Loan Charge

Kirsty Blackman Excerpts

Thursday 18th January 2024 Commons Chamber

[Sir David Davis (Haltemprice and Howden) (Con)]

In the interests of time I will try not to repeat all the self-evident truths that have been stated throughout this debate. The right hon. Member for East Antrim (Sammy Wilson) made a characteristically fluent exposition of the case. Everyone, from him through to my right hon. Friend the Member for North East Somerset (Sir Jacob Rees-Mogg), reiterated essentially the same point: all of a sudden, in the last few weeks, the public have become aware that huge state or quasi-state organisations put their own interests ahead of the interests of the public and, unfortunately, that is not abnormal behaviour. The right hon. Member for East Antrim quite rightly characterised that as being repeated in a high-handed and insensitive way by HMRC but, frankly, I think he understated the point.

Why do I think that? Because HMRC has referred itself to the Independent Office for Police Conduct over those 10 suicides and some other attempted suicides and self-harm. When dealing with Government Departments, that is as close as we get to a confession. Those at HMRC know they have done wrong, and they have known it for some time. They have known that the consequences of this have led to death and enormous harm to people, yet they have continued to do the same thing over and again. How on earth do they justify that when they look at themselves in the mirror?

The only thing I can come up with is that HMRC thinks this is a deterrent. Clearly, it will not raise that much money—three quarters of people will go bankrupt —so maybe it is a deterrent. If it is, that brings us to the next question that the right hon. Member for East Antrim raised: why does it not go after the promoters? The promoters exacted 18% to 20% of the incomes of these people in carrying out this scheme, so there is a large sum of money there—someone said hundreds of millions. It may even be that the victims of the scheme—that is the right word—thought that was the tax deduction, because it was of that order of magnitude. Why has HMRC not done that? We know that many of the organisations using those promoters and contractors were state organisations, including HMRC itself. That might be a reason—it does not want to embarrass itself. It might be because of that that it is complicit in covert advice to those contractors at the beginning. It is entirely possible that HMRC approved it, and those documents are hidden away in HMRC.

What is the answer? My right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) was not quite right in saying that HMRC is completely protected. There is one body—the Public Accounts Committee—that can get at this. One of the things that should come out of this debate is that the Public Accounts Committee should look at the documents —not the numbers—associated with those early contracts and see why they were done. That would be one way to get past the assertion made by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) that we cannot deliver a practical outcome. That is one practical outcome that we can deliver.

The second practical outcome we can deliver among ourselves is to address the fact that this is retrospective taxation. As my right hon. Friend the Member for North East Somerset rightly pointed out, our country does not believe that people who undertake behaviour that is not illegal at one point in time should be prosecuted if it becomes illegal in future. That applies in spades to taxes.

One of the things I wanted to do early on in our collective campaign was to move a motion in the House at the beginning of the Budget, under the general motion that is normally put, explicitly to ban retrospective taxation. Let us guess what happened: since then, the Treasury has not moved a general motion. We always get narrow finance motions, which makes it difficult to change anything. I wrote to the Procedure Committee, which I gather is still concerned about this, to ask it to request the return of the general motion at the beginning of the Budget. Then, we could actually put it to the House. Back in those days, we probably did not have the 100-plus supporters that we now have. Today, we could probably carry that motion. I ask everyone taking part in this debate to support that—I might write around and ask everyone—and to write to the Procedure Committee to try to get that corrected. We can use our right of initiative, which we do not have much of anymore, to stop this explicitly.

[Kirsty Blackman (Aberdeen North) (SNP)]

I agree entirely on the amendment of the law resolution. In fact, whenever I have spoken on a Finance Bill since it stopped being common practice to use it, I have said that we should have an amendment of the law resolution. I appreciate what the right hon. Gentleman says about the Procedure Committee. As a member of the Committee, I can tell him that we have looked at this but, ultimately, it is the responsibility of the Government to make the change—they need to table the amendment of the law resolution. The previous Chancellor was clear that it was a small, technical change that he would not make.

[Sir David Davis]

Forgive me, but I have been here a long time. The Procedure Committee can do it—it can put it to the House and seek a Back-Bench motion. Guess what? We can move Back-Bench motions that instruct the Government. Some may remember that we did it on prisoner votes, and we won that day. It is about time that we exerted our own rights in this House on this matter.

The last point I want to make is that this whole thing was, if not precipitated, then certainly made worse by the 1999 move by the Government with what is now known as IR35. The complex rules associated with the IR35 triggered part of this behaviour pattern. What is interesting is that the behaviour of HMRC on IR35 pretty much mirrors its behaviour on the loan charge.

A large number of people out there, one of whom is in the Gallery today, have been oppressed by HMRC, frankly. They have an argument over money, let us say £70,000. They win in the first tribunal, so HMRC appeals. They win in the upper tribunal, so HMRC appeals again and takes them to court. The court, of course, then sends them back to the beginning and they do it again.

