Loan Charge
Debate between Paul Beresford and Julia Lopez
Sir Paul Beresford (Mole Valley) (Con)
I feel a little cautious in this debate as I do not have the full knowledge or experience of many Members here and I do not have many cases in my constituency.
I have had a considerable number of cases over the years in which I have had to deal with HMRC. Contrary to what many people have said, I have found that individual approaches to individual taxation experts in HMRC have been extremely positive: cases have been listened to, and we have secured some dramatic changes.
I have six cases of loan charges in my constituency, and one other case which, while not a loan charge, is slightly relevant. I was approached by an individual some years ago. He was divorced and his wife had moved, some years before, to New Zealand of all places. He paid a large monthly payment to her and support for the child, and she remained single—or so he thought. After a considerable number of years, he discovered that, in fact, she had got married and that all that maintenance he had paid over those years—vast sums—he should not have paid, so he stopped paying. HMRC came along and asked him why he was no longer making those payments, because they were tax deductible, and he explained. An HMRC official said, “Well, the money that you have paid that you should not have paid is now counted as profits and we would like tax on that plus interest.” This man was not suicidal, but he came close to considering murder. The ex-wife was still alive. We went to HMRC and got an agreement on this retrospective—or retroactive—payment. It was spread over time. The collector was eminently reasonable and the payments were managed. When the circumstances of this individual changed—he went to university—again we went back, and again they changed the terms.
What I am saying to my six loan charge cases, or to those who want help—only two of them do—is that I am prepared to take up their cases and work with them. Everyone in this Chamber will know that when we have that portcullis on our letters and we ask for a meeting, it happens. That has to be the best way through it. What I have discovered in two cases is that some of the information that the Inland Revenue and HMRC have been given does not match the real information. When we hear Members say, as we all have done, that communications have broken down and that the information that has been used has given rise to incorrect decisions, some of that is because officials are not being given—probably deliberately—every bit of information that they need to come to a fair and clear decision.
I could not believe that two of them, who were bright, independent professionals, had actually taken up their loans. I asked one of them to explain to me—I am fairly simple and can only count to 32—how it had happened. They said that they had been told that it was all right. I asked by whom. They said by the promoters. I asked them to describe the situation. They said that they had worked for whoever it was and that they had been given money, but it was not payment; it was a loan. I said, “Fine, what was the interest on it.” “Oh, there was no interest,” they said. I asked, “When will you pay it back?” “Oh, we’re not going to pay it back,” they said, “and we are not paying any tax on it.” I said that that was just too good to be true.
Julia Lopez
I must confess that I share some of my hon. Friend’s mixed feelings about this issue, particularly as there is a disparity between what my constituents say to me and what the Minister says to me. Where there does seem to be culpability from HMRC from my perspective is that it knew full well about some of these loan schemes for a very long time and subsequently a political decision was made to call them in, and that political decision could have been taken much earlier so that we would not have seen some of this damage. That creates a lot of uncertainty within the wider tax system, which is very corrosive.
Sir Paul Beresford
I thank my hon. Friend for her intervention if for no other reason than she has given me a minute more. I will leave that for the Minister to answer. I can only go by the six cases that I have seen and what she says does not apply in any of them.
If I can say anything to Members it is this: please, put these cases together and consult an individual senior tax inspector. I have found the inspector and the collector to be really co-operative, which makes such a difference to these people’s lives. There is a look of relief on their faces when we come out of the meeting with those officials. There is also an acceptance that they will have to pay the loan. Some may call it retrospective, but I call it retroactive. I do remember the case of the divorced man who did not commit murder—his bill was way up over £100,000.