New Loan Charge Review attacked for being ‘independent’ only in name

Boris Johnson omitting the word ‘independent’ from the 2019 Loan Charge Review he vowed appears not to have been accidental -- at least in the eyes of affected contractors’ supporters.

In announcing the review's key terms online, the government insisted three times that it is going to be “independent,” and stressed the “independence of mind” of its head Sir Amyas Morse.

Keith Gordon, QC, said yesterday that having previously headed the National Audit Office, chartered accountant Sir Amyas “certainly has the skills” to look into the now in-force charge.  


But the barrister also expressed "concern" that the review looks set to be staffed by HMRC and HM Treasury civil servants, calling into question its true independence.

Mr Gordon said: “If anything has already been learned from the past 24 months, it is that HMRC and HMT officials are able and willing to manipulate facts in order to justify their actions in respect of the loan charge.”

On social media, contractors also sounded alarmed. “Reading this [the HMT announcement of the loan charge review],” wrote one, “I'd question the use of the word ‘independent.’"

'Not going to go far enough'

A former Tory party leader, Iain Duncan-Smith MP echoed: “While HMT have finally announced an independent review into the loan charge, it is clear that this is not going to go far enough.”

Not removing the review from Whitehall’s reach follows a Treasury review of the charge in March, which MPs have called a “whitewash.” It was described by tax experts as “shameful.”

“The review must be genuinely independent of the Treasury and HMRC,” the Loan Charge APPG said yesterday before the terms were unveiled, sounding fearful of another whitewash.


The MPs added in a letter to chancellor Sajid Javid: “With the prime minister’s commitment to an independent review, we hope and assume that this is a genuine commitment.”

The chancellor has also been told by the MPs that the review, due to close in November, should take evidence from parties outside of Whitehall, “including those facing the charge.”

On Twitter, both Mr Duncan-Smith and Mr Gordon agreed that the review’s call for evidence must be widely sounded. However, the short timeframe is bothering the barrister.

“It is understandable why the review has been given such a short timetable, but this will leave many people wondering whether there is sufficient time to allow the review to be as thorough as it needs to be."

'More time will be needed'

Mr Gordon also said: “I hope that, if at any time in the next two months Sir Amyas considers that more time will be needed, he will feel able to request an extension and require all enforcement activity related to the loan charge to be suspended in the meantime.”

Timing is troubling too to Clive Gawthorpe, partner at accountancy firm UHY Hacker Young.

“News [of this review into the loan charge] comes too late for many taxpayers who have had to sell their home and other assets to pay HMRC,” he said.

“It is a shame that the government did not announce this at the end of July when they came into power. That would have made a lot of difference.”

Had the review been announced then, there is a greater possibility that it may have come with a suspension or deferment to Loan Charge deadlines -- the latest of which is September 30th.

'Fair share of tax'

But the deadlines and the charge itself will remain in force while the review is carried out, meaning sticking to existing settlement or APN payment plans is still the recommendation.

“Everyone should pay their fair share of tax,” Treasury minister Jesse Norman said yesterday, sounding begrudged at having to launch the review.

He added: “These disguised remuneration schemes are highly contrived attempts to avoid tax, but it is right to consider if the Loan Charge is the appropriate way of tackling them.”

'Not fit for purpose'

Former tax inspector Carolyn Walsh believes that it is much less than appropriate. “With respect to HMT, the Loan Charge was designed to ‘draw a line’ under tax avoidance arising from the use of loan schemes

“[But] it didn’t,” she says. “The same providers are still at it, proving that the Loan Charge is not fit for purpose. What other conclusion can be drawn from any review?”

At UHY Hacker Young, the suggestion is that one conclusion could be that HMRC is right to chase tax it deems owed, albeit with “less punishing” interest for the debtors.

'Conflict of interest'

Almost regardless of its findings, the review must be thoroughly independent. The Loan Charge APPG said: “The Loan Charge Review secretariat cannot be provided by HMRC or HMT staff or there’s a clear conflict of interest, utterly incompatible with an independent review.”

Ahead of an exclusive analysis which it is preparing for ContractorUK on the Loan Charge Review, HMRC dispute advisory WTT Consulting suggests that lack of independence is likely to be the review's flaw.

The advisory's head of tax Tom Wallace said last night: "Sir Amyas will resource his review team with staff from HMRC and HMT, [so] it is not a stretch to suggest that those staff will be drawn from a pool that have already been involved in the Loan Charge -- and are tainted by the previous three years of HMRC justification of why it was needed. 

"To be truly independent, it can only be sensible to appoint a tax barrister or QC to lead the review who can be impartial and not beholden to any HMRC or HMT paymasters."

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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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