Loan Charge

Part of the debate – in the House of Commons at 4:28 pm on 11th April 2019.

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Photo of Mary Robinson Mary Robinson Conservative, Cheadle 4:28 pm, 11th April 2019

Before the sitting was suspended last week, I listened with interest to over two hours of debate on this, so I know that the arguments have been well made and we will review them again.

One thing that those arguments have in common is that they concern people who genuinely entered into these schemes under the impression that everything was above board, based on what they believed to be good and sound advice from accountants, advisers and banks. These people were, in many cases, entrepreneurial, self-employed individuals. It is important to stress that, as far as they were concerned, they were not employees and so did not gain from the security of the benefits that come with most forms of employment such as sick pay or holiday pay. To all intents and purposes, they were simply self-employed.

I urge the Minister to consider putting the loan charge on hold and to consider an independent inquiry. It is important that before we do so, we reflect on the way that things have been changed. I recognise the changes that have been made by HMRC, which now targets the promoters of tax avoidance schemes rather than the individuals who entered into them under the impression that they were legitimate. I would argue that there is a better case for pursuing those who promote these schemes. This approach is successful. Only two weeks ago, HMRC won a legal case against a tax avoidance scheme provider, Hyrax Resourcing Ltd, collecting £40 million in unpaid tax. As I understand it, Hyrax users were paid just enough to comply with the minimum wage, with the rest of their income made up of loans that were transferred to an offshore trust in Jersey.

This is an important development, because it now contrasts with the way in which we were approaching the matter previously. We are now approaching it through the promoters and closing things down in the legitimate way that we should expect. That is the right way to do it. That is important for the people who have been pursued, going back 10 or 20 years, and who want to see that the process is done in the right way. We should put this on hold now.