With the Post Office Horizon scandal fresh in our minds, the Commons debated the Loan Charge yesterday.
Horizon and the Post Office rumbled on for years with debates and inquiries but did not explode into public consciousness until the recent ITV Drama.
The Loan Charge is in that rumbling along stage, having had a limited inquiry and a few debates but, notwithstanding thousands affected and ten suicides, it has yet to make an impression on the public and so, demand political action.
It is in all our interests that HM Revenue & Customs pursue ‘disguised remuneration’ schemes which disguise income in order to evade tax.
Many contractors however, faced with the complications of a particular tax regulation called IR35, were persuaded by employment agencies, employers and accountants to accept payment in the form of a loan. They were assured that this was proper and above board, typically they paid fees of 18% to the provider. They declared the arrangements in their tax returns, unchallenged by HMRC.
Then years after the event, for tax years now closed, they started to receive huge tax bills, with eye watering additions for interest stretching back over the years.
Typically, these are people of modest means including many nurses, computer programmers, some were even contractors working at HMRC.
Much of the debate last Thursday was taken up with the detail of HMRC’s shocking treatment of its victims and the terrifying experience it can generate.
The worst of it however, is that unlike the Horizon scandal, where the Post office and Fujitsu can be blamed, the powers that HMRC are now using were specifically granted for that purpose by the House of Commons itself in the Finance (Number 2) Act 2017. (Exclusive blame lies with the Commons because Finance bills don’t go to the House of Lords for scrutiny).
A key question that we touched on was, how was it that, when we approved the measure, we didn’t realise the full implications and consequences of what we were about to inflict?
The 2017 Loan Charge measure defies the principles of good legislation because, first, it is retrospective in its effect, and second, it denies anyone affected the right to have their case resolved by a tribunal or court: It makes HMRC their sole judge, jury and executioner.
I have constituents who came to me for help, insisting that they declared all their affairs properly at the time and believed they had paid the tax that was due. HMRC didn’t challenge them or raise any question about what they had clearly set out in their tax returns. Then, using the power to re-open closed tax years retrospectively, HMRC has presented them with demands that they just cannot comprehend, against which they have no right of appeal.
Their lives are in turmoil, and they stand to lose everything
I wonder if it will take a TV drama to resolve