Advisers to loan charge contractors urged to help MPs 'look under the carpet'

Advisers to contractors caught by the Loan Charge are being formally invited by MPs to give evidence on the HMRC policy, as anticipated by ContractorUK back in May.

Specifying that they now want to hear from accountants, tax advisers and lawyers, the Loan Charge and Taxpayer Fairness APPG said evidence must be submitted no later than July 15th.

As HM Treasury and HMRC have “failed to give straight answers” about disguised remuneration, says Baroness Kramer, the submissions by advisers will be “invaluable”.

'HMT and HMRC have brushed the reality under the carpet'

Asking for no more than 2 sides of A4 from advisers, the Lib Dem peer continued: “The Treasury [and taxman] have brushed the reality of the loan charge under the carpet.”

On an online form for advisers to complete, in a section entitled ‘How these submissions will be used,’ the MPs say the evidence received will be shared with HM Treasury.

But ContractorUK understands that the MPs will actually be targeting officials personally, by handing it to both Treasury minister Lucy Frazer, and to HMRC chief executive Jim Harra.

'No replies'

The cross-party parliamentary group is persisting with Ms Frazer despite her having failed to reply to its April letter, requesting she attend an open Q&A session on the loan charge.

While the APPG plans to follow up with the minister, the MPs are also yet to receive a reply from Lord Morse, following serious questions about his review raised by FoI disclosures.

The thinking from the MPs and others appears to be that, even if civil servants and ministers are not responding, collating evidence is a constructive way to thwart obfuscation.

'Submit evidence'

“If you are a tax professional with clients affected by the Loan Charge, please do submit evidence,” tweeted tax lawyer Sarah Gabbai of McDermott, Will and Emery.

As a former tax inspector and past president of the Chartered Institute of Taxation, Ray McCann is a likely respondent to the MPs’ call for evidence.

However on Friday, following their call, he signaled online that he’s still trying to understand how members of the House of Commons came to approve the loan charge in the first place.

'Loan charge impact assessment is nonsense'

Citing HMRC’s impact assessment of 2017, which states the loan charge is “not expected to have a material impact on family, formation, stability or breakdown," Mr McCann wrote:

“This should have been seen for what it was – complete nonsense. If the outcomes for many [contractors] were not so serious, you could laugh at the utter absurdity of these statements.”

Also likely to reply to the MPs is WTT Consulting, an advisory on both the charge and tax disputes (the MPs specifically ask for advisers’ “own experiences of dealing with HMRC”).

'HMRC deliberately blurred the lines'

But the words respondents will use will matter. “It is….of crucial importance that those of us advising in this space are 100% accurate in our phrasing”, said WTT’s Graham Webber.

Reflecting on his disappointment at a solicitor’s choice of words in a tax article, Mr Webber explained the need for descriptions, terms and wording to be beyond reproach.

“HMRC has poured millions into its PR teams in order to shape public opinion that a failed tax scheme must be illegal and its user treated as criminals. They have deliberately blurred the lines between evasion and avoidance.”

'Fifteen per cent suicidal'

However Sammy Wilson MP, co-chair of the Loan Charge APPG, sounds like he’s just keen to get his hands on as much evidence as possible from as many advisers as possible.

Mr Wilson said: “[Given the] very worrying 15% of people [responding to our first evidence-call] saying they have had suicidal thoughts or actual intent….we now wish to hear from advisers.

“Many [advisers] work extremely hard doing all they can to support clients, often in the face of communication issues with HMRC.

“So we believe their insight will also be very valuable in demonstrating the reality of the situation, something that is alas ignored and denied by HMRC and the Treasury.”

'Better to help failed DR scheme users'

But the government not seeming to listen is why not everyone is supportive of the MPs’ new call for evidence.

“Why ? What's the point?” asked a Twitter user responding to the MPs asking advisers to come forward with their insights.

“HMRC and government have made it clear that they are not going to change their position on this matter. Your resources would be better aimed at helping failed Disguised Remuneration scheme users settle their liabilities with HMRC on terms that they can afford.”

'Loan charge-covid-IR35 cocktail'

Sarah Olney MP of the Liberal Democrats is among those not giving up on the numerous individuals being hit by a perfect storm of measures.

“Many people have struggled with financial and mental health problems as a result of the loan charge, and have been further adversely affected by the lack of covid support such as those working through limited companies and those affected by the IR35 off-payroll rules.”

In a letter to Ms Frazer at the Treasury, the Lib Dem MP continued: “In addition, many of those affected by the loan charge have seen contracting jobs lost overseas or simply scrapped altogether, Now they are being affected by the rise in National Insurance and the cost of living crisis.”

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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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