Loan Charge debate in the Commons: Five key blows that dealt HMRC a bloody nose it won’t ever forget

They say a week is a long time in politics.

Well, after the remarkable week for the campaign against the dangerous, unfair Loan Charge, a week can be a very long time in campaigning too, writes Steve Packham of the Loan Charge Action Group.

History in the making

In fact, the week commencing Mon 15th January 2024 should go down in the history books as the week that the Loan Charge scandal broke through, into both the mainstream media and into the public consciousness.

It was also the week when parliament seemed to finally wake up to the reality -- not only of the whole scandal, but also to the reality of His Majesty’s Revenue and Customs. In short, MPs exposed HMRC’s rotten culture and its out-of-control behaviour. It was a week of real change.

None of this would have come to pass without a quite remarkable debate in the House of Commons on Thursday January 18th.

‘HMRC acts with impunity'

Secured by MPs from the Loan Charge and Taxpayer Fairness APPG, MP-speaker after MP-speaker not only exposed the disgraceful reality of the government and HMRC’s approach to contractors caught by the Loan Charge, but also exposed the truth about the tax office’s treatment of these ordinary people – the speaking MPs’ constituents, ten of whom facing the Loan Charge have killed themselves. Just to reiterate, ten people have taken their own lives over a tax policy.

For the first time in a Loan Charge debate of this kind, not a single MP moved to water down the message or even really show support to the government and HMRC. Every single speech was powerful, well-informed and damning of a failed policy, an unruly public body (“HMRC acts with impunity”), and even suggestions of a state-sponsored cover-up. 

‘The Loan Charge is the next Post Office Horizon scandal’

Little wonder, then, that MP after MP made comparisons with the appalling Post Office scandal. And while there are clear differences, there are also clear parallels, with an unaccountable arm’s-length, government-funded body putting its own reputation before the lives of  (60,000) ordinary people and showing its willingness to distort and hide facts from MPs and the media, to stop the truth coming out about its own failures. 

There was so much passion and purpose in this Commons Loan Charge debate and so many remarkably strong and powerfully statements from MPs of all the political persuasions. But here, exclusively for ContractorUK, are five key takeaways from this historical debate.

1. Abject disappointment for a taxman who thought he’d washed his hands

First, the debate showed very powerfully that if the government and HMRC thought the issue was done with -- and they had got away with the Loan Charge scandal, they were very much mistaken.

No doubt thinking that by ignoring letters signed by large numbers of MPs and failing to properly and honestly answer parliamentary questions they could avoid scrutiny, the debate showed that the commitment of parliamentarians is greater than ever -- both to expose the scandal but more importantly, to keep pushing until there is a change of approach and a resolution. As Tory MP Sir Desmond Swayne powerfully asserted, ‘the Loan Charge scandal WILL reach the public’s consciousness.’

2. 'Bad behaviour' as Sir Iain Duncan Smith put it, that’s so bad it’s worth getting irate about

Second, it was striking that now, as well as commitment, there is real anger from parliamentarians at the way HMRC and the government have conducted themselves (“bad behaviour” -- former Tory leader Sir Iain Duncan Smith).

Previously, there had been clear upset at the appalling fact that people have been killing themselves as result of this HMRC-sponsored government policy; there has been concern about the impact on constituents, and frustration at the clear obfuscation and deflection from senior HMRC staff and ministers alike. (Sarah Green MP: “Over three years later the material [showing the final draft of the Loan Charge Review] has still not been released” by HM Treasury).

Yet now there is real, burning anger from MPs, not only at the way their constituents, ordinary hardworking people, were being treated – pushed into suicide, divorce, bankruptcy, even abortion (as Sarah Green MP revealed) – but also fury at the refusal to tell the truth; the cover-up, and the contempt of parliament from the same two parties.

Several MPs, including senior Conservatives actually warned the Treasury minister tasked to respond to the debate in the Commons to be careful what he said, and to avoid simply reading out the usual templated rubbish from HMRC.

3. A totally at sea Treasury Minister whose actions spoke a thousand apologies

Third, it is notable that the minister was very visibly uncomfortable, when responding to the debate. He sounded uneasy and nervous, and certainly not convinced by what he was reading out or the arguments behind it. This is in stark contrast to the previous minister -- all willing participants in the whole Loan Charge scandal who acted as apologists for HMRC, just with different styles of expression.