The House will remember a previous Backbench Business debate when we started the action against SLAPPs—strategic lawsuits against public participation—in which oligarchs use their huge financial power to destroy people. What is HMRC doing? Precisely the same thing. The Government are now moving to stop oligarchs doing what they do themselves, so we need to look at that too. IR35 is a disgrace. When a state organisation with infinite resources—actually, your tax money and mine—uses that power to overrule and reduce the ability of ordinary citizens to protect themselves, I am afraid it is behaving in a way similar to how countries behind the iron curtain used to behave.

--- Later in debate ---

[Kirsty Blackman (Aberdeen North) (SNP)]

I congratulate the right hon. Member for East Antrim (Sammy Wilson) on securing this important debate and I thank the Backbench Business Committee for making time for it.

To paraphrase the hon. Member for Strangford (Jim Shannon), this is an absolute mess. It is not an ethereal mess or something that is not happening to real people; it is happening to real people and affecting their lives today. We have a situation where the promoters and operators have faced no recourse. Tens of thousands of people have had their lives changed and torn apart, but HMRC has not been held to account for its behaviour. We must get to a point where there is a resolution. An end must be found, so that people do not have the sword of Damocles hanging over them.

First, on the promoters and operators, as has been said, there have not been any arrests or prosecutions, never mind convictions, of anybody who has been promoting or selling the schemes. Looking at debates from that time, the then Minister made it very clear that they were cracking down on schemes, not the individuals who use those schemes, and gave commitments that they were chasing promoters and operators. Whether Ministers were lied to by officials or knowingly came and told us something that was incorrect, I do not know, but we should never have been given those assurances, which were patently false.

There has been a consistent and concerted campaign of disinformation. MPs talking on behalf of their constituents, as well as MPs talking about the general issue, have been faced with disinformation. Whenever we have tried to find out information, we have been told stuff that is untrue, so I agree with the right hon. Member for East Antrim that we need to redouble our efforts. In fact, it is not even that we need to redouble our efforts, because doubling nothing still makes nothing; we need to make efforts to actually go after the promoters.

It is not only those promoters who promoted schemes back in the day, but the new ones that are springing up, along with other individuals and organisations that are taking advantage of people who are caught up in the loan charge scandal. People are being told, “Oh, you’re involved in the loan charge stuff—I can help you with that.” The person offering the help is then taking their money and running for the hills. That is still happening today, but those folk and those organisations are not facing any sanctions for their behaviour. The Government need to ensure they are taking action.

In many cases, the lives of individuals have been irrevocably damaged. Communication has been terrible and there have been contradictions throughout. Every Member who has talked about individual cases has said that people have been given conflicting information by HMRC. People were told, “If you pay this much, it will be fine,” but then they were told, “Actually, we’ve discovered we want another 50 grand from you,” or, “We need this,” or, “We are going to serve an APN,” or, “We’ve reopened tax year 2003.” As constituency MPs, we have all heard reports that people have been told conflicting information. Either every one of our constituents who has come to us about these issues is lying to us, or this is actually happening. I tend to assume that this is actually happening and that people have been mistreated by HMRC. That is a major concern.

It is impossible even for MPs to find out how much HMRC thinks people owe. There are times when I have had a settlement figure and an amount on behalf of a constituent, and then HMRC has chased that person again for other money later. As I said, it is a sword of Damocles hanging over people. They cannot ever get to the stage of resolution, because even if they settle, HMRC can come back and say, “Sorry, we miscalculated. We are going to chase you for another year.”

There is no point at which people can get out of this trap. I have spoken to so many constituents who—whether it was because of the loan charge or other things—reached the stage where they were terrified of opening envelopes that came through the door. Those of us who are dealing with constituents who are caught up in this know that they are terrified of opening any official-looking envelope, because it might be another demand for tens of thousands of pounds. It might be another demand for money that they do not have.

[Michael Fabricant (Lichfield) (Con)]

I am following the hon. Lady’s arguments and agree very much with her. Does she not agree that this is almost contrary to jurisprudence? There is no double jeopardy, so a person cannot be tried more than once for the same offence, yet HMRC, on those occasions, seemed to be doing just that.

[Kirsty Blackman]

I am concerned that we will not get to the end of this and that our constituents will never feel comfortable opening letters again. They will never get out of it.

The Minister needs to look not just at this issue as a whole, but at each individual case. It is very clear that there has been a disparity in the way that people have been treated. We were given the utmost reassurance that nobody would lose their home and nobody would be made bankrupt as a result of this. That was made utterly clear to us. I remember being in Westminster Hall when the Minister stood up and made those promises. Those promises have dematerialised completely. I have a constituent on universal credit whose only asset is his home, and he has been asked for tens of thousands of pounds—not tens of thousands of pounds over a 12 or 20-year period, but tens of thousands of pounds today. The only way that he can get that money is to sell his house. That is directly opposite to what the Minister told us at the time. We need to ensure that these changes are made.

Finally, a resolution to this is the most important point for me. This needs to end, so we need to get a resolution for individuals or for the whole group. People need to be absolutely confident that they will never again get through the door a terrifying demand from HMRC about something that they thought had been sorted out. If we get a proper resolution for each of those individuals —our constituents—we will have done our jobs as constituency MPs.