2019 Loan Charge

Debate between Justin Madders and Gareth Snell

Tuesday 20th November 2018 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate the hon. Member for Wycombe (Mr Baker) on securing the debate. It is clear from what we have heard that the issue has caused much consternation and anguish for many people, so it is right that those concerns have been aired here.

As much as the next person, I believe that if tax is due, it should be collected. Without the ability to raise funds, our public services would grind to a halt. I am sure there is unanimous agreement about that. My concern, and that of many hon. Members, lies in the way the recovery of the 2019 loan charge has been handled. It raises questions about whether HMRC can say, hand on heart, that all those who are subject to it have had what I would call a fair hearing. I want to make it absolutely clear that if, following due process, the money is owed, it should be paid, but what I have heard from a constituent does not give me confidence that that will be the case.

My constituent, Mr Crook, was working as a geologist in the oil industry when the agreements that are being scrutinised were set up. His work has dried up and he is now unemployed. He tells me that he is not in a position to repay everything he owes—not that he has been told how much that is—and that because of the uncertainty and the failure of HMRC to engage with him, he is concerned about the risk of bankruptcy.

I have corresponded with Ministers and officials to ask someone to look into Mr Crook’s case but I have had nothing back but the standard response. With Mr Crook understandably anxious to resolve matters, he has contacted HMRC at the email address provided on 9 April, 8 May, 30 August, 31 August and 28 September, and by post on 2 July. His emails have had an automated response and he has had no response to his letter at all.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

My hon. Friend is making a powerful argument on his constituent’s behalf. I have a constituent much like his who has been told that he may have to pay back more than £100,000 over the five years, which could cost him as much as £2,500 a month. Does my hon. Friend accept that even when people are still in work, if they are trying to provide for their families, those sorts of sums are simply unobtainable for most of our constituents and will lead to bankruptcy, whether that is what the Government intend or not?

[Justin Madders]

There is a lack of reality and a lack of genuine engagement with the individuals affected. As I said, my constituent has not had a discussion of the sort that my hon. Friend refers to, and until he does, he is in no position to know whether he will be able to repay anything at all. Will there be genuine discussions before the loan charges become due? Is the Minister confident that the Department has sufficient staff and resources to deal with all the inquiries that we have heard about?

My constituent tells me that although he submitted his tax returns each year when he was working they were never queried, and because of that HMRC has at the very least implicitly, if not explicitly, accepted that the moneys he received as a loan were indeed just that. He is concerned by the retrospective nature and long reach of the loan charge, and states:

“We really are normal people, who operated within the law at the time, itemising everything on our tax returns, paying benefits in kind tax on the loans and operating under a registered scheme with a reference number lodged with HMRC at the time.”

I contrast those words with what my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) said earlier about the string of multinational companies that are clearly paying less tax than they ought. When individuals are being driven to despair by the sort of hectoring we have heard about, it is perhaps right if they conclude that there seems to be one rule for the big corporations and another rule for the man on the street. If individuals are made bankrupt we will all lose, but it looks as if we could end up in that situation by default because of a lack of resources and engagement by HMRC. Will the Minister look carefully at how the recovery operation is working, so that we avoid that? Finally, I ask that HMRC acts with competence and compassion.