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Loan Charge 2019

Treasury – in the House of Commons on 11th February 2020.

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Photo of Seema Malhotra Seema Malhotra Labour/Co-operative, Feltham and Heston

How many people will be affected by the 2019 loan charge after the Government have implemented the recommendations of Sir Amyas Morse’s review.

Photo of Laurence Robertson Laurence Robertson Conservative, Tewkesbury

How many people will be affected by the 2019 loan charge after the Government have implemented the recommendations of Sir Amyas Morse’s review.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

Of the estimated 50,000 individuals affected by the loan charge, the Government currently estimate that more than 30,000 will benefit from the changes. That includes about 11,000 people who will be taken out of paying altogether. In addition, individuals who have settled or who are settling their tax liability with Her Majesty’s Revenue and Customs will be out of scope of the charge.

Photo of Seema Malhotra Seema Malhotra Labour/Co-operative, Feltham and Heston

Neither the law nor HMRC made clear the position regarding loans and self-employed people. Indeed, it was not until 2016 that it was announced that the law would be changed to include the self-employed and others who did not even find out until a year or two later, such as my constituent Dhruv Salotra. Will the Financial Secretary do the obvious thing, get rid of all retrospection and apply the loan charge from when the law was clear and applied to everyone, including the self-employed, and, in addition, clamp down on those who promoted these disguised renumeration schemes in the first place?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

The hon. Lady is absolutely right that it is important to crack down on promoters, and at the Budget we will bring forward a package about how to do that. Her wider point, however, is wrong: this is not a retrospective measure. It is also true that the Government have to some extent been vindicated by Sir Amyas Morse, who found that the loan charge was an appropriate way to respond to tax avoidance and, after detailed argumentation, suggested a date in December 2010 as the correct date from which to date the legality of it.

Photo of Laurence Robertson Laurence Robertson Conservative, Tewkesbury

But even 2010 is 10 years ago, so if the law was clear then, as the report suggests, why did HMRC not act then? Surely this matter is its responsibility.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

HMRC did pursue these cases quite vigorously. Sir Amyas found, on the basis of detailed consideration, that the law was clear then, and therefore HMRC rightly believed that people would accommodate it. Of course, it pursued people who had been avoiding tax through disguised renumeration schemes for many years before that, and it will continue to do so for those that have been carved out by the loan charge review.

Photo of Ruth Cadbury Ruth Cadbury Labour, Brentford and Isleworth

The Treasury has accepted some of Sir Amyas Morse’s recommendations, but there is confusion about some of them. A constituent of mine got caught in a disguised renumeration scheme before 2010, and yet he is still not convinced that he is in the clear and has that fear hanging over him. What does the Financial Secretary have to say about that?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

The hon. Lady is quite wrong. We accepted all but one of Sir Amyas’s recommendations, and we did not accept that one because the issue he raised was already being handled very well within the system. If the hon. Lady has a specific concern, she is very welcome to raise it with tax commissioners or, indeed, with me, although on an anonymised basis because obviously I cannot deal with specifics.