a year back in 2001, but had no evidence to
prove it. It said it would charge him the aver-
age of all the other years, so this poor man
was being charged back tax for a year during
which he hadn’t even worked. Readers more
au fait with the law than I am will no doubt
know that we are required to keep financial
records for only seven years. Not 20.
For any government to be so ruthlessly
pursuing these people would be strange.
For a Conservative government to be
doing so is perverse, especially as the peo-
ple we’re talking about ought to be natural
Tory voters. Any government should stamp
out tax arrangements or loopholes that it
deems unacceptable. But to sting people for
schemes once known to be perfectly legal,
targeting people who declared everything intax returns that were signed off year-on-year,
is blatantly unfair. It surely undermines the
very rule of law and international conven-
tions that outlaw retrospective legislation.
Philip Hammond used to understand
this. When critiquing a Labour Budget in
2005, he pointed out that ‘a taxpayer is
entitled to know with certainty — be it an
individual or a multinational corporation
— what he may or may not do in planning
his tax affairs. He is entitled to expect that
his treatment be laid down in statute, not
determined by administrative fiat; he is
entitled to expect that another taxpayer in
similar circumstances will receive treatment
similar to his; and he is entitled to be pro-
tected from retrospective or retroactive leg-
islation.’ I couldn’t have put it better myself.It seems clear that the ‘loan charge’ pol-
icy — like so many others under this gov-
ernment — was designed without proper
scrutiny or any serious assessment of how it
would affect, and sometimes ruin, lives.
Some of those involved are desperate,
facing losing everything they have worked
for. Some will lose their homes. Some
may never be able to work (or pay taxes)
again. Some have reported feeling suicidal.
Already campaigners have blamed the loan
charge for one man taking his own life.
HMRC has no estimate of how many bank-
ruptcies it will cause, which makes it impos-
sible to predict how much money it will
actually raise.
HMRC is now starting to realise the scale
of its mistake. It had put it in writing that
doctors and nurses wouldn’t be affected, but
now it admits that they are. Ministers have
stated that they are pursuing the tax advice
agencies that promoted this scheme. When
asked how many have been prosecuted,
HMRC said it didn’t have the answer. I do.
It’s a big fat zero. Mr Stride is so unsure of the
situation that he has refused on three occa-
sions now to defend the policy to a House
of Lords committee. The committee accuses
him of a breach of the ministerial code. I’d
go further and accuse him of being ‘frit’.
What we need is a backbench rebellion.
Many Conservative MPs, lobbied by desper-
ate constituents, are speaking out, and with
the Budget legislation coming up there will
be the opportunity to change the law. We all
know that sorry is the hardest word for poli-
ticians and that it’s nigh-on impossible for
any minister to admit he or she got it wrong.
But the disingenuous and at times prepos-
terous way in which the government is try-
ing to justify a bad policy that was never
properly thought through is as unedifying
as it is disappointing.
Rather than double down on their mis-
take, ministers should instead listen to those
affected and decide whether they wish to
continue their pursuit. There is still time
to prevent the serious harm that the loan
charge will do to contractors and freelancers
and their families, to the wider economy, and
to the reputation of the Conservative party.Iain Dale presents the evening show on
LBC radio.Y
ou probably haven’t heard of the
loan charge. I hadn’t until a couple of
months ago, when I told listeners to
my LBC radio show that I would soon be
interviewing Mel Stride, the financial sec-
retary to the Treasury. Following this, I was
bombarded by texts and emails from some-
thing called the Loan Charge Action Group
and its many, many sympathisers. I then
became acquainted with what might be the
next storm to hit the government.
The messages, many of them emotion-
al and some borderline aggressive, told the
same story: hundreds of what politicians like
to call ‘hardworking families’ were facing
unpayable and unjust tax bills as a result of a
Treasury U-turn on what previously had been
a perfectly legal tax scheme. Freelancers and
contractors had been allowed to be paid
through an employee benefit trust; the pay-
ment was via ‘loans’ that were never repaid.
An odd arrangement, to be sure, but it was
once accepted and promoted as a legitimate
way for the self-employed to reduce income
tax. Now, it has been declared a form of tax
evasion, and the authorities are seeking to
claw back 20 years of what are being regard-
ed as missed payments.
What’s going on? How could this be jus-
tified? When I put questions to Mr Stride
in my studio, I found him decent and affa-
ble, but he provided answers that were
entirely unconvincing. It’s not at all clear
that the government expected its sudden
tax demands to have such an effect. Many
self-employed traders are now looking for
answers from those who advised them to use
these vehicles, based on written guarantees
from HMRC that they were legal. But the
authorities don’t care if anyone was wrongly
advised: they want the money.
And they want it whether or not their tar-
gets have it. We’re not talking about a cabal of
the rich and famous. Sarah from Maidstone, a
locum GP, rang in to my show to say HMRC
had demanded £120,000 from her and that
she would have to sell her house. This in spite
of the NHS requiring her to be on the books
of an agency. Mark in Windsor told me he
had already had to pay £180,000 and his fam-
ily were now living in a two- bedroom coun-
cil flat. Simon in Wealdstone was also facing
demands for more than £95,000. He told
HMRC that he had been unemployed for
Can’t pay, shouldn’t pay
The loan charge is unjust
IAIN DALE
An odd arrangement, sure, but it was
once promoted as a legitimate way
to redu ce in com e t ax