Tax body shares Loan Charge Review testimony
One of the first professional bodies to have given evidence to the 2019 Loan Charge Review has outlined some of its testimony to Sir Amyas Morse.
The ICAEW, the UK’s largest accountancy body, indicated that its submission to the review was in three parts: fairness and proportionality, impact on the tax system and further changes.
Under the latter, which were tabled for taxpayers who have already entered into settlement agreements with HMRC, the body said that the key was to now treat taxpayers with fairness.
'Should not be disadvantaged'
This focus on proportionality chimes with review outcomes already hoped for, such as a low tax rate loan charge, and a relaxation of the requirement for taxpayers to pay in one tax year.
“They [Loan Charge taxpayers] should not be disadvantaged by any changes introduced,” Frank Haskew of the Institute of Chartered Accountants in England & Wales (ICAEW) said in a letter to Sir Amyas.
“In the event that new terms are offered following this review, such terms should also be offered to those who came forward and settled. It would also not be unreasonable for those who did so to seek redress for the time and cost they have incurred in seeking to comply with the law.”
In the letter, in which Mr Haskew makes clear Sir Amyas has a “decision” to make about the potential for changes, the institute warns that it has not been listened to before. And it seems, not without consequences.
“[We] cautioned MPs that we had fundamental problems with the [disguised remuneration] legislation as drafted, and that HMRC had not acted quickly enough to address the problems when they first emerged, as well as subsequently. However, the legislation was not amended to address our concerns.”
Worse still, relevant legislative clauses were then not examined enough; and ensuing parliamentary debates lacked both substance and proper assessment of the taxpayer impact.
“[It] was very disappointing,” Mr Haskew, the ICAEW’s head of tax said, having outlined the many shortcomings.
“We now have a situation where individuals, having had to rearrange their tax affairs based on the introduction of the loan charge, now face uncertainty over whether there will be further changes in this policy area and therefore potentially further rearrangements of their tax affairs.”
A proper assessment of the clauses, plus a listening to of the concerns (which the letter acknowledges were raised not just by the institute) would have helped head off today’s “controversy” that is Loan Charge 2019.
'Damaged the integrity'
“We believe that it is for parliament to now resolve this,” said Mr Haskew. “However, the controversy surrounding the Loan Charge has damaged the integrity of the UK tax system and lessons need to be learned for the future to ensure it does not happen again.”
His letter to Sir Amyas clarifies that while the ICAEW supports measures to tackle tax avoidance, the legislation caused “hardship” for some, failed to account for taxpayers who were “misled” and was followed by HMRC’s incorrect approach of “looking to make the taxpayers concerned bankrupt.”
The institute wrote the letter as supplementary evidence to oral testimony it gave to the Loan Charge Review on September 16th, following the review’s unveiling on September 11th. The review is still scheduled to report back with Sir Amyas’ recommendations in mid-November.