Loan Charge

Charles Walker Excerpts

Thursday 11th April 2019 Commons Chamber

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Thank you for calling me so early in this resumed debate, Mr Speaker. I have to say that I had never imagined that I was going to speak in it, seeing as rain stopped play at about this time last week. I am by no means an expert on the 2019 loan charge, but I, like many others who expressed an opinion last week, have been contacted by numerous constituents who have set out in clear terms how they believe it would impact on them. They are being asked to pay back thousands, tens of thousands, and in some cases even hundreds of thousands of pounds that they never believed would be due.

Do not get me wrong: I believe that everyone should pay their fair share of tax. We know that that is what funds our public services, and we should clamp down on tax evasion at every possible opportunity. However, minimising tax exposure has always been a legitimate part of our tax system.

When looking at this issue, I have been on a journey. Initially I was in two minds about the validity of the arguments presented. Obviously, I had great sympathy for my constituents on both a personal and an individual level, but I felt that the old adage, “If something looks too good to be true, it is too good to be true,” applied. I have now, however, come to a different conclusion. I have looked at the individual cases presented and at the wider issues. To demonstrate why I have come to that conclusion, I want to use the words and sentiments that one particular constituent has sent me. He wants me to do this anonymously, as he does not want to prejudice himself or his case. As an aside, I am not sure that it is a healthy state of affairs when constituents are scared to speak out against a Government agency.

My constituent is a freelance IT professional who was advised to enter one of these schemes. When he entered the scheme, to give himself confidence that it was legally compliant and that what he was being told by his professional adviser was true, he contacted Her Majesty’s Revenue and Customs. The correspondence my constituent has from HMRC shows that in 2012, when he was checking for compliance under disclosure of tax avoidance schemes legislation, he asked HMRC to review the particular arrangements he had joined. I am informed that the HMRC anti-avoidance group concluded that no hallmarks of tax avoidance were in evidence and so HMRC did not assign a DOTAS number to that arrangement.

If that is true, which I obviously believe it is, I think it is fair to say that, under HMRC’s duty of care and due diligence, it had plenty of opportunity to inform my constituent that things had changed and that the particular arrangement that he had entered into would be liable to taxation. HMRC completely failed to notify my constituent that anything was amiss, so for years he relied on the initial HMRC advice he had received and continued as a customer of the arrangement.

[Mr Charles Walker (Broxbourne) (Con)]

That retrospective and disproportionate approach being taken by HMRC are what concern a number of my constituents. The people I represent are very reasonable, and they would be happy to come to an arrangement with HMRC, but HMRC seems to want to bankrupt its debtors, as opposed to getting some return from them.

[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.