Baroness Winterton of Doncaster
Main Page: Baroness Winterton of Doncaster (Labour - Life peer)
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I am deeply aware of this. The all-party group took evidence from a family whose father had committed suicide. If the House will indulge me, I received this email from a constituent:
“I find all this massively worrying and stressful and I try not to discuss with my wife otherwise she would feel the same. At times I have considered suicide but realise that that will help no one and impact my family most.”
The loan charge is having a terrible effect on people’s mental health, isn’t it?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. A lot of people want to speak this afternoon, and I am sure the hon. Member for Aberdeen South (Ross Thomson) will bear that in mind.
Ross Thomson
I could not agree more with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). We have all heard harrowing testimony in our constituencies. My constituent talked about the stress and anxiety keeping him awake at night and his fear for his family’s future. He cannot escape the fear brought about by a crippling demand from HMRC that will leave him unable even to keep a roof over his family’s heads. He went on to say that the loan charge has removed all joy from his life, leaving him unable to concentrate on everyday tasks or even to enjoy time with his wife and young children.
My hon. Friends and I are proud of this Government’s record on mental health. However, we will jeopardise that hard work if we continue this cold approach to people in our communities who face this charge.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. As colleagues can see, a number of people want to participate in this debate. I will start with an eight-minute time limit.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I will have to reduce the time limit to seven minutes.
Mr Jim Cunningham (Coventry South) (Lab)
I agree with the right hon. Gentleman: it is about time that the Government listened. Regardless of the issue, retrospective legislation can be a dangerous thing. In some instances it might be justifiable, but by and large and in principle, it is a very dangerous thing. The other point that has emerged from this debate is that those who encouraged people in their employ to get involved in such schemes should be the ones to pay up, not the victim. Does he not agree?
Madam Deputy Speaker (Dame Rosie Winterton)
May I just point out that interventions must be short? Please remember that interventions mean that other people have less time to speak.
Sir Edward Davey
I agree with the hon. Gentleman. Let me take his point on retrospection into the substance of my speech.
Everybody has paid tribute to the Minister and I join in that, but I urge him to look at the retrospection issue. The all-party group has spoken to tax professionals and has read a lot of material. There is a debate about whether aspects of this are retrospective or not, and about where the retrospection lies. One group has been hit by the loan charge where the retrospective nature has been proven beyond doubt: taxpayers who have had their tax returned to the Treasury with DOTAS added—sometimes even without DOTAS added—and who have come clean on everything they have been doing. HMRC has accepted that and has not opened an inquiry. Their cases have been closed and time has passed. Under section 9 of the Taxes Management Act 1970, we have been giving taxpayers in that situation total protection from HMRC coming back to them. That has been true for decades. Indeed, we have signed international conventions to say that that is the way individuals should be treated. Yet here we are, going back on that. To be clear to the Minister, all the tax professionals we talked to believe that for closed cases, that was a transgression. Indeed, I asked them if they could find any example on the statute book ever of a Government passing a law to override taxpayer protections and they could not.
When the Government responded to that clause with a review, their argument against all the advice was that the charge was not retrospective because it was a charge on the loan as of now—the outstanding loan. That is interesting, because they had never before proven that loanable income. That was the whole point of this whole debacle. Moreover, the loans were taken out in the past. We might not call it retrospective and we might call it retroactive, but frankly it is the same thing for the ordinary person. The reply to the amendment to the Finance (No. 3) Bill was therefore simply not good enough; it was wrong. This is a breach in the rule of law, particularly for those people with closed tax years. At the very, very least, the Government should not apply the loan charge to those people; that is the recommendation of the all-party group.
We then come to people with open tax years. Sometimes there has been an inquiry years before—15 or 20 years ago. For many taxpayers, it was not really clear what that was. There was a little form. They were not told what their rights were or what they should do in response. They just sat there, and some of them did not even know there was an open inquiry. Those open inquiries have lasted for years, with, as the hon. Member for Scunthorpe (Nic Dakin) said, HMRC doing nothing. Surely that is HMRC incompetence, not mistakes by taxpayers. They are now paying because HMRC could not administer the tax system over that period, and tried and failed to get the law right. I am sorry, but HMRC cannot penalise our constituents with tax bills of tens of thousands of pounds because it could not do its job properly. That is not acceptable.