Loan Charge
Debate between Ruth Cadbury and Jim Shannon
Ruth Cadbury (Brentford and Isleworth) (Lab)
As one of the vice-chairs of the all-party loan charge group, I add my thanks to members of the Loan Charge Action Group for all their work in submitting evidence to us, and particularly to those few people who have worked their socks off in recent weeks to pull together the APPG report, which was released yesterday and is available online for anybody who wants to see it. I will focus on HMRC’s communications with taxpayers that have led to many of the appalling stories that Members across this House have been relating and will relate today.
Jim Shannon (Strangford) (DUP)
I sought the hon. Lady’s permission to intervene beforehand. Many of my constituents have the same problems that everybody, including the hon. Lady, has referred to. They are asking for a six-month delay for a review of the loan charge. Does she share my real concerns about those who are purported to have committed suicide? There have been deaths, and people facing bankruptcy have had to sell their homes. The effect on people’s health is enormous.
Ruth Cadbury
Examples such as that—tragically, we heard from the family of somebody who committed suicide—have been mentioned today. The stress has been well related by Members today on behalf of their constituents.
I knew very little about this issue until I met a group of my constituents. They are normal people, if anybody is normal. They are specialists in their field and they are middle-aged, but they have had to put their lives on hold. One couple cannot get married and get a mortgage. Another are making plans for their children’s university education, and that is causing them real stress. Those who are still working are treading water. They are not investing, not employing people and not generating wealth for this country. All are profoundly anxious and depressed, and it is affecting everything about their lives.
What I have learned from the work that we have been doing in recent months is that there are, very roughly, two groups of people. The first group is professional freelancers who went into the scheme, starting up to 20 years ago. Generally, they are middle to high earners and took professional accounting advice about the options available in the post-IR35 world. This group, mainly professionals, went into loan schemes because for them, pay-as-you-earn employment was not an option and their accountants advised them that due to the regulatory complexity and disproportionate cost burden of IR35, it would be best to enter into a loan-based enumeration scheme. There was no uncertainty about the legality of the scheme back then. They made arrangements with umbrella companies to prevent them from inadvertently breaking the IR35 rules. Everyone I heard from who went into these schemes said that they did so not to save tax, but to save the administrative burden.
There is another group—an unknown number—of more recent joiners since the rules changed in 2016. They are working in public services, as nurses, doctors and social workers. The word “loan” was never mentioned to them by the scheme providers. They generally did not take separate professional accountancy advice, as they were signed up by a recruitment company that had links with the umbrella company. There appeared to be no choice, and
“everyone we worked with was doing it”.
It is possible that many of these people do not know that they are caught up in this.