The "by Autumn Budget" clock is ticking down to the publication of the government-commissioned McCann Review into the settlement terms faced by contractors caught up in the Loan Charge nightmare, writes Steve Packham, founder-member of the Loan Charge Action Group (LCAG).
How Labour's loan charge review, of sorts, is now imminent…
The hopes last October when the government announced that there would be another loan charge review were high, following the promise made by Rachel Reeves when in opposition.
However, the hopes were dashed in January 2025, when the Treasury announced a very limited review — into only settlement terms, thereby not actually looking at the loan charge itself, nor examining the whole "loan charge debacle," to use former HMRC boss Jim Harra's own phrase.
Last week, the Labour government got itself in a complete mess over the hugely important grooming gang inquiry, because of clearly inappropriate shortlisting of a former police officer, and a former council director of children's services director, to lead it. These are two people who have worked for public bodies known to have failed victims.
Not even the 'look' of independence, never mind the 'feel'
There is a strong parallel with the decision taken on the loan charge review, by announcing a supposedly independent review but then appointing a former assistant director of HMRC.
Any meaningful review of the loan charge would need to fully and independently scrutinise what we believe are the failures and misconduct of HMRC.
It's therefore dishonest to bill the McCann review of the loan charge as an 'Independent Loan Charge Review' as ministers, civil servants and some headline-writers have done. It is, in fact, a review of HMRC's settlement terms. We deem those terms life-ruining demands, with exorbitant HMRC interest and penalties. And it's a review conducted by a former senior member of the government department that pushed for the loan charge legislation.
McCann's findings could be worthwhile
A review of HMRC loan charge settlement terms, which is all the McCann review is, could potentially be a worthwhile, if limited, thing to do under a former CIOT president (who also previously worked in a senior role for HMRC).
But it is clearly not the same as a 'review of the loan charge scandal.' Nor can it possibly be regarded as the "genuinely independent review" that James Murray MP, who announced the McCann review, had previously called for.
By being dishonest from the outset about the McCann review, Treasury ministers quickly lost the trust and respect of those they previously pledged to help.
What McCann wants to recommend versus McCann's final recommendations
Whether the McCann review does provide any relief at all, for any of those caught up in the nightmare, comes down to what, if any, meaningful changes to settlement terms Ray McCann is allowed to make.
When looking at the not insignificant restrictions put upon him, there is little optimism that it will or indeed can.
In a letter that Mr Murray (then exchequer secretary, now chief secretary to the Treasury) wrote to Ray McCann, he said that whatever "targeted solutions" he proposes, must have "the minimum possible impact on the public finances".
Ministers want only tax gap-conscious conclusions from McCann
The Treasury minister also stated: "Given our approach to closing the tax gap and the fiscal position, we will not be able to accept recommendations that do not meet these criteria."
As we have said to Ray McCann in our letter to him, this means he may not be able to make significant reductions in settlements that make it possible for people to settle their cases without hardship.
If that is the case, then the McCann review will not and cannot resolve cases, as many people simply will not be able to pay.
Nor would such an outcome do anything to resolve the fundamental injustice that the government continues with its approach of pursuing victims of mis-selling.
Furthermore, it would not provide the much-needed investigation into the whole loan charge fiasco, which is the only thing that will truly provide the answers needed.
What loan charge questions need answering?
Answers are needed as to how this whole mess happened; who is to blame and who should pay, as well as holding those in HMRC and government to account, as we believe that some officials have presided over a wholesale failure of policy.
The Loan Charge and Taxpayer Fairness APPG has made clear their concerns about the fact that there will be private discussions between ministers and Ray McCann, before his loan charge settlement recommendations are agreed.
McCann has admitted he doesn't have 'first voice' about where he'd like to end up
Cross-party MPs on the group wrote to James Murray quoting Ray McCann himself, from the meeting they had with him in April.
McCann told them: "Once my report goes in with the recommendations, then I think it would be incumbent upon me to await some response from the minister and some indication of direction before I start talking about where I'd like it to end up".
This statement, and the action McCann proposes in it, would be totally unnecessary if we had a genuinely independent review of the loan charge.
HMRC and HMT are still deciding the fate of loan charge contractors
His utterance to MPs here — that he doesn't even have 'first voice' — also means that even if Ray McCann were to make recommendations of changes that might resolve cases, he faces being told, behind closed doors, that he is not permitted to make them.
Therefore, it is still the Treasury – and HMRC – that is dictating the fate of loan charge contractors.
