Justin Madders
Main Page: Justin Madders (Labour - Ellesmere Port and Neston)
Justin Madders (Ellesmere Port and Neston) (Lab)
I hope that I can complete my speech before rain stops play—I think it is probably some kind of symbol of how many people view Parliament as broken, but let us return to the matter at hand.
I congratulate the hon. Member for Aberdeen South (Ross Thomson) on securing the debate. Clearly this issue has caused much distress, and brutally so at times. Of course, if tax is due, it should be collected. Without the ability to raise funds from taxation, our public services will obviously grind to a halt, but my concern, and that of many other hon. Members, is about how the loan charge and the recovery of it has been handled to date. It raises many questions about how HMRC can say in all honesty that each individual case is being looked at properly before the menacing letters are sent out. Let me make it clear that if, following due process, it is determined that money is owed, it should be recovered in a fair, consistent and reasonable manner. However, what I have heard raises questions about HMRC’s capacity to deal with these issues properly.
I previously raised the issue of my constituent Mr Crook when we debated the matter in Westminster Hall back in November. I recounted the six times that he had contacted HMRC about his potential liability without any response. I explained the immense anxiety that he was feeling, because he was not getting any answers and feared bankruptcy. Since my involvement, there have been responses from HMRC. I am sure that it was entirely coincidental that they came the week after the Westminster Hall debate.
I wish that I could say that we had somehow managed to reach a happy ending, but we have had tales about spam boxes and deleted emails and about how, in that wonderful phrase, my constituent’s request will be “progressed within the normal timescales”. Yet here we are, 360 days after my constituent registered his interest with HMRC, and still no agreement has been reached. My constituent is not the only one in this position, so I repeat the question that I raised back in November: does the Department consider that it has sufficient resources to deal with this issue?
Mike Amesbury (Weaver Vale) (Lab)
I have a constituent called Jeff, who has lived by the rules and played by the rules, and who submitted tax returns year in, year out, yet he is also suffering this retrospective injustice.
Justin Madders
My hon. Friend is absolutely right. It is the retrospectivity of this that is really difficult for people to reconcile with what they consider to be a fair and transparent process.
I have had constituents raise concerns that if they manage to reach agreement with HMRC, they will be required to sign a settlement document that stops them reclaiming money from HMRC if they are later judged against in a judicial review. The retrospectivity of this sits uncomfortably with me, but the idea that the Government will not be bound by future court decisions goes very much against the rule of law that we are used to in this country.
That is the wholly unsatisfactory situation that we face, but I want to return to where we all started on this. My constituent tells me that, having submitted his tax returns each year when he was working, they have never been queried—[Interruption.]
Mr Deputy Speaker (Sir Lindsay Hoyle)
Some might say that there is a leaky Parliament at the moment, so we will take it from there.
Justin Madders
I am sure that many Cabinet meetings have similar difficulties.
My constituent tells me that, having submitted his tax returns each year when he was working, they have never been queried. He states that, by doing that, HMRC has at the very least implicitly, if not explicitly, accepted that any moneys that he received in the form of a loan were just that. However, it is the retrospective nature and long reach of the loan charge that is so hard for him to accept. I understand that it has been claimed that HMRC has always said that these arrangements were unacceptable, but I have not seen anything prior to 2016 to suggest that that was the case.
When the Minister responds, can he say whether in future I should advise my constituents that they should no longer consider HMRC responses to tax returns to be final, that they can be reopened at any point and that any schemes registered with HMRC can be overturned decades in future? Can he also advise me whether any companies that made loans will be pursued for employer national insurance contributions? What if the company is no longer trading? Will the employees’ national insurance records be updated?
I also want to say a few words about the human cost of all this. HMRC has admitted in response to freedom of information requests that no assessment was made of the likely number of taxpayer bankruptcies that will result from this charge, yet the official HMRC statement—[Interruption.]
Justin Madders
I will carry on.
The HMRC statement says:
“The government anticipates that some of these individuals will become insolvent as a result.”
It also says that the measure
“is not expected to have a material impact on family formation, stability or breakdown.”
I find that statement unbelievable on two counts. First, it is unbelievable how little understanding or empathy there is for those facing bankruptcy. Anyone who has spent more than five minutes in the real world will know that individual insolvency has a massive impact on families. My other huge reservation about that statement is that it appears to say that no assessment has been made of the number of bankruptcies, yet it claims that there will be “some” insolvencies. If people have to be made bankrupt, I think we are all clear that something has gone terribly wrong.
Finally—and before we get the paddles out—I would like to ask the Government to think about what kind of message this whole mess is sending out to entrepreneurs, the people the Conservative party used to consider the bedrock of its support. Under this Government, those people are being left with the distinct impression that HMRC is prioritising the recovery of tax revenue over justice by targeting individuals rather than the promoters of the schemes, many of whom still enjoy generous contracts with Government. They knew what they were doing but appear to have accepted no responsibility for their actions and faced no consequences. The suggestion that some public sector employers were insisting that the people paying the price now would only be employed if they agreed to accept the kind of contract that HMRC is now declaring unlawful is an outrage.
Several hon. Members rose—