Sir Keir Starmer edges Boris Johnson on loan charge 'mis-selling' scandal

Boris Johnson has possibly one last chance to intervene on the loan charge, before Sir Keir Starmer has his shadow Treasury ministers scrutinise the legislation with help from its critics.

In a new and suddenly politically-charged race between the PM and the opposition leader, the HMRC policy is being outlined to both of them as mass mis-selling, akin to the Post Office scandal, which their consciences are being urged to resolve.

The Labour leader himself has already characterised the 2019 charge as mis-selling, saying in a new letter to one of his constituents that “people face substantial payments for schemes they were often inadvertently forced into by employers, or poorly advised by accountants.”

'Mis-sold not misguided, prime minister'

Meanwhile Mr Johnson, who at a PMQs last month said HMRC customers were “misguided,” has been thanked by the SNP’s John McNally for speaking up about the issue, but also corrected:

“Rather than people being misguided, they were actually mis-sold the arrangements,” Mr McNally tells the PM in a letter being widely endorsed on social media for giving Number 10 a “perfect summary” of the unfairness of the loan charge.

The MP for Falkirk continues: “People were not given any sense of risk of using the schemes which were recommended, in some cases by chartered accountants and registered tax advisers, as entirely legal and in some cases less risky than using a limited company.”

'Mis-selling victims'

As a result, “the approach taken by HMRC and the UK government should be very different” than the approach currently being taken by HMRC with the loan charge, Mr Johnson is told.

“People facing the loan charge are victims of mis-selling,” the Loan Charge Action Group confirmed on Friday, also in a letter, but this time to Sir Keir offering its support in helping his shadow Treasury ministers scrutinise the rule.

LCAG explained: “People were told, in writing, by professional advisers and by the promoters of these arrangements, that these schemes were tax law-compliant and QC-approved.

“Some people even asked HMRC about them and HMRC did not tell them not to use them at the time, despite their claims that they ‘were always clear’ that they did not work.”

'Complete travesty'

“Someone needs to help,” a Twitter use chimed in, trying to goad either Mr Johnson or Sir Keir into intervening.

“This whole scenario [of the loan charge] is leading to anxiety at one end of the scale, escalating to suicide for many [at the other]. A complete travesty that someone needs to stop.”

All but committing to action, Sir Keir said in his letter (written to tax barrister Keith Gordon) that he believes “HMRC has urgent questions to answer”.

'Scrutiny to prevent anything like this happening again'

The Labour leader also told the QC: “The impact in far too many cases has been extremely serious, in some cases leading to distressing financial and personal harm.”

“I've instructed my shadow Treasury ministers to scrutinise this legislation closely and improve it, with the help of loan charge campaigners, to prevent anything like this happening again.”

While thankful for him making the instruction, LCAG’s Steve Packham regrets that the government’s “weak and vague proposals” will not achieve Sir Keir’s aim of avoiding a loan charge re-run.

'Compensation for victims'

Offering to work with Labour, and in a clue as to what it might ask the party’s leader to table in the House of Commons, the group said: “We believe that the best and only realistic way of doing this is to make agencies and/or scheme operators liable for any tax deemed to have been avoided.”

Mr McNally, for the SNP, makes a similar point in his letter to the PM. “Why [is it] that those who were advised to use these schemes [are the ones] that are being pursued… rather,” he says, “than those who profited from advising people to use these arrangements?”

On Twitter, a loan charge contractor reflected, somewhat optimistically: “Thank you so much John [McNally] for raising the unfairness of the retrospective loan charge with Boris [Johnson] at PMQs and in your follow-up letter. Victims of the Post Office scandal are being compensated, so will HMRC pay compensation for their loan charge debacle?”

'Getting away with it'

But others online say it’s not just a two-horse race or, if it’s going to be, that Mr Johnson and Sir Keir aren’t the only ones who should be blamed if the loan charge isn’t quashed.

Referring to Sir Graham Brady joining an open letter of MP protest against the loan charge, a social media user said: “It’s not just Boris Johnson, or even [chancellor] Rishi Sunak’s fault…it’s also the 1922 Committee’s failure for allowing them to get away with it.”

Profile picture for user Simon Moore

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.
Printer Friendly, PDF & Email

Sign up to our Weekly Newsletter

Keep up to date with everything in the world of contracting.


Contractor's Question

If you have a question about contracting please feel free to ask us!

Ask a question