Contractors, the Loan Charge APPG Review is absolutely damning

Yesterday, Wednesday April 3rd 2019, the Loan Charge APPG released its report on the 2019 Loan Charge.

This ahead-of-schedule report by this cross-party group of MPs comes ahead of a loan charge debate in parliament today -- April 4th. It is on April 5th, of course, when the charge applies.

Before I make some acknowledgements to those without whom this unique 91-page report would not have happened, it must be recognised that the findings within are absolutely damning of HMRC, writes Graham Webber, director of WTT Consulting.

Damning findings (cont.)

It accuses HMRC of a cynical campaign of deliberate misinformation and manipulation of data, ignoring facts and the rule of law; using the loan charge to cover up a lack of action on schemes that they knew about in plenty of time and essentially, misleading parliament.

Some of the key findings related to this include (almost word-for-word from the MPs who sit on the Loan Charge APPG):

  • The real reason for the introduction of the loan charge was to bypass the normal legal processes and to allow HMRC to collect tax where they failed to do their job.       
  • The loan charge legislation rides roughshod over the entire tax system, undermining longstanding, basic and fundamental taxpayer protections.
  • There has been so much misleading information from HMRC and the Treasury that it is impossible to trust anything they say with regard to the loan charge.         

Furthermore, the report calls for a review of HMRC and HM Treasury staff and officers, as there is a suggestion that the Civil Service Code and the Ministerial Code have been breached. This is serious. The report calls for disciplinary action and for a change of leadership in HMRC, if they are to recover any trust within parliament or the tax-paying public.

Some of the key findings related to this include (almost word-for-word from the MPs who sit on the Loan Charge APPG):

  • The way in which HMRC has conducted itself over the loan charge from start to finish, including with regard to the wilful and chronic campaign of misinformation, to parliamentarians and the wider audience, is disgraceful.
  • Behaviour of HMRC staff suggests at a wider level an organisation that has lost its way, is lacking fundamental underlying values and is devoid of proper leadership.
  • HMRC’s failure to set up a suicide prevention phoneline, knowing the clear suicide risk of people facing the loan charge, is wilfully negligent, and its failure to deal with the threat to vulnerable individuals has, in some cases, breached their own Vulnerable Customer Guidelines.

So, the basis and policy behind the loan charge is comprehensively and completely destroyed by this first truly independent exploration of the legislation. And that legislation “is retrospective”.

To quote the MPs: “HMRC are pursuing people for  closed  tax years, including in some cases where people have only closed tax years. This is against the Taxes Management Act 1970 and against international principles of tax.”


In addition, says the loan charge APPG, “We have found no example of a new tax law being introduced that allows  closed  tax years to become subject to tax.”

The report makes clear that this seemingly unprecedented pursuit of taxpayers is being used to frustrate and bypass the law in a deliberate, sustained and biased manner, supported not only by senior HMRC officers, but also by HM Treasury.

It’s not the only aspect without precedent. Addressing both the risk of loan charge-induced suicides (the link between the legislation and people killing themselves is determined as “clear and irrefutable”), and actual instances of suicide -- a total of nine deaths are cited in the report, the MPs say:

“For so many parliamentarians to raise the suicide risk, and [in terms of] actual suicides linked to a government policy, [it] is unprecedented.”

The remedial detail in the report mirrors many of the elements and proposed solutions that have been suggested to HMRC and parliamentarians by us over the past four years. There’s also a a call for an immediate delay in implementation, which today’s debate will push for.


The Loan Charge APPG’s recommendations include (-- simplified here for brevity):

  • Implement a six-month delay and suspend all settlements.
  • Remove closed years from the scope of the charge.
  • Grant taxpayers statutory rights to defend against open years.
  • Set up a 24-hour counselling phoneline.
  • Launch a tax judge-led independent review of the legislation.
  • Give automatic, 10-year TTP arrangements for all taxpayers regardless of income.
  • Offer the option for a 10% full and final settlement rate on any open years.

This latter recommendation -- a quick, simple and easy answer to this slow car crash by imposing a 10% tax on all loans as a full and final settlement, is not new. It was made to the House of Lords last year. It reappears here but is now more complicated due to HMRC pressuring more desperate people into what is called a “settlement” but is, in fact, an imposed ‘take it or leave it’ determination.

A national scandal

Once again, HMRC by sticking to a dogma that is now independently and verifiably shown to have been supported with misinformation has created a situation in which clarity is missing. And uncertainty reigns. When will they learn? Here, we have a unique report that details nothing short of a national scandal that has been unfolding over the last decade-and-a-half.

We recognise that the Loan Charge Action Group has played a huge role in getting this report published and so they must be commended. Everyone both at and behind LCAG, ranging from the past members of its ExCo to those contractors lobbying their MPs this morning, should regard this as an important step on the way to what will hopefully be a root-and-branch review of the loan charge; HMRC policy and HMRC itself. We are forced to the egregious conclusion that without it; so without an independent review pressing with conviction the ‘reset’ button on the loan charge legislation, the APPG’s findings have just deepened the misery for contractors. Let us hope it will not be eternalised.

Profile picture for user Graham Webber

Written by Graham Webber

Following nearly 4 decades working in various tax disciplines, Graham co-founded WTT to offer his deep experience and understanding of complex tax structures to those embroiled in tax enquiries. More recently Graham was awarded best forum adviser and best forum personality in the ContractorUK Awards.
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