New Loan Charge APPG to probe government reply to Morse Review

Fresh praise for the newly reformed Loan Charge APPG is being balanced out with growing dissatisfaction about a number of Loan Charge 2019 issues that remain stubbornly the same.

Broadly, those issues are the lack of accountability of loan promoters, HMRC’s perceived leniency towards promoters and their persons, and HM Treasury’s evasiveness to MPs.

But there is also dissatisfaction at the Morse Review, despite its ‘better than expected’ verdict initially. Taking aim at is headline recommendation, Conservative MP David Davis said:

'Compromise pulled out of thin air'

“Sir Amyas Morse's report raises the point that the Treasury was still losing significant test cases up to 2015 and it was only resolved by the Supreme Court in 2017.

“The [Morse] review also said that 2017 legislation's retrospective elements were completely without legal precedent.

“Based on these [two] points, the proper break point should be 2017, not 2010, which seems like a compromise pulled out of thin air.”

'Utterly indifferent'

Tax blogger Richard Murphy is more concerned at how the review’s recommendations were translated into policy because, as others agree in relation to ‘full/reasonable disclosure,’ in places their meaning was intentionally lost.

“HMRC’s interpretation of Sir Amyas Morse’s review is similarly utterly indifferent to the situation people found themselves in,” Murphy says. “Morse tried to find some balance - and HMRC have chosen to ignore it.”

Both the recommendations by the former NAO boss and the government’s response to them will be the very first point of focus for the Loan Charge APPG, its MPs agreed on Tuesday.

'Beyond reproach'

“The general picture being communicated to me is that HMRC are out of control but consider themselves beyond reproach,” said Keith Gordon QC, implying that the MPs might have their work cut out.

Writing online, the tax barrister also said that scheme promoters should be invited on television or radio to “justify” their arrangements, in front of an independent tax expert.

Having last week offered to meet with any MP on the Loan Charge APPG who wants to discuss the loan charge (the group has new members), Gordon said such a public forum for promoters would be “interesting”.

He added: “If the schemes work, then that would be free advertising. If not, there will be less chance of another raft of victims.”

'HMRC should not be lenient'

Mr Murphy has similar ideas for the individuals behind the arrangements – they are harder hitting yet also work off the same ‘naming and shaming’ principle.   

“Whenever HMRC can identity a professional person engaged anywhere in the creation or supply of these schemes, they should refer them to a relevant professional body to ensure that they are duly penalised - with all publicity being given.

“And those bodies should not be lenient,” the tax researcher blogged. “By default, I suggest the penalty should be loss of professional status and fines commensurate with the losses they caused innocent clients to suffer.”

'Injustices'

MPs on the Loan Charge APPG said last week that they would continue to challenge the “injustices” of the charge and, in the words of reappointed co-chair Sir Ed Davey, push for a “just conclusion…for all.”

Newly appointed co-chair Sir Mike Penning, a Conservative MP, who will share the role with Sir Ed (of the Lib Dems) and Labour MP Ruth Cadbury, said he was looking forward to “asking the questions that need to be asked.”

Chris Matheson MP tried to do that on Tuesday, but appeared to receive no straight answer from Treasury minister Jesse Norman in response.

'Why was it necessary?'

The Labour MP asked Mr Norman: “If these arrangements were already illegal when my constituents were charged, why was it necessary to bring in the loan charge in 2017 at all?

“As the honourable gentleman will be aware from reading the [Morse] review, it is a very thorough and comprehensive piece of work”, the minister begun.

“He has accepted the case for a loan charge in principle -- he recognises that it was important to address the issue of abusive tax avoidance -- but he ​said that it should apply to loans taken out after a specific date.

“In his judgment, that represents a fair balance between the concerns that…[you raise] and the loan charge, and the government have accepted that.”

'Unable or unwilling'

Online, affected taxpayers responded: “Unfortunately, [Mr Norman] is unable or unwilling to give a truthful answer to difficult loan charge questions,” said one.

Another Tweeted: “Unsurprisingly, [the minister] failed to answer the question put to him… because the schemes were never [illegal] and still aren’t”.

One of the new Loan Charge APPG members, Paul Holmes MP, said it was “clear” to him from only his first meeting with his colleagues that loan charge contractors “need further concessions” than those which the Morse Review recommended.

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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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