As a result, we have called upon Ray McCann to disown the whole sorry stitch-up and to let everyone know if, as suspected, he finds he cannot make recommendations that would allow cases to be resolved while restoring justice.
Will the real James Murray MP please stand up?
But there's more.
Unfortunately, more evidence has come to light that further shows what a wasted opportunity it was for James Murray MP to announce a review only of settlement terms, despite his previous chastising of the last government for not pursuing perpetrators of mis-selling.
(N.B. Murray also told the then Tory government: "Tens of thousands of people have been affected by the loan charge, with some having faced well-documented distress and harm as a result of HMRC's approach.")
The Loan Charge Action Group has just published two new reports that further expose the fundamental injustice at the heart of the Loan Charge Scandal. The fact is that HMRC and successive governments have pursued victims of mis-selling, and not the professionals and parties guilty of that mis-selling.
Unaccountable accountants
The first report, "Unaccountable Accountants: A charter to mis-sell payroll schemes & ruin lives," exposes the extent to which accountants, including chartered accountants, were involved in mis-selling schemes and misadvising their clients, for profit.
The report exposes that accountants referred clients to schemes on an industrial basis. The evidence that we have compiled shows that hundreds of accountants were recommending schemes to clients and, in many cases, telling them not to use a limited company, but to instead use a scheme that is now subject to the loan charge.
The report also states that accountants were pocketing huge fees for clients signing up to schemes, with some taking ongoing payments. Other accountants were actually directly involved in presentations and social events, marketing schemes that are now subject to the loan charge.
The role of recruitment agencies in the loan charge scandal: explained
Our second report focuses on recruitment agencies, "Recruited into a life-ruining nightmare: Report on recruitment agencies' role in the Loan Charge Scandal."
Recruitment agencies, including leading blue-chip and high-street names in recruitment, directed their clients to umbrella companies, which then recommended that they use schemes now subject to the loan charge.
Recruitment agencies and individual recruitment consultants were also taking commissions and other incentives from these umbrella companies and payroll schemes for recommending clients to them, with contractors having no idea of these 'kickbacks'. In many cases, umbrella companies recommended by recruitment agencies were directly linked to 'disguised remuneration' schemes, which was not known to those being advised to use them.
Our recruiter loan charge exposé poses some big questions for HMRC, too
The report about recruiters also alleges that people recruited through the government's own recruitment framework now face the loan charge, having been recommended to use umbrella companies and payroll providers, which we say featured on the government-approved supplier list.
We allege that this includes an individual who worked for HMRC for four years, having been recommended an umbrella company by a government-approved recruitment agency. In the report, we further allege that HMRC failed to raise any concerns with him during this time.
There are also many local council contractors who went through public sector recruitment agencies on lucrative local authority contracts.
'Trust me, I'm a professional'
Here, then, we have what we determine to be more damning evidence of the reality of how so many ordinary people are now caught up in the seemingly never-ending nightmare of the loan charge. People trusted professionals whom they believed were giving trustworthy advice in their best interests, when it is now clear that these accountants and recruitment consultants, just like the scheme promoters themselves, were pushing people towards schemes to line their own pockets.
All along the way, though, HMRC and ministers have demonised everyone caught up as deliberate tax avoiders when, in many cases, people followed the advice of chartered accountants who told them to use schemes to avoid the risk of HMRC action.
Victims and Perpetrators
It is so clearly unfair that despite acknowledging the mis-selling, the government commissioned a review (the McCann review), which keeps the focus on only those victims and not the perpetrators.
We expect that the McCann review will acknowledge that this mis-selling happened.
As a result, it may make some concessions to settlement terms.
But crucially, it is not allowed to make recommendations that these perpetrators are liable and should be pursued for the fees they take.
Where we fear the imminent Ray McCann loan charge review will fall short
It also looks apparent from the restrictions put on the review about how much settlement figures can be altered that the review will be prevented from resolving the situation for most people. The review also won't tackle the many injustices, as the terms of reference were invariably designed to ignore them all.
And the review has no provision to recommend action against all those who mis-sold schemes.
At the same time, it remains all too easy for the government to continue to pursue individual victims of mis-selling rather than wealthy firms that can defend themselves.
Lastly, the McCann Review shall not be the last word…
Finally, a throwback.
The agreed Labour Treasury team line for the couple of years before Labour won general election 2024 was that the discredited Sir Amyas Morse review 'should not be the last word on the matter.' Whatever limited concessions Ray McCann might imminently announce (and be allowed to announce), it is already clear that the partial, limited and biased McCann review must not be and cannot be the last word on the matter either.
