Page 44 Daily Mail, Wednesday, August 21, 2019By Ben Wilkinson
and Samantha
Partington
TAX SCANDAL
44 MoneyMail
LOW-INCOME families worried about the cost of
power of attorney fees may be exempt.
Anyone setting up power of attorney in England
and Wales, who earns less than £12,000 a year,
only pays half the £82 charge to register the
document. If you receive certain means-tested
benefits you may not pay at all. Those in Scotland
can also apply for an exemption. You must set uppower of attorney while of sound mind for trusted
family or friends to look after your affairs when
you are no longer able. To apply in England and
Wales, visit gov.uk/government/publications/
power-of-attorney-fees. Or call 0300 456 0300.
In Scotland, visit publicguardian-scotland.gov.
uk, or call 01324 678398.
[email protected]Free power of attorney for low earners
the 2016 Budget, made any out-
standing loans on April 5 this
year taxable income. This means
freelancers who used the legal
loophole face a retrospective tax
bill on all their income since 1999
that was paid using the loans.
HMRC expects to claw back
£3.2 billion before the repayment
deadline of January 31.
But a Treasury sub-committee
report last month warned the
charge was causing ‘widespread
anxiety and distrust’. Campaign-
ers have linked it to five suicides,
and more than 150 MPs have
joined an All-Party Parliamen-
tary Group to highlight concerns
that many will be made bank-
rupt or have to sell their homes.
Boris Johnson promised to
order an independent review at
leadership hustings earlier this
summer, but months on, HMRC
is still demanding the huge sums
be repaid.
Terry Brooker, 58, was told to
pay £240,000 back tax from his
work as an IT contractor for Her
Majesty’s Customs and Excise
(HMCE) and the Metropolitan
Police in the early 2000s.
A freelancing friend had recom-
mended the scheme. Terry says
if the taxman had told him not to
use the scheme, he would never
have agreed to it. He says the
umbrella firm — based on the
Isle of Man — took around 15 pc
of his income in fees. He missed
out on pension contributions,
holiday and sick pay that employ-
ees normally get.
The father-of-two, from
Colchester, says: ‘It is absolutely
horrendous, it is just so unfair.
‘You cannot expect me to now
pay six years’ worth of tax given
I believed there was nothing
wrong with what I was doing.’
After recovering from breast
cancer, a social worker we’ll justM
INISTERS are
today urged to end
the devastating
pursuit of self-
employed workers
who legally cut their tax bills
up to 20 years ago.
More than 50,000 contract workers
— including nurses, teachers, and
small business owners — have been
hit with backdated tax demands for
as much as hundreds of thousands
of pounds. The controversial Loan
Charge — which aims to claw back
unpaid taxes from as far back as
1999 — has been linked to suicides
and bankruptcy.
Writing in Money Mail, former
Work and Pensions Secretary Iain
Duncan Smith today calls on Boris
Johnson’s new government to
immediately suspend the tax hunt
and launch a review.
The former Tory Party leader last
week said he was ‘ashamed’ of his
government for allowing it to goahead. HMRC is using the Loan
Charge to demand tax they say was
avoided using ‘disguised remunera-
tion’ schemes.
These involved paying workers
using tax-free loans from offshoretrusts that did not need to be paid
back. By paying the workers a loan,
it meant employers did not need to
pay income tax and National
Insurance contributions.
The Loan Charge, announced inHow thousands of
self-employed face
losing their homes
and livelihoods
after innocently
using a tax loophole
call Beverley, decided not to go
back full-time and registered as
self-employed instead.
She set up a limited company
to work as a locum and receive
payments from her agency.
But in 2016, she was told by her
agency she could no longer use a
limited company because of a
new law called IR35. She has to
use an umbrella company
instead. Weeks later, the mother-
of-three says she was contacted
by Smart Pay which said it would
manage her earnings and she
would get to keep at least 90 pc
of her income.
Beverley, 50, from Manchester,
says: ‘[The caller] had a very
shiny sales pitch. I questionedhow it worked but he said there
was nothing to worry about; they
had been operating the loan
payment scheme for years.
‘He said it was perfectly legal
and if HMRC queried anything
with us, I should tell them to
contact Smart Pay.’
Two years later, she received a
letter from HMRC telling her she
would be investigated.
Beverley, who quit the scheme
immediately, says: ‘It came like a
bolt out of the blue. I am not a
tax expert and I feel naive for
following their advice.’
She is still unsure how much
she will have to pay, but fears it
may be up to £20,000.
She says: ‘We are an everydayTHE Loan Charge was
announced in the 2016
Budget to make sure users of
tax avoidance loan schemes
pay their share of tax.
Tens of thousands of self-
employed workers received
their earnings as a loan,
instead of income. It meant
they avoided paying income
tax and national insurance.
HMRC says the loans were
never intended to be repaid;
therefore they count as
income and should be taxed.
The Loan Charge applies to
all loans, taken out by those
such as social worker Bever-ley, made since April 6, 1999,
if they were still outstanding
on April 5, 2019, and the tax
due had not been settled.
If users gave HMRC all the
required information about
their loan by April 5, 2019, or
had already settled their tax
affairs, they would not be
subject to the Loan Charge.
Those who settled would beQ&A