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Loan Charge 2019: Sir Amyas Morse Review

Part of the debate – in the House of Commons at 3:11 pm on 19th March 2020.

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Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury 3:11 pm, 19th March 2020

I am very grateful to the hon. Gentleman, but if I may say so, I do not think that has been true. I think the conclusion colleagues have been pushing in this debate is that they disapprove thoroughly of tax avoidance, and their view is that this is not tax avoidance in many cases. If they accept that this is tax avoidance and that the issue is merely as to the remedy, that is of course a slightly different position, and one that I am happy to respond to.

I just want to make it clear that this is a form of tax avoidance. It goes to the wider issue as to whether people should have known what it was. The point is that it is tax avoidance, and it costs the Exchequer hundreds of millions of pounds a year. That has two effects: it deprives public services of the money they need to operate; and it forces other taxpayers to pay more to make up the shortfall.

The purpose of the loan charge was to combat this form of abusive tax avoidance. The loan charge was introduced as a new measure in 2017. Following a public campaign last year, we asked Sir Amyas Morse, as has been noted, to conduct a review of whether it was an appropriate policy response to the use of the disguised remuneration scheme. He had full control of the review’s management and recommendations. He took evidence from a very wide range of individuals affected, and he spoke to interest groups, MPs, tax specialists and many other stakeholders.

Again, the facts are not in doubt. Sir Amyas Morse, as has been recognised by colleagues today, is an individual of huge experience and great independence of mind, and he is widely respected across the House. He was independent in his review, and he was given wide scope in expert support. He produced a thorough and exacting piece of work—a 76-page, 30,000-word report—that drew on over 700 individual testimonies and impact statements, and which painstakingly worked through the issues before recommending notable changes to the policy, including substantial carve-outs as to who was affected. Sir Amyas was clinical and at times unsparing in his criticisms, including of Her Majesty’s Revenue and Customs and, be it said, of the Loan Charge Action Group. All but one of these recommendations were accepted by the Government.

Among those recommendations were two to which I want to draw the House’s particular attention. The first is Sir Amyas’s insistence, as we have heard across the House today, on the need for the Government to go further in going after and bringing to justice people who enable or promote tax avoidance schemes. I am therefore delighted that, as part of the Budget documentation we have produced today, we have published a policy document on “Tackling promoters of mass-marketed tax avoidance schemes”, and I draw the attention of all colleagues to it. It is a sober and thorough piece of work that looks at lots of different approaches as part of an integrated strategy.

The other thing that Sir Amyas pointed to—again, I think rightly, but also picking up on a widely anticipated and understood gap—is the importance of raising standards in the tax advice market. Again, I am pleased to say that, as part of the Budget documentation, we have published a call for evidence on this very topic, “Raising standards in the tax advice market”. I encourage all colleagues and their constituents to contribute to that approach.