Loan Charge

Part of Brunei – in the House of Commons at 2:23 pm on 4th April 2019.

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Photo of Crispin Blunt Crispin Blunt Conservative, Reigate 2:23 pm, 4th April 2019

I apologise to the Minister if I am not here to listen to his response to the debate. I am flying to Rome to go to the Vatican for an engagement on behalf of the all-party group on global lesbian, gay, bisexual, and transgender rights. That goes to show how important those all-party groups can be, and I hope there will be a significant policy development in that area.

I congratulate my hon. Friend Ross Thomson on his excellent speech and I thank the all-party loan charge group, which has done so much work in representing our constituents’ interests. None of us wants our tax system to be abused. We should all pay our fair share of taxes, and we must ensure a level playing field for the sake of the integrity of our economic model.

The interests of those who do not have the means to opt for or set up complex tax schemes should be as protected as the interests of those who can afford such advice. It is therefore right that in the Finance (No. 2) Act 2017 the Government sought to close the disguised remuneration loophole, but today we are questioning the way that the Treasury handled that closure. My right hon. Friend Mr Davis chaired the Public Accounts Committee during my first Parliament, and he was completely right in what he said about the change in culture inside the Inland Revenue and Treasury towards such issues over the past two decades.

Current Treasury policy is having an unfair retrospective effect, which is recklessly throwing the lives of thousands across the country into sheer chaos. Sadly, that also highlights some of HMRC’s own performance issues, as it appears to have failed adequately to inquire into notifications by honest taxpayers about their use of a scheme under DOTAS when it had the chance. I do not understand why HMRC now thinks it is fair to go back over records that are up to 20 years old, and unexpectedly ask for sums in the tens and hundreds of thousands of pounds from ordinary, hardworking people. It completely baffles me. More to the point, who are these people? By and large, they are the most flexible and entrepreneurial workers in our system, and as we have heard, they were employed flexibly and did not receive holiday pay or allowances because of their employment conditions.

Our constituents are seriously distressed by the vast amounts of money that the Treasury is trying to claw back from them in a totally unexpected way. They have also experienced repeated delays in the handling of their cases, resulting in even more uncertainty and pressure. They have experienced consistently poor communication from HMRC. One constituent told me that an adviser on the dedicated helpline told him not to quote her under any circumstances. I am grateful for the letter, dated yesterday, that the outstanding Parliamentary Private Secretary to the Treasury made available to us. It states:

“I strongly encourage any of your constituents affected by this issue to contact HMRC as soon as possible before 5 April. I have enclosed a factsheet on disguised remunerations, and further information on the support available from HMRC”.

It seems a bit of a stretch to get that information to constituents by tomorrow, although I appreciate the Treasury’s putting out that message.

HMRC’s website states that it is estimated that 75% of income from this policy will come from employers and 25% from individuals, and that so far, 85% of that money has been raised by employers. That is not entirely surprising, because employers are not in the same position as individuals, and it is much easier for them to come up with funds if they are presented with a bill by HMRC. It is the little people who are on the receiving end of this policy.

One of my constituents who is facing bankruptcy articulates the issue clearly:

“In short, HMRC got tired of going for the scheme providers because they knew how to deal with them and were always one step ahead of them…Due to their inability to get any perceived tax they feel they are owed out of them, they have now shifted the focus further down the chain to people like me.”

The Minister has received plaudits from across the House, and I hope that the steel in his position—