Richard Burden
Main Page: Richard Burden (Labour - Birmingham, Northfield)
Ross Thomson
Sorry, but I will continue to make progress.
This story is far from unique. More stories emerge every day from people who fear the break-up of their family and a future devoid of opportunities as they face lifelong payments to cover HMRC demands.
Another constituent wrote to me recently about his long work in oil and gas and how he has experienced the highs and lows of the industry for decades, but he told me that HMRC is now demanding nearly £200,000, dating back two decades:
“I am 59 in July this year, I have no assets, I will have 5 or 6 years of working life left, assuming that I get to work, even if I am lucky enough to secure a job for that period, trying to pay that amount of money really is mission impossible.”
Ross Thomson
Apologies, but I will make progress so that others can speak in this debate.
My constituent is facing financial ruin at the end of his long career in the oil and gas industry, which has seen him work hard during boom and bust. HMRC is turning a lifetime of work to nothing, delivering my constituent a bigger blow than the oil market ever could. It cannot be ignored that over half of those who responded to the APPG inquiry believe these changes will place their chosen career in danger. The loan charge is driving people away from industries in which they have long played an important part. This is intolerable.
I fear there has been a complete breakdown in trust between the people and the authorities that are responsible for upholding the rule of law. It is a sad reality that this breakdown in trust will not end with those who have been directly affected by the loan charge scandal. There will instead be lasting damage to the trust that the people of this country have long had in the very institutions they expect to serve them fairly. The stories I have shared today are but a drop in the ocean compared with the number affected. Each person acted in good faith, and each of them has been let down by HMRC. The fact that the Government continue to pursue the loan charge, without hesitation or thought for those who will be affected for the rest of their lives, greatly saddens me.
Many of the people who now find themselves facing retrospective charges were simply acting on the professional advice of employers and advisers. The tax arrangements that these individuals entered into were presented as entirely legal, legitimate and HMRC-compliant financial planning. None of us objects to people paying a fair share of tax. Indeed, we should be doing more to crack down on those complicit in tax evasion. However, that is not the case here.
HMRC is seeking to claw back tax and is breaking legal safeguards that ensure fairness. Those safeguards include time limits, and the Treasury Committee heard evidence from the president of the Chartered Institute of Taxation, Ray McCann:
“In reality, the retrospective effect actually displaces all the protections that taxpayers are given by Parliament in terms of getting certainty for their affairs”.
The behaviour of HMRC to date has greatly concerned me, and I know other colleagues will elaborate further.
Simply put, HMRC has demonstrated it is willing to pursue individuals for settlement, driving them into bankruptcy, breaking families apart and destroying hope for financial security in old age. HMRC has blatantly gone after the softest target—individuals who have the least to defend themselves—while largely ignoring those who are most culpable in proliferating these schemes.
Members will be aware that a number of people have now taken their life as a direct consequence of being unfairly pursued by HMRC. As part of the APPG inquiry, we heard the most harrowing, powerful and emotive evidence I have ever heard. The Government have been made aware of the risk that we will only see more cases of this nature, yet they have continued to refuse to halt settlements. The Government have the power to do something about this, and they have the ability to ease the suffering, pain and distress felt by so many. However, they have yet to do so. I hope the Minister will say that the Government are willing to change course. Our request is not onerous. A six-month delay and a review is not the end of the world for the Treasury, but a failure to do this is the end of the world for thousands of people across the country.
I am sure that Members on both sides of the House will join me in urging the Government, once again, to halt settlements and urgently to bring forward an independent review of the loan charge. Failure to do so would continue to put lives at risk, would break families apart and would fuel distrust in our institutions. Trust in the rule of law and our democratic system is at stake.
Nic Dakin
I will make a bit of progress.
I have seen HMRC’s briefing pack on the loan charge, and I note the line in bold that says:
“HMRC has never approved tax avoidance schemes.”
I am glad to hear that, but I am not sure in this case whether I completely believe it, because when this law was passed in 2017, it applied a retrospective tax going all the way back to 1999. Notwithstanding the trouble with retrospective law in general, 18 years is a very long time to disapprove of something but not say that or act to fix it. The reality is that, by HMRC not speaking out or acting to prevent these loan schemes from being used for 18 years, while it did not give explicit approval, it certainly gave implicit acceptance.
Richard Burden
My hon. Friend makes a powerful point. At best, HMRC was woefully slow on this. Does he agree that, even at that late stage, the Treasury could have sorted this out when it accepted the amendment to the Finance Bill tabled by the right hon. Member for Kingston and Surbiton (Sir Edward Davey) in February by undertaking a proper review of this, so that it does not have the impact on individuals that my hon. Friend and the hon. Member for Aberdeen South (Ross Thomson) have talked about? It is woeful that HMRC and the Treasury did not conduct a thorough review, and that is why we need a proper, independent investigation.
Nic Dakin
I tend to agree with my hon. Friend, but fortunately the Financial Secretary to the Treasury is a good Minister, and I echo the comments made about him. I am sure he will respond in a positive way to the debate and that we can anticipate positive moves that will reassure people.
It is easy to see why people such as tax accountants, employers and even my constituents who were employed under these schemes and told they could not be employed otherwise thought it was okay to use these schemes—they believed they were perfectly legal.
Lee Ashcroft, who is one of my constituents impacted by the loan charge, is an engineer in the construction industry. He is a normal working man who happened to find himself, through no fault of his own, in a sector where businesses contracting workers obliged them to enter into these schemes if they wanted to work. To Mr Ashcroft, these schemes seemed unfair because there was no holiday pay or sick pay, but they seemed perfectly legal. He was told that they were perfectly legal by the company he worked for and by advisers with whom he checked it out.
Mr Ashcroft needed to work and accepted that this was the deal. He tells me that, in relation to £6,500 in loan payments, HMRC expects him to agree to settle a bill of £25,500—money he clearly does not have. He strongly disputes the amount he has to pay, which is vastly in excess of what he earned, but the clock is ticking. If he does not enter into an arrangement to pay by the upcoming deadline, he will be expected to pay the full amount with fines added on top. He is being forced to make an impossible decision: accept paying a huge bill that he thinks has been miscalculated and is morally wrong, or try to get HMRC to re-evaluate what he owes, and if he is unsuccessful, he will have to pay the full amount with fines on top. Either way, it will have a life-changing impact on his prosperity. Given the amount of worry that this has caused him, I think it has already had a life-changing impact, and Members will have stories of other constituents whose lives have been turned upside down by this.
It is unclear to me why HMRC is going after Mr Ashcroft in the first place. After all, it was his employer who forced people into these schemes. It is the employer who has benefited financially from this, yet it is the employees who are being left to pick up the tab, after HMRC waited 18 years to collect it and now wants it all in one dollop. These advanced payment notices are being relentlessly pursued by HMRC with no independent right of appeal. That does not seem to be playing fair.