid-November, to let anyone who may be affected know, and to give people time to plan in advance of the January self-assessment filing deadline. To help taxpayers who may need longer to pay, Her Majesty’s Revenue and Customs has confirmed again that there is no maximum time limit for payment plans.

The loan charge is the worst form of retrospective taxation. It is causing real hardship and distress to law-abiding taxpayers, and this week it was reported that a seventh person had taken their own life because of it. How many more people are going to take their lives before the loan charge is scrapped?

Let me correct my hon. Friend on the facts. We have been notified of three suicides that may have some connection with the loan charge, and which have been referred to the Independent Office for Police Conduct. In one case there has been a referral back to HMRC, but in all other cases there has been no further development, so I do not recognise the picture that my hon. Friend has described. Let me also remind him that although these effects have been much bruited, there is also the question of collecting the several billion pounds of back tax that is due.

What is clear is that the retrospective loan charge is causing huge pain and upset as people’s livelihoods and homes are threatened. Will the Minister ensure that the review hears directly from people who have been so affected, and will he either suspend the loan charge or at least tell HMRC that those who have signed a settlement agreement can pause their payments until the review has been concluded?

I am grateful for the question. Of course any injury to individuals from any act of Government or their agencies is to be deeply regretted. I recognise that, and if it has happened here, it is appropriate for the House to feel that way.

I have no powers to direct Sir Amyas Morse. I understand that he is taking evidence from external sources, including the loan charge all-party parliamentary group and the Loan Charge Action Group, which acts as its secretariat. I have met the APPG and the secretariat separately. So the matter is being fully addressed. The details of settlement have been set out on

On the issue that my hon. Friend the Member for Wellingborough (Mr Bone) raised with the Minister, the hard fact is that seven people facing challenge or investigation for the loan charge have taken their own lives. He can attribute cause as he wishes. The fact is also that the distress has been caused by the historical incompetence of HMRC and the subsequent willingness of Ministers to use retrospective taxation. Are the Government going to give up on the premise of using retrospective taxation, or does it fall to the House to pass laws that will stop them doing so in future?

The legislation is not retrospective. [Hon. Members: “It is.”] There are defined circumstances in which HMRC and the Government may seek to use retrospective taxation, and they do so with extreme care and attention. All that I am doing is referring my right hon. Friend to the facts as reported to the IOPC. As he will be aware, these are immensely difficult cases in which many circumstances and factors may be in play.

Despite the review, the loan charge remains in place and HMRC continues to pursue people for advance payment notices for which there is no right of appeal. That clearly goes against the spirit of the review. Will the Minister now suspend all activity?

The review is designed to assess whether the Government’s policy is appropriate, and it would be wrong to change it until the review has had chance to make a decision on it. The Treasury and the House have a great interest in supporting the provision of public services, which the recovery of tax avoided in this way, in many ways egregiously, is designed to fund.

I honestly do not think that the Minister is paying attention. These comments are coming from Members behind him, not opposite him. [Hon. Members: “From all sides.”] These people followed professional advice and declared their arrangements to HMRC, which did nothing. Yet it is now going back and taxing them retrospectively, all the way back to 1999 in some circumstances. The Minister cannot stand at the Dispatch Box and just ignore what he is hearing from the Benches behind him.

Nothing could be further from the truth. We are carefully attending to concerns that have been expressed. That is why I announced changes in July and have written on two occasions to colleagues to inform them of changes and developments. That is why we have instituted this independent loan charge review, the purpose of which is precisely to scrutinise the extent to which Government policy is appropriate.

The Minister is bound to be aware of the scale of concern across the House and among those who are directly affected. He has outlined a date of mid-November. Immediately upon that date being reached, will he take urgent action to assist those affected?

I have no idea what the loan charge review will conclude, but I guarantee that we will look at its findings with all due speed and dispatch.

Like many Members, I have constituents who have been egregiously affected by the loan charge. The Minister’s response is unacceptable from their perspective. He should suspend all the loan charge activity while the review is under way and until the Government have responded to it. What preparation is happening in HMRC for the policy shift if the review says that the loan charge is unfair and needs to be changed? How will he deal with my constituents who have already had to pay but may be proven to have paid erroneously?

I am unable to comment on what the review will conclude. We can certainly look at whether there may be changes that HMRC would take rapidly thereafter. It possesses the capacity to do so quite quickly if necessary, as does Government. We will have to review that moment when it comes.

19. Seven needless deaths; seven families tragically left to deal with the consequences, and yet companies such as AML that have promoted the schemes are getting away scot-free. AML and its director, Doug Barrowman, appear to have moved away with no consequences whatever. In fact, they are boasting that HMRC is not pursuing them for any assets or unpaid taxes. Will the Minister detail the efforts that are being taken against such companies, which have caused so much pain and tragedy? (912467)

The hon. Lady is absolutely right to focus on the activity of the promoters. They are extremely ingenious in operating within the framework of law, but doing some very nasty and duplicitous things. They often operate offshore and it is extremely difficult to close them down when they are constantly mutating from one company to another. I assure hon. Members that we are looking at the problem extremely closely, and I hope to return to the House at some point fairly soon with some thoughts.

I worry that the Government characterise those who are suffering from the loan charge as in some way egregious tax avoiders, when it is abundantly clear that in the case of my constituents they acted on advice, openly, and in the belief that the scheme was approved by HMRC. I also worry that HMRC is behaving towards taxpayers in a fashion that is new, and in many cases, tax advisers say, unprecedented. I also think that the retrospectivity is deeply questionable.

I must say, I am surprised to hear a man of my right hon. and learned Friend’s legal standing and status regard this as retrospective, because it plainly is not. [Hon. Members: “It is!”] There are many parts of tax policy that have to look back to the basis of an asset or a liability, and that has happened here. In this case, HMRC has taken quite vigorous action over the years, in different forms, to let people know. Of course, it is subject to the loan charge review; we will see what that concludes. However, I remind my right hon. and learned Friend that these people were in many cases paying very little or zero in tax. [Interruption.] Of course the circumstances can differ, but there are a large number of people who knew, or should have known, that they were avoiding tax, and doing so un—