Instead Nigel Huddleston MP, the financial secretary to the Treasury, in a rambling and at times confused speech, looked as if he wanted to be just about anywhere else than at the despatch in this debate. 

Claiming absurdly to have been asking the same questions to HMRC that MPs were asking in the debate (and claiming to have already had the answers from HMRC), the minister must have left the chamber wondering what had hit him. And if, as we are led to believe, he is a decent and affable person, he will be troubled at what he heard throughout the debate and at what he had been given to read out to try to justify it.

4. Retrospection was the Revenue’s response to not doing its job at the time

Fourth, it was very clear that the penny really has dropped among MPs, about the reality of the Loan Charge scandal and the fact that HMRC failed to police the contractor supply chain; failed to do its clear legal duty under the agency provisions or ‘agency rules’ and failed to collect PAYE at the time from agencies, umbrella companies and client companies who engaged them. 

A year ago, I wrote an article for Contractor UK about this – it’s something that HMRC and HM Treasury have tried to brush under the carpet. But alas for them and thanks to our campaigning and the input of the many excellent tax sector professionals who have signed the Loan Charge Resolution proposal, MPs have now lifted the carpet and found what HMRC have been trying to hide. 

MPs are now aware that HMRC conceived of the Loan Charge, not the elected government and it clearly did so because officials knew they were out of time to pursue individuals. And as we heard numerous times in the debate, the tax office still can’t find legal justification for doing so.

Several MPs made the point that it is agencies/employers that should have paid tax deemed to be due, at the time. Yet instead, HMRC invented a law to retrospectively allow them to go after people (“hounded”), where they otherwise would have no legal right to do so and in other cases, to do so rather than going through the normal tax dispute processes.   

5. Off the record, on the record or on background only? With HMRC; it’s now all for the birds anyway

The fifth, final point which is clear from all the week’s media coverage of the Loan Charge (The Telegraph and BBC’s Newsnight, among others) and also from social media as well as the debate itself, is that HMRC have lost control of the narrative over the Loan Charge scandal. Better still for the 60,000 wronged taxpayers? MPs and many journalists simply don’t believe their soundbites any longer.

With the debate, mainstream press coverage and the comprehensive report by Tax Policy Associates founder Dan Neidle on Knox Group director Doug Barrowman’s links to the Loan Charge scandal, last week was the week that HMRC and its press office -- which has been shown in the past to issue misleading and at times downright dishonest statements -- simply lost control of the messaging over the Loan Charge. A charge that the department itself conceived and then in our view, and many of the MPs’ eyes, deceived parliament over.

No wonder the comparisons with the Post Office Scandal were made (and one MP, Andrew Bridgen, cheekily pointed out that HMRC also use a Fujitsu computer system!).

Horizon Vs Loan Charge: notes on the modern scandals of our time

The efforts of the wronged postmasters and campaigners – backed by some excellent MPs - have been remarkable and inspirational and we celebrate their success in finally being believed and pushing towards getting justice.

While no one facing the Loan Charge has been thrown in jail for crimes they did not commit, people have been demonised by HMRC’s dishonest propaganda and shamed by their ‘behavioural insights’ and their tiger-branded ‘DR Project’.

People who did nothing more than went to work; who took and followed professional advice and placed their trust in others, have been made to feel like criminals, as well as financially ruined; in both cases to the point where some people have taken their own lives. MPs warned Mr Huddleston -- did he want to in future be complicit in failing to listen, failing to act and allowing more suicides to happen?

We know from the Post Office Scandal how long it takes for accountability, for honesty, for justice. The Post Office (and government) had hoped and assumed that the postmasters would fade away and give up, but they did not and they’re an inspiration -- a reminder to keep campaigning.

Our message on behalf of Loan Charge contractors…

So our message to HMRC and the government is this:

You’ve had your turn demonising Loan Charge victims with the dishonest propaganda, the guilt shaming ‘nudges’ from behavioural insights and the DR Project with the menacing tiger image. Well now it is our turn to ‘Make it Real’ by exposing the reality. It is our turn to roar and we will continue to do so, and to stand together, working with courageous independent minded MPs, until we are all heard and fair resolution, not an unaccountable, unfair and uncontrollable HMRC, is the result.