blog header image

Posted : 03 Feb 2020 at 13:29:46
Category: Important Announcement

Share this article

The loan charge is a legislative, operational and communications failure on a grand scale by HMRC, writes David Davis MP

A loan charge protest outside the Houses of Parliament'Around 40,000 people will still be targeted by this unjust and retrospective tax.'Credit: PA

For months many thousands of people across the country will have been eagerly awaiting the publication of the independent review of the Loan Charge. But they will be bitterly disappointed following its release in December. For many, it goes nowhere near far enough.

Sir Amyas Morse’s report is detailed and thoughtful, and I commend him and his team for their heroic efforts to find a compromise on the Loan Charge.

Importantly, the review recognises the Loan Charge is retrospective. Not only that, but it notes in paragraph 3.8 that there is no legal precedent for the retrospective element of the Charge.

When people entered into these tax arrangements, they had no idea that 20 years later HMRC would come after them. They were advised by promotors of the Loan Charge that their arrangements were perfectly lawful and, in many cases, were apparently told the schemes were appropriate by HMRC itself.

The review recommends all payments made before December 2010 should be exempt from the charge. This would rescue around 10,000 people from the distress and hardship of the Loan Charge. That is good news for them and their families who can finally move on from this trauma.

But it will still be retrospective. For matters of natural justice and the Rule of Law, a compromise is simply not enough.

Around 40,000 people will still be targeted by this unjust and retrospective tax. They will continue to be hounded by HMRC and will still have to cope with mental and financial hardship. These people are not city bankers and hedge fund managers. They are locum nurses, contractors, teachers and small business owners. There is simply no justification for keeping them within the scope of the Loan Charge.

The 2010 cut-off point recommended by Sir Amyas is entirely arbitrary. It is based on the Government publishing draft legislation on disguised remuneration and initiating a public consultation in December 2010. But HMRC does not take its direction from draft legislation. It takes its direction from the settled law.

HMRC was claiming the law was clear over the past twenty years. But it is not HMRC’s opinion that matters here. It is the Court’s opinion that matters. Paragraph 2.22 of the review points out that HMRC lost the arguments in the courts in the critical Rangers’ case right up until 2015, and the matter was only finally resolved by the Supreme Court in 2017.

So, if the law was not clear to HMRC and the courts until 2017, how could it possibly have been clear to the average person on the street back in 2010?

This is a legislative, operational and communications failure on a grand scale by HMRC. Unfortunately, under British law, when HMRC make a mistake it is the taxpayer that always pays. What we are seeing here is a combination of technical incompetence and institutional avarice.

The only sensible, just and fair cut-off point is 2017. That is when the Courts settled the matter and it is when further legislation was passed making the law clear. Any action taken against taxpayers before that would be fundamentally at odds with the Rule of Law.

The Budget and Finance Act will soon be coming before Parliament. At that point MPs can take a proper judgement on the Loan Charge.

As I have made clear in the House of Commons and in a letter to the Chancellor in December, if the Government does not take positive action on this, MPs will be forced to find a legislative route to ensure HMRC and the Treasury cannot engage in retrospective taxation ever again.

David Davis is Conservative MP for Haltemprice and Howden

Original source Politics Home

SIMILAR NEWS

blog header image
IMPORTANT ANNOUNCEMENT
HMRC ANNOUNCE THAT SELF ASSESSMENT CUSTOMERS WILL NOT BE CHARGED LATE PAYMENT PENALTIES

Today HMRC has announced that Self Assessment customers will not be charged the initial 5% late payment penalty if they pay their tax or make a Time to Pay arrangement by 1‌‌ April. The ...

blog header image
IMPORTANT ANNOUNCEMENT
UK GOVERNMENT ANNOUNCES PAY RISE FOR MILLIONS OF PEOPLE

Millions of UK workers to receive increase in pay from April 2021 following rise in the National Minimum Wage and National Living Wage. Published 26 November 2020 Around 2 millio ...

blog header image
IMPORTANT ANNOUNCEMENT
CHANCELLOR WARNED CONSTRUCTION VAT PLAN RISKS RECOVERY

Chancellor Rishi Sunak is being urged to abandon VAT changes which could cause a cash-flow crisis across construction. The Construction Leadership Council is hoping for a last-minute reprieve ahead of ...

blog header image
IMPORTANT ANNOUNCEMENT
GOVERNMENT SET TO WRITE OFF ESTIMATED £31BN OF PANDEMIC LOANS

An estimate of £31bn of government loans handed out during the pandemic will have to be written off, according to the UK’s spending watchdog. In its latest Covid-19 Cost Tracker, the Natio ...

blog header image
IMPORTANT ANNOUNCEMENT
SELF-EMPLOYED GIVEN EXTRA MONTH TO FILE TAX RETURN FINE-FREE

HMRC will not levy a late fine on those who file their tax return by 28 February 2021. The deadline to submit a self-assessment tax return is usually 31 January, and late penalties are usually applied ...

blog header image
IMPORTANT ANNOUNCEMENT
RISHI SUNAK SET TO EXTEND FURLOUGH SCHEME PAST APRIL

Rishi Sunak is reportedly set to extend the government’s furlough scheme beyond the end of April in his 3 March Budget. The chancellor is drawing up plans to extend the £82bn scheme into t ...

business-directory Business Directory
smartbusinessdirectory Payroll Services Business Directory
truebusinessdirectory payroll-services Directory
payroll-services Directory