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In 2018, when a group of constituents first came to my surgery to complain about their treatment by HMRC, I was not particularly sympathetic—they were talking about loan schemes, of course. After all, why should a group of people use schemes to pay less tax than the rest of us? If they do not pay their fair share, others have to make it up, or so I thought. I was actually too harsh, not because people should not pay their fair share of tax, but because I did not understand the circumstances until they explained their predicament.
First, the people I met were clearly not out to defraud the system. They did not look or sound like petty criminals. They were normal, decent and honest. Some explained that they did not even have a choice, as we have heard: either they used a loan scheme or they would not be employed by the company or, in some cases, the state.
Secondly, as self-employed individuals, they were often contracted to different entities. Nobody but themselves, from what they earned, put aside anything for pensions, sick leave, paid holidays or, indeed, guaranteed employment. They were much less secure than someone with a permanent job.
In the interest of being quick, I have four requests of the Minister. First, I would like to see the retrospective nature of the charge removed up until July 2017, when the Finance (No. 2) Act 2017 was introduced. That makes sense to everyone.
Secondly, if that is not possible, the Government should revisit the settlement terms, which are hugely punitive. We have just heard Allan Dorans say how punitive they are, and I would like to see a radical reduction in extortionate interest rate charges and inheritance tax demands.
Thirdly, we would all find it distasteful for the Government to send out settlement terms using words that imply people have deliberately broken the law—they did not. HMRC allowed the use of loan schemes every year. It sent the tax returns back, and people thought they were doing right.
Finally, I see no reason why loan charge repayments should not be delayed by a year, rather like IR35, in response to the health crisis we are all facing. So many people are worried enough at the moment. Give them a break—give them another 12 months.