Loan Charge

Robert Buckland Excerpts

Thursday 18th January 2024 Commons Chamber

[Sammy Wilson]

The answer is easy: the victims are easy targets. They are the ones who are easy to chase. The promoters of the schemes have all kinds of means of defence. Many disappeared when they realised that they may well be pursued. This is the baffling thing, and maybe the Minister can explain it: if these schemes are designed as contrived ways of avoiding tax, why is HMRC not pursuing even some of the new promoters who are establishing themselves today and who will have disappeared by tomorrow, once it is seen that their schemes are being challenged?

[Sir Robert Buckland (South Swindