Loan Charge

Lord Bellingham Excerpts

Thursday 4th April 2019 Commons Chamber

[Royston Smith (Southampton, Itchen) (Con)]

I do not intend to take all of my time, because I am nowhere near as qualified as the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and my hon. Friend the Member for Aberdeen South (Ross Thomson), who have done a fantastic job in getting us here to this debate, so that we can make representations on our constituents’ behalf. I, too, pay tribute to the Minister. He has been very helpful in responding to all my queries and those of my constituents. Of course, not all responses have been to their liking, but he has always been available and I pay tribute to him for that. I hope he is as accommodating today as he has been so far.

My hon. Friend the Member for South Suffolk (James Cartlidge), who is not in his place any more, argued that people who use public services should pay for them. If we are talking about evasion versus avoidance then of course he is absolutely right, but self-employed contractors have a different tax regime from people who work with PAYE; they have a different structure. They will look to see whether they can make the best use of their tax situation, because they do not get sick pay or holiday and nobody is paying their pension for them. They will therefore look for the most efficient way to deal with their tax. Some of these schemes have been shown to be that for them. They asked the questions and we all know they asked the questions. There are very few people caught up in this who we think went deliberately out of their way to avoid tax.

[Sir Henry Bellingham (North West Norfolk) (Con)]

I endorse what my hon. Friend said about the Minister, who has been extremely receptive, and we hope that he will take action. Is my hon. Friend aware that many of these people are well into their late 50s and many are over 60, and they have no chance of ever recovering their financial position? Some of my constituents specifically asked the Revenue whether everything was in order and correct and proper. They were told categorically that it was, and it allowed them to take out future schemes in future years.

[Royston Smith]

My hon. Friend makes a very good point. That is exactly what my constituents have been saying to me. Some of them are nearing retirement with absolutely no chance of paying back what they are told they owe. Furthermore, they tell me that these schemes still exist—I hope that the Minister will confirm whether they do—and that people are still promoting very similar schemes. If that is the case, it is incumbent on HMRC and the Government to be shutting them down and going after the people who did them.

--- Later in debate ---

[Sir Mike Penning (Hemel Hempstead) (Con)]

I should not be here today. I should be at the funeral of my constituent Graham Smart. He was the chairman of Leverstock Green football club, and as his constituency MP and president of Hemel Hempstead football club—another community club—I desperately wanted to be there and had promised to attend. However, my place is here in this debate, making sure that I stand up for, initially, one of my constituents, who came to see me many months ago, which is when I joined the all-party group. I was informed this morning that I now have 100 constituents who are affected by the loan charge.

I sat in on some of the all-party group’s evidence sessions. There is a really important point to make here. We have Select Committees in this House and other Committees. All-party parliamentary groups can be a complete waste of time, or they can really make a difference. I jointly chair one of these groups—the all-party group on medical cannabis under prescription—and we managed to change the law. I truly hope that the all-party loan charge group, with the backing of the House, will be able to sway Ministers and the Treasury’s view on this, which I think is one of the great disasters that we are bringing on our communities.

More than 900 years ago, this House was formed to represent the people who paid tax. Admittedly, it was completely unelected in those days, but that remains our job. Unlike some of my colleagues, I have clearly upset the Financial Secretary to the Treasury. I was over-zealous defending my constituents. I have apologised to him privately and I apologise to him publicly now. I think that he is fundamentally wrong in what he said to me, but at the end of the day that is his opinion and, I am sure, the Treasury’s. In my opinion, what is happening here is that some of my constituents took advice from the companies—if they had not, they would not have got the job—and from some very large taxation accountants; they submitted completely openly that they were in one of these schemes; they had a registration number from Her Majesty’s Treasury; and now they are getting bills for hundreds of thousands of pounds, which, as we have heard, is completely and utterly destroying their lives.

Like lots of colleagues, I have had constituents come to me. I am not making it up, but I am not going to name these people, because—it is part of the problem we face—they are too ashamed to tell their loved ones that these bills are coming down the line. They are petrified of their employers knowing. Many of the people in my constituency who have come to see me and written to me are employed in the financial sector in the City. There is absolutely no doubt that they will lose their jobs and their livelihoods.

[Sir Henry Bellingham]

rose—

[Sir Mike Penning]

I will give way twice: once to my hon. Friend and then to another colleague.

[Sir Henry Bellingham]

I am grateful to my right hon. Friend for putting forward a strong and moving case. Is he aware that some early-retirement benefit schemes—so-called EFRBS, or employer-financed retirement benefits schemes—are also being unpicked retrospectively, causing an equal amount of pain and suffering to constituents, including one in my constituency who is having to pay back £175,000?

[Sir Mike Penning]

I do not agree with the way the Treasury has started to unpick people’s personal taxation schemes. This is not the big companies that frankly get away with murder because they can employ the right sort of lawyers, but the small people. They are the people who are getting messed about.