It is indisputable that everyone should pay their fair share of tax to fund our public services, and if recent events have taught us anything, they have illustrated that we all rely on the response of those services and that any future threat of funding must be resisted. However, the Government’s current position on this issue is, frankly, quite wrong and unjust. At £35 billion, the Government’s official estimate of tax losses is now the highest it has ever been, yet the true figure of tax avoidance by the super-rich and corporations could be as high as £120 billion a year.
My constituent Doug Aitken is facing a significant bill as a result of the loan charge. This is money that he simply does not have, and if HMRC persists, he will lose his home and his car, and, because he is self-employed, the resulting bankruptcy will lead to the loss of his business and his personal contribution to the Exchequer. Like many, he took independent advice from tax experts before entering the scheme and was reassured that it was operating entirely within the law. He declared his income and submitted his tax returns. He set money aside, ready to pay any tax liabilities, and he kept the money for the HMRC look-back period. He is not alone; a number of other constituents have contacted me about this matter. Some are retired or are now surviving on benefits. They simply do not have the resources to pay. Others have spoken of the significant impact on their mental health. Although the changes to the look-back period from the Morse report may exempt thousands from being pursued, thousands more are still facing the prospect of absolute financial ruin. This is nothing short of a disgrace and meaningful recovery is very unlikely, whereas bankruptcy is almost certain.
In closing, I would like to offer my reflections on the key argument put forward by Sir Amyas in favour of recovery. In his recent contribution to The House magazine, he explained that the advice he took about legality was from tax experts. However, he also notes that the contributions from those who entered the scheme’s evidence that they did not understand the implications—that is, they are not tax experts. Although Sir Amyas might have sympathy with the loan charge recipients, pursuing them now is very unlikely to lead to any meaningful recovery.
I previously served the health service ombudsman as a clinical expert, and I was advised that I should not assess the treatment and care provided against my gold standard practice level. Rather, my judgment should be tempered to a level of what one could reasonably expect. I would respectfully suggest that the current policy has measured those in the grip of HMRC over the loan charge against the gold standard of tax experts and not, as it should have, against the standard of what one would reasonably expect a lay person to understand. Although I firmly believe that individuals should pay the taxes they owe, ruinous action from HMRC will help no one. The Government must act now to completely remove all retrospective action.