HMRC 'engaged disguised remuneration contractors'

A panel of MPs has finally got an answer to a question on Loan Charge 2019 that the taxman was criticised to ContractorUK in November for dodging.

In fact, three months since HMRC ducked whether it engaged contractors who used disguised remuneration schemes caught by the charge, the panel has reportedly been told that it did.

Not by the Revenue however, but by the former HMRC contractors themselves who say they used such schemes during their time at the department, the Sunday Telegraph reported.

Representing just a handful of the 50,000 affected individuals, the ex-Revenue contractors told the newspaper that they face HMRC penalties as a result of using the scheme.  

One contractor quoted on condition of anonymity was said to be facing a liability of almost £140,000, although whether their engagement was with HMRC was not made clear.  

The disclosure that HMRC has 'turned against its own' on the loan charge (as it did with both IR35 and 2017’s off-payroll rules), follows an estimate that it will net £800m from caught individuals.

Issued to the Financial Times by a Revenue spokesman, the estimate was implied because while the loan charge is set to yield £3.2bn in total, “three-quarters” of it will be collected “directly from employers.”

But the tax authority was then accused of issuing “deliberately misleading statement[s] to journalists” by lobbyist the Loan Charge Action Group, in relation to another mainstream press piece.

Featured in the Guardian, the piece carried a quote from a HMRC spokesperson stating that: “Since the formation of HMRC’s fraud investigation service on 1 April 2016, more than 15 individuals have been convicted for offences relating to arrangements which have been promoted and marketed as tax avoidance schemes and sentenced to over 95 years custodial.”

In response, the Loan Charge Action Group said: “It turns out that none of these cases were about promoters  promoting loan-based arrangements, meaning that HMRC have deliberately and cynically misled journalists”.

The group, which is inviting people interested or affected by the charge to an ‘open meeting’ in London on the evening of Spring Statement 2019 – March 13th, said HMRC was trying to justify its “aggressive behaviour,” and cover up “years of inaction” -- given that it did not challenge the schemes at the time.

Liberal Democrat MP Sir Ed Davey, chair of the Loan Charge APPG tweeted: “If government changes tax law, the change should only apply to future tax not someone’s tax affairs from 20 years ago. It’s called the rule of law. Especially where HMRC has previously accepted an individual’s tax affairs were closed.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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