Loan Charge 2019: Sir Amyas Morse Review

Desmond Swayne Excerpts

Thursday 19th March 2020 Commons Chamber

[Sir Desmond Swayne (New Forest West) (Con)]

On a point of order, Mr Deputy Speaker. I am sorry to have delayed my point of order, but it is pertinent particularly to this business. May I ask why the Financial Secretary’s excellent biography of Adam Smith has not been laid on the Table as one of the papers pertinent to this debate?

You will appreciate that Adam Smith was absolutely categoric in his view of taxation—that it should be fair, proportionate, not retrospective and not arbitrary, which is clearly the subject matter of this afternoon’s debate.

[Mr Deputy Speaker]

It is as if the right hon. Gentleman read my mind. I am sure that those on the Treasury Bench will have heard his comments.

--- Later in debate ---

[Mr Davis]

I am talking about how we got to that position. I will come on to talk about the financial status of these people, but my hon. Friend is right: these are not rich people.

HMRC, which has claimed that this is clear law, lost the Dextra Accessories Ltd and Sempra Metals Ltd cases in 2002 and 2008 respectively, when the courts specifically rejected the idea that the loans could be subject to income tax. HMRC then lost a case in 2012 and again in 2014, demonstrating that the 2011 legislation had not clarified the law to the satisfaction of the courts. That is a key point—it was not a question of it not being to our satisfaction or our constituents’ satisfaction, but it was not to the satisfaction of the courts. The fact that HMRC lost twice and then won twice tells us that even experienced, highly informed judges spending a great deal of time studying these cases found it a difficult issue to resolve.

[Sir Desmond Swayne]

Is not the proof of the pudding in the fact that the 2017 legislation was introduced? The loan charge itself is standing proof that previous legislation was not sufficient to tax the people involved, otherwise that would have been done.

[Mr Davis]

As usual, my right hon. Friend trumps my argument in advance, but I will come back to that in a second.

What that demonstrates—and what my right hon. Friend’s point demonstrates—is a failure of the Treasury and HMRC to write clear and comprehensible legislation. If the judges cannot understand it, what chance is there for ordinary laymen—people who cannot afford to employ an accountant? We are not talking about city slickers or international bankers; we are talking about locum nurses, social workers, careworkers and hospital cleaners.