MPs downplay Treasury minister’s Loan Charge closed years ‘commitment’
A surprise series of measures from Treasury minister Jesse Norman with the aim of assisting 2019 Loan Charge (LC) contractors is receiving a mixed reception.
Lord Forsyth, whose Lords’ Economic Affairs Committee yesterday quizzed Mr Norman on the charge, said the committee “very much appreciated” the showpiece of those measures.
In the minister’s exact words, that showpiece is that HMRC will “not apply the LC to a tax year where an enquiry was closed on the basis of the fully disclosed information.”
'Exclude from the charge'
This disclosure by Mr Norman sent the peers into a commotion with audible gasps and whispers because, as Lord Forsyth moved to proudly point out, the Economic Affairs Committee last year recommended:
“The loan charge legislation [should be] amended to exclude from the charge loans made in years where taxpayers disclosed their participation in these schemes to HMRC or which would otherwise have been ‘closed’.
But last night, MPs on the Loan Charge APPG clarified: “To avoid confusion, at the Lords’ Economic Affairs Committee, Jesse Norman did not exclude closed tax years from the LC.
“We strongly believe [this] should happen, [but instead he] merely [excluded] the small number of cases where an enquiry was opened then closed. [The LC] still applies retrospectively to the vast majority of closed years.”
'Separate out closed years'
The clarification may disappoint the visibly jubilant peers, who have characterised the LC as retrospective in its effect because in many cases the tax years it applies to are ‘closed’ years.
Like Lord Forsyth, Baroness Kramer yesterday rejoiced and thanked Mr Norman as she too seemed to think that HM Treasury is, in her words, agreeing to ‘separate out’ closed years.
The minister did caveat his “commitment” by saying due to its nature, “inevitably there will be guidance that unpacks it.” But he was giving peers “the broad structure,” he claimed.
'I don't know'
Upon questioning by Lord Forsyth, Mr Norman was unable to say if HMT’s ‘closed years commitment’ would be backdated, so as to help taxpayers who have already settled.
“I don’t know,” he finally admitted, after having had and asked for time in the session to “think it through.”
The Treasury’s financial secretary then blurted out: “There may be scope for them to revert even, as it were, where there’s been a settlement. I’ll have to explore that and write to you.”
Other aspects of the Treasury’s “assistance programme” for LC contractors (as Baroness Kramer called it), was said by Mr Norman to include new guidance on HMRC not taxing the same income twice.
With this guidance is “additional flexibility” for people “settling under the published terms who may be in genuine financial difficulty,” plus more “collaborative” communications by HMRC, said the minister.
But a breakdown in communication, at best, is now being hinted at by the Loan Charge Action Group, a lobbyist-turned-support group for LC contractors, which Mr Norman told peers that he had met with in his first seven weeks at the Treasury to help ‘get his head around’ the loan charge.
The group’s co-founder Steve Packham last night insisted on Twitter: “LCAG have not met, and have not received an invitation to meet with Jesse Norman. [But minister], we are more than happy to meet at your convenience to discuss the Loan Charge.”