Daily Mail - 21.08.2019

Daily Mail, Wednesday, August 21, 2019 Page 45

MoneyMail 45

RUINING LIVES

B

ACK in April in the

House of Commons,

something rather

strange took place.

There was a debate on

what to many might have seemed an

obscure subject, yet the chamber

was packed with MPs of all parties.

So many wanted to speak that

there simply wasn’t enough time. But

one thing became clear, all of them

agreed that their constituents were

suffering a gross injustice.

The subject was the 2019 Loan

Charge introduced in the Finance

Act 2017. This is a levy on all payroll

remuneration through loans made

since 1999.

These schemes were entered into

with the full knowledge of Her

Majesty’s Revenue and Customs and

were perfectly legal with no concerns

or objections being made by HMRC

despite its advice being sought.

Anyone who has ever been employed

through such a structure is now

being hit by a retrospective charge in

the 2019-2020 tax year to be paid in

one year.

More than 50,000 people are

affected; most are decent people who

have small businesses and who work

long hours to make ends meet. Sadly,

this charge is even now causing

businesses to close and has forced

people to lose their jobs and pushed

many into bankruptcy.

Many are facing tax bills of more

than £100,000 and so great is the effect

on their lives I understand a number

have either committed, or contem-

plated, suicide directly as a result.

concerns of those whose lives

are being blighted by this.

I, too, have constituents

caught up in this, some of

whom have come to see me in

desperate straits, facing

bankruptcy and scared about

the future for themselves and

their families.

They genuinely believed

these loans to be a perfectly

acceptable practice, otherwise

they wouldn’t have entered

into them. It is harrowing hav-

ing to listen their stories and

know that HMRC in turn does

not appear to be listening.

In a recent letter to all MPs,

the minister in charge, while

explaining the position of

HMRC, added that ‘HMRC

acknowledges that the service

has sometimes fallen short’,

and that HMRC seemed to

accept ‘the policy may breach

established norms of taxation

by reopening tax years which

have already been signed off ’.

If so, then as the All Party

Giving evidence last November

to the Treasury Select Commit-

tee, the previous Chancellor,

Philip Hammond, was clear and

confirmed the payments were

legal and above board.

Y

eT those who entered

these schemes facing

demands from HMRC

feel they are now

being treated like criminals.

As Labour MP Andy Slaugh-

ter said about his constituents

caught up in this: ‘[It] was fully

declared in the tax returns

and HMRC was aware of what

was happening.’

That is the point: throughout

the past two decades HMRC

has been aware of this process

and only in 2017 did it decide

to legislate.

For HMRC, the whole point

of this is that it believes it will

claw back billions from all

those affected, and it appears

this inducement has made it

deaf to the worries and

Parliamentary Group (APPG)

has said, the Government

should hold an independent

inquiry into the Loan Charge.

This was something that the

new Prime Minister, Boris

Johnson, himself recognised

when he signed an APPG letter

in 2018 to the then Chancellor.

In fact, during the Conserva-

tive leadership campaign he

underlined that when he said

‘it seemed superficially unjust

that they should be retrospec-

tively pursued’ and he called

for such a review.

For everyone involved, it is

the regressive, retrospective

nature of this demand that

causes the concerns. It was

always a principle that retro-

spective taxation breaks the

notion of natural justice.

This new Government must

recognise the genuine

threatening nature of these

issues and act to hold that

inquiry before taking any

further action.

By Iain

Duncan

Smith

working-class family, we don’t have

that type of money. I am filled with

horror every time a letter arrives.’

Smart Pay did not respond to a

request for comment.

Loan Charge Action Group (LCAG)

has launched a campaign for a judicial

review into the charge.

Tax barrister Keith Gordon, of

Temple Tax Chambers in London,

says the law could be a breach of

human rights. He says many workers

had to sign up to the scheme in order

to get paid, and were given no indica-

tion they were doing anything wrong.

‘A lot of the contractors were not

doing it to avoid paying tax, but to do

their job,’ he says. ‘And HMRC, by fail-

ing to make enough noise, gave the

impression it was acceptable.’ Mike

Cherry, the Federation of Small

Businesses national chairman, has

called on the Government to review

the charge. He says: ‘Retrospective

tax grabs make it impossible to plan

for the future. Many who are playing

fair with their tax affairs today will be

wondering where else the Government

might suddenly change the rules.’

An HMRC spokesman says: ‘The

Loan Charge is designed to tackle tax

avoidance and ensure everyone pays

their fair share. It builds on more than

two decades of HMRC action to

challenge these schemes. The Prime

Minister will be setting out more

details on the Government’s policy

agendas over the next few months.’

[email protected]

The Last Word — Page 47

Harrowing

tales that

show the

PM must

now help

PROPERTY owners looking to their homes to

boost finances in retirement are increasingly

using plans to release cash when they need it.

So-called drawdown equity-release mortgages,

are loans for homeowners aged 55 and over. But

instead of taking a lump sum, more borrowers

are releasing money in stages. More than two

thirds (67 pc) of new equity-release loans, some

7,227 plans, taken out between April and June

this year were drawdown plans, according to

trade body, the Equity Release Council.

After the initial lump sum is approved, the rest

is kept in a reserve account. As with all equity-

release loans, interest is added to the debt which

is repaid when you die or move into care.

[email protected]

RBS voted worst again Over 55s taking equity brick by brick

ROYAL Bank of Scotland (RBS)

ranks bottom for overall service for

the third time in a row, according to

a competition watchdog survey.

Just 46 pc of the taxpayer-owned

bank’s customers told the Compe-

tition and Markets Authority that

they would recommend it to friend

or relative. Metro Bank soared to

the top, with 82 pc of customers say-

ing they would recommend the

bank. TSB was ranked bottom for

its online and mobile banking

services. Last year the bank’s IT

meltdown cost it 80,000 customers.

An RBS spokesman said: ‘We can do

more to improve customer service.’

[email protected]

FORMER WORK AND

PENSIONS SECRETARY

Pictures:

ALAMY/GLEN MIMIKIN

Unjust: Campaigners

protest outside the

Commons. Inset, Beverley

charged income tax on all loans

paid to them, less the scheme’s

expenses. Tax would be calculated

at rates and bands applicable in

the year the loan was made.

Users who did not meet the

April 5, 2019, deadline have to pay

the Loan Charge. It takes the total

of all outstanding loans on April 5,

2019, and treats them as income

received on that date, or profits

arising in the tax year 2018/2019.

This means they’re likely to be

charged tax at a much higher rate.

Those who have not settled must

give details of outstanding loans

to HMRC before the January 31,

2020, self-assessment deadline.