The HMRC Loan Charge is a simple enough concept with multiple issues but there is a way to stop this.
It was introduced in the 2016 budget as a way to properly recoup unpaid tax from a specific kind of scheme. This involved disguised employment profits and disguised remuneration incurred from 1999-2019. It was designed to pay employees via loans instead of salaries taxed normally.
This budget categorised these as tax avoidance and this tax charge is in place to recoup as much of the outstanding amount as possible. HMRC are ruthlessly chasing to get these monies back. They obviously have a significant number of resources to be able to do this.
Yet there are multiple issues with the whole system that need bringing out into the open.
Firstly, this applies to a twenty-year period, so it is retrospective. That potentially means some people are going to be hounded for up to twenty years of arrears. You could be a regular contractor earning a decent wage, but it is unlikely you kept 20% or so of your salary back for 20 years.
Some of these people could well be retired and now living off a modest pension. That is to say, what is owed could be a debilitating amount of money. You might say it just needs to be paid.
Yet, for some of the people who took the HMRC loan charge, they did not use it to evade tax. Professional advisors gave the advice to take part in this scheme. Also, some schemes made false claims, so some people did not realise what they were getting in to.
Yet now, they are considered completely to blame.
What is the Loan Charge Action Group and who are they're fighting for?
There is a Loan Charge Action Group to support those affected by these issues. They claim that at least nine people being pursued by this have now taken their own lives. The action group consider the policy to be immoral and call for a review of it.
In the wake of this knowledge and on the back of the Post Office scandal, you might think ministers would feel the same. Yet so far there are no reviews or halts to this policy progressing. It is thought to affect up to 50,000 people.
HMRC merely say that to leave this unchecked is unfair to the 99.8% of taxpayers who did the right thing. As we wait with bated breath to see who the next Chancellor of the Exchequer will be, what will they be willing to do?
So, this situation is one that the Chief Exec of HMRC, Jim Harra, himself has called a ‘debacle’. It is clear that something needs to be done. There are calls for an independent review to see whether the approach being taken is fair.
If, in many of the circumstances, people did not really know what they were doing or accepted poor professional advice then is this truly fair? Either way there is hope that the new Prime Minister will see the importance of this. Once they are in office there will be calls from the Loan Charge Action Group to do just that.
For the outcome, we must wait and see.
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