Labour attacked over botched Loan Charge amendment explainer

An attempt by Labour to explain why it abstained from a vote on Loan Charge Finance Bill amendments to help affected workers has backfired for inflaming not pacifying its critics.

In a seven-paragraph reply to a taxpayer who objected to party leader Sir Keir Starmer about the move, a party official makes a number of claims that experts do not think bear scrutiny.

Top tax barrister Keith Gordon said of the reply by Labour’s ‘Lee’ (no surname): “I'm not convinced that the author of this…response actually understood what s/he was writing.

“However, as we saw in the [House of] Commons last week, such political decisions do not need any rational basis.”

'Labour failed'

The QC was referring to the government overcoming MPs’ opposition to the widely-criticised loan charge, in the shape of three amendments, including the popular ‘NC31.’

“Labour failed to support NC31 which was what was required to oppose the retrospective taxation of the Loan Charge”, one contractor Tweeted to Sir Keir yesterday.

Another contractor rebuked the Labour leader, who on the eve of the vote was sent a note by a contractor explaining that without the party’s support he would commit suicide, saying:

“I'm shocked that by not supporting NC31,which would not have removed any perceived tax liability, that you removed hope for thousands [of workers] that access to justice would be restored.”

'Clamping down on avoidance'

Under NC31, the charge which was unveiled in 2011 would be confined to applying only in cases before then where the taxpayer demonstrated that they knew the loan was taxable.

But in his reply on behalf of Sir Keir, Labour’s ‘Lee’ states: “[We] have not opposed the government’s changes to the Loan Charge, as it is clamping down on tax avoidance”.

A taxpayer corrected in a Tweet: “There were no government changes to oppose.

“There were changes proposed by David Davis MP to support. Those changes would restore the access to normal judicial process which the Loan Charge removes.”

'Fig leaf to cover HMRC failings'

Mr Gordon also found fault with the wording from the “Labour Membership Services and Correspondent” unit official, who replied on Sir Kier’s behalf.

“The loan charge was not meant to clamp down on avoidance.

“There are enough rules and principles that have that effect,” the QC said, adding. “The loan charge is a fig leaf to cover up decades of HMRC failings.”

'Insulting'

Online, others were irked less by the reply’s content and more by its form.

“[A] templated reply sent to loads of people impacted by the Loan Charge is not only insulting,” a contractor in receipt of it said, “[but] it also shows how ill-informed Labour, [its] leadership and their front benches are on this matter.”

Similarly directing his ire at Sir Keir, whose “mailbag is so full” that Lee says in his reply that the former head of the Crown Prosecution Service will not respond to him in person or directly, another contractor tweeted:

“You really should have informed yourself of the specifics on the topic,” the Labour leader is told of the loan charge, “before [you ask] a junior comms person to issue this template response.”

'Affront to the rule of law'

Also now following Sir Keir on social media, albeit just to confront him, a Loan Charge contractor said: “I would have thought that with a background in law you would (a) understand that retrospective legislation is an affront to the rule of law; and (b) [understand that the] Loan Charge simply removes access to the judicial process which should be the right of every UK citizen.”

Sounding more aligned with taxpayer concerns, Labour’s Lee states in the reply: “[The party] still believes that HMRC have serious questions to answer about their handling of this issue”.

'Very spurious'

The reply adds: “Labour has and will continue to call on the government to examine how the enablers of tax avoidance, such as promoters of disguised remuneration schemes, have been tackled by HMRC and ensure that those engaged in these activities are held to account.”

But barrister Mr Gordon signalled that the party’s well-meaning intentions miss both the point and the issues currently at stake.

“Promoters are maintaining that they can take pay out of the tax net in ways that I would say sound very spurious,” the QC said. “What's more, the loan charge will NOT apply to anyone duped into signing up to these schemes now.”

 

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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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