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Loan Charge 2019: Sir Amyas Morse Review

Part of the debate – in the House of Commons at 2:54 pm on 19th March 2020.

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Photo of Fleur Anderson Fleur Anderson Labour, Putney 2:54 pm, 19th March 2020

I, too, congratulate Mr Davis on securing this important debate at a time of national crisis. This is a crisis for 50,000 people across the country, and it will exacerbate the already difficult mental health and economic situation they face. I welcome the agreement we have heard across the House during the debate.

Let me make it clear at the outset that the debate is not about protecting and keeping in place loopholes and avenues for tax avoidance. I join other Members in saying that tax avoidance is a scourge, and any initiative or legislation aimed at tackling it has my full support. However, I do not support cruelly punishing more than 50,000 people and their families—hard-working entrepreneurs who acted in good faith—and often driving them to suicide. I have met many constituents at surgeries who have been in tears as a result of the effect of this issue on their family.

One constituent was hit with a bill for £158,000 plus interest five years after retiring. There is no way that he can repay that charge. He was advised by his accountant in 2007 that entering into employment via a loan remuneration scheme was entirely legal. That is a theme among the constituents who have come to see me. They say they found out that these schemes were QC-approved, they felt they were entirely legal and they did their due diligence, but the law has failed them. Although the Government’s decision to accept most of Sir Amyas’s recommendations is a very welcome step, the loan charge is still grossly unfair and is destroying lives in my constituency and across the country.

In the interests of time, I will cut to the six changes that I urge the Minister to consider. First, he should call off the dogs during the coronavirus situation and remove the threat of these huge charges from our constituents. This is a mental health crisis for many people. Secondly, the date that the loan charge looks back to should be amended from December 2010 to the date of Royal Assent of the Finance Act in July 2017, as the law was not clear.

Thirdly, the Government should accept the Morse review recommendation that unprotected or closed tax years should remain closed. Fourthly, they should accept the Morse review recommendation that people with incomes of under £30,000 should have any outstanding tax balances written off after 10 years of making a genuine attempt to pay on the terms that have been announced. Fifthly, the legislation must treat business owners and directors equally with individual contractors. Finally, anyone still using these schemes—I was astonished to find out that that is still going on—should be told immediately of the liabilities that they face.

We have to tackle tax avoidance, but using retrospective charges, which are ruining the lives of hard-working contractors and entrepreneurs and putting them in hundreds of thousands of pounds of debt overnight, is not right or just. The companies that promoted these schemes should be penalised, and the Government should accept the blame.