Loan Charge

Part of the debate – in the House of Commons at 4:35 pm on 11th April 2019.

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Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Spokesperson (Exiting the European Union) 4:35 pm, 11th April 2019

I am grateful for the chance to sum up in this debate. Even without the request for brevity, I do not think my voice would last much longer than the few minutes that I have.

I do not know if the sponsors of the motion intend to divide the House tonight, but I think that would be a mistake. Everyone would support it, with the possible exception of the Minister. We have heard rumours that they will artificially force a Division, but I am not sure that this is the right occasion to do that.

Last week, Sammy Wilson reminded us that three of the main tenets of a tax system are certainty, fairness and convenience. Another one is that tax has to be mandatory. If it is too easy to dodge the tax, it will not work. There is a distinction, which a recent speaker highlighted, between the vast majority of the 50,000 people we are talking about—who may have been naive or made the mistake of trusting their professional advisers too much, and who may be mildly culpable but certainly were not culpable to the extent that they deserve to go through the stress that they are going through now—and a fairly small number of people who knew what they were doing. They are probably hiding at the back now, hoping that the justifiable cases will get some sort of dispensation and they can go through on their coat-tails. One of the criticisms of HMRC in the past has been that it has not distinguished between the people who made mistakes—who maybe took a bit of a chance, not really understanding what they were doing—and those who went into this with their eyes open and the deliberate intention of dodging substantial amounts of tax. That has to include the promoters and employers of the schemes.

My hon. Friend Ross Thomson, in his opening comments last week, pointed out that many of the companies that are most culpable have conveniently been wound up. The people who set them up have not been wound up. They are still there and they can still be traced. They are running similar schemes in similar companies. One of the things that the independent inquiry that is clearly needed should be able to do is to look into whether there is a case for lifting the usual veil that separates limited companies from those who run them. If company directors are found guilty of personal misconduct, sometimes they can be held liable for the wrongdoings of the company, despite the fact that legally they are two different persons. That may have to be looked at on this occasion.

Three questions have to be asked. This is quite a task for HMRC because I want it to do this for each one of the 50,000 people, so that each case is looked at on its merits. First, was the tax liability properly and legally established at the time? In many of the cases we are talking about, that may have been the case. Secondly, did HMRC take reasonable and intelligent steps to identify and notify the debt and to attempt to recover it at the time? In many other civil debt cases, if the person who is owed the money does nothing about it for years and then tries to claim the money with interest, it is time-barred and they cannot do it. Why are HMRC not subject to the same restriction?

Finally, and most importantly, is HMRC taking recovery action now that is fair, proportionate and reasonable, given the individual circumstances of the person they are pursuing? In many of the cases we have heard about today and even more so last week, there is a serious question to be asked there. I am not asking whether HMRC is acting within its legal powers; I am asking whether it is acting fairly and reasonably. Sometimes HMRC’s powers do not require it to act reasonably and fairly.

Actions need to be suspended so that the issue can be sorted out. At this stage, I cannot support a full amnesty because an inquiry would identify the people who should be held to account and who should pay back substantial amounts of back tax. I cannot support the full wording of the early-day motion on an immediate amnesty, but that may change once we have dealt with the people who set up the companies—not those who were on £30,000 a year, like most of the cases we are talking about—and were raking in profits of millions of pounds and paying heehaw in tax. They are the people HMRC should be going for. If HMRC did that, the amount of money recovered would be a significant proportion of the total for which we are now pursuing 70 of my constituents and 50,000 of our constituents collectively.