Loan Charge
Debate between Cheryl Gillan and Iain Duncan Smith
Dame Cheryl Gillan (Chesham and Amersham) (Con)
It is a pleasure to follow the hon. Member for Brentford and Isleworth (Ruth Cadbury). I join others in congratulating my hon. Friend the Member for Aberdeen South (Ross Thomson) and the other Members who secured this debate today.
I do not want to repeat the eloquent speeches that have already been made, but it is worth putting on the record that this is not happening to a group of high net worth individuals but to some ordinary, hard-working people such as social workers or IT consultants—people in the everyday run of their lives. Frankly, if I were to be cynical, I would say that the indictment of HMRC, which the hon. Lady was laying out for the Chamber, is absolutely right. I feel that these collection officials are cutting their teeth on a whole group of individuals who feel that they cannot fight back. This debate shows how they can fight back, particularly when the voices of those who are not often heard are represented so well across the House. The right hon. Member for Kingston and Surbiton (Sir Edward Davey), who chairs the APPG, was right in saying that the issue brings the House together.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
Will my right hon. Friend give way?
Dame Cheryl Gillan
I am sorry, but I will not give way. A lot of people want to speak, and the more I give way, the more their time gets reduced.
What is striking for me is that all these individuals made reasonable inquiries about their tax liabilities. They consulted professionals and were offered advice. Indeed, the actions of HMRC almost reinforce the fact that what they were doing was a legal way of pursuing their employment.
If as a result of this issue our constituents who work in the banking industry are declared bankrupt, they will not even be able to continue legitimately pursuing their career and means of earning a living, because they are specialists in that area. They will be prohibited from working in the banking sector. That is absolutely appalling.
I turn to what some of my constituents have said, to reinforce some of the points that have been made. One of my constituents used an umbrella company, which assured him that he was doing nothing wrong and that the scheme was HMRC approved. When, finally, the bill landed on his desk, the umbrella company asked him to appeal, which he did. He received letters for tax years other than the one in question, but always at least three years after he had sent in a tax return. In each case, HMRC not only requested the tax it said he owed, but three years’ interest as well.
Another constituent said:
“I am not a tax expert and the policy left me extremely confused…I didn’t know which way to turn. I was advised that I could use an arrangement that would ensure I was compliant with IR35. My primary motive was to abide by the law. I was told that the tax arrangement was HMRC and QC approved.
HMRC are now saying that these arrangements do not work, yet at the time they did nothing to curb them. They allowed me to build up years’ worth of debt, signing off my tax returns and on some occasions sending me a tax rebate!
I simply do not have the sums of money involved. I am not a wealthy person, I have worked hard and I have paid taxes. Over the 18 months, this situation has led to anxiety and stress.”
Sometimes, he has had suicidal thoughts. This person is a freelancer, so he has had no holiday pay, sickness pay, maternity pay, paternity pay, compassionate leave, pension contributions, career development, training or bonuses, and certainly no job security. He is suffering from sleep deprivation and has been thinking he could take out some sort of insurance so that if he ended his life it could secure his wife and children’s future. That is a terrible thing to have to say.
Another constituent said:
“I began receiving loans in late 2011 and they were always very clearly disclosed to HMRC within my annual Self-Assessment Returns. In mid-2012, HMRC reviewed the payroll arrangement and the loans provided to me and formally confirmed they did NOT constitute ‘tax avoidance.’”
When HMRC gives that sort of reassurance to the taxpayers of the United Kingdom, they should expect to be able to believe it. Much praise is heaped on Front Benchers and the Financial Secretary to the Treasury; I concur with it—my right hon. Friend is always polite, always replies and is assiduous in dealing with my constituency correspondence, for which I am very grateful. However, I am afraid that I agree with my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), who is not in his place, who said that we cannot pursue anything before 2017. I hope that the Minister will listen carefully.
I feel that HMRC has been trying to collect taxes aggressively but using what I consider to be a very tame audience. It should direct its attentions to the fraudsters and the mega-companies—not just the J.P. Morgan schemes, but the Googles and the Amazons. In some instances, our constituents are being asked to pay sums greater than what a company such as Amazon or Google has paid in a whole tax year.
I consider that this issue has been used as a loss leader by HMRC; it has put so much into administration costs that it is almost caught—it feels that it cannot go back and abandon its pursuit of these individuals. But I think it should. Treasury Benchers certainly now need to pay attention to the will of the House. The anarchy of what has happened to our Standing Orders has resulted in the House being taken over by people other than the Government. There is a strength of feeling across the House and across parties. If some mechanism has to be sought to try to get relief for our constituents, that is not now beyond imagination.