Loan Charge

Bob Stewart Excerpts

Thursday 11th April 2019 Commons Chamber

[Stephen Metcalfe]

My hon. Friend makes an excellent point. All the correspondence I have had has been phrased in very reasonable terms. People want to do the right thing, but they feel under a huge amount of pressure.

[Bob Stewart (Beckenham) (Con)]

I am sure that, every year, my hon. Friend’s constituent sent in a tax return, which HMRC ticked, approved and sent back. Only recently has HMRC suddenly seen the way things are going and said, “Right, this is some kind of tax avoidance. Let’s get it all back, and in one year.”

[Stephen Metcalfe]

I do not know what the rules are on my hon. Friend reading the next line of my speech over my shoulder, because it says here that my constituent continued with these arrangements and, each and every year, dutifully declared on his tax return the amount he had received in loans and the amounts he had returned thereof. It came as a surprise that, years later, HMRC intends to use its newly granted powers—in what my constituent describes as “winding back the clock”—to retrospectively claim that the arrangements my constituent and others had used were not legal, had never worked and that the tax on the loans was always due.

--- Later in debate ---

[Adam Holloway (Gravesham) (Con)]

I pay tribute to the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and the Loan Charge Action Group for all that they have done, and indeed to the Minister, who for a long time has been given a hard time on the subject.

I am speaking today on behalf of about 100 constituents whose lives have been blighted by this and who have lived with awful uncertainty for about three years. After last week’s debate, I met a number of them at the City Praise Centre in my constituency. I have to say that when I first met constituents about this, my heart did not exactly bleed for them; it is not fair for one particular group of people to pay income tax at a lower rate than the rest of the workforce, and lots of my constituents are in real need, living in substandard accommodation and waiting months for hospital appointments, so I cannot condone the systematic loss of revenue to the Treasury.

[Bob Stewart]

The people who are coming to my hon. Friend are normal people, such as nurses—some of them actually work for HMRC.

[Adam Holloway]

I thank my hon. Friend and absolutely agree.

My view has since shifted, however, as I have come to understand more about their circumstances. These people are not pocket Al Capones out to defraud the system; they are self-employed professionals who are contracting to different entities, paying their own pensions, without the protection of regular employment, and trying to avoid the complexities of IR35. I guess any of us would wish to minimise the tax we pay, and HMRC knew about those arrangements for decades and was slow in taking legal action, and inept in shutting it down.

--- Later in debate ---

[Bob Stewart (Beckenham) (Con)]

I have huge sympathy with my constituents caught by loan charge repayments, because they are normal honest people who thought they were doing the right thing. They had no intention of diddling the taxation system.

Most people who owe loan charge repayments accept that they are now liable to pay that tax back. What I find unacceptable is the amount of interest that is heaped on that tax requirement. My plea to the Minister—as he knows, because I have spoken to him separately about this—is to reconsider the interest charges. In my view, they are far too high and, as a decent gesture—because these people did act decently—the interest charges should be dropped entirely. Such a move would go a long way to lessen concerns among my constituents, and it would be a fair way to proceed, bearing in mind HMRC’s lack of warning to participants in loan schemes.