Loan Charge

Adrian Bailey Excerpts

Thursday 4th April 2019 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I congratulate the hon. Member for Aberdeen South (Ross Thomson) and his colleagues in the all-party group on the way they have taken up and pursued this issue, and on the incredibly well informed report they have delivered. Many of the points I wanted to make have already been made, but I think one or two are well worth underlining and reaffirming.

The first point is on the retrospective approach taken. The people caught by the charge are, by and large, on ordinary, or perhaps slightly better than ordinary, incomes and are law-abiding; they were advised, perhaps beguiled, and in some cases even coerced into being part of the schemes; and they filled in their tax returns and declared everything. There was no attempt to hide their tax status in returns to HMRC. Although it may be true that HMRC did not approve the schemes, it is self-evident that HMRC ignored the evidence in front of them that may have justified taking action, so to take action now, after 20 years, is totally unfair and defies all laws of natural justice.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Will my hon. Friend give way?

[Mr Bailey]

Sorry, but I will not take interventions.

The Government need to do something about this problem. Astonishingly, it appears that, during those years, the Government had adequate legal redress available to them, had they wanted to take action. The loan charge legislation they introduced was designed to recoup the money simply, in a way that avoided the time and hassle involved in taking action under previous legislation. It smacks of trying to maximise income from the softest targets with the minimum of cost. The high volume of complaints that I have had about the process used to achieve that aim underlines that point.

It has been mentioned that the deadline is Friday for people to give evidence of how they will settle their outstanding bills. I have people in my constituency who are scared witless because they are not in a position to do that. It is not that they ignored HMRC; they provided it with the evidence, but they have not had the figures necessary to make the decision on how to settle their affairs. They are being threatened by HMRC that if they do not do that, penalties will be invoked, but HMRC has not provided them with the figures they need to do it. It is absolutely incredible, and it underlines the impression that HMRC is trying to maximise the amount of income that it can get from individuals who are trapped in this situation.

I looked at the HMRC document on the subject, particularly the “Supporting people” section. Unbelievably, it says that people must realise their assets, if necessary. I suppose that with a multimillionaire, that is a reasonable approach, but for ordinary people—especially retired people on low incomes, whose home may be their main asset—it is a totally inappropriate way to “support” people. One person who came into my surgery told me they think—they have not had the figures—that, after 5 April, they will have to sell their house. It is all right for HMRC to say people will not have to sell their house, but if that is their only asset and they have to realise their assets, they have no alternative.

The HMRC document goes on to say that people can remortgage. A retired person on a low income who goes to a financial institution and says, “I need to remortgage my property so I can pay off my tax debts” is unlikely to get a sympathetic response. Frankly, that document contains a lot of honeyed words that actually give no help or succour to those who are confronted with this potentially devastating and life-changing financial experience.

HMRC holds surgeries in the House of Commons that we can go along to. That is praiseworthy, but I went along with a couple of cases on loan charges and, unbelievably, there was no one there in a position to give me an answer. Given that this is the pre-eminent taxation issue that Members face at the moment, and HMRC is presumably trying to improve communication between constituents, MPs and itself, that is an amazing omission, which only underlines again the fact that HMRC appears to be totally indifferent to the plight generated by its processes and the culture that surrounds them.

I say to the Minister that there will be thousands of people watching us today, knowing that their future welfare, their livelihood and their happiness depend on the words of advice he gives at the conclusion of the debate. I just hope that his response will be favourable. Treasury Ministers do not often have a chance to make people happy, but here is an opportunity to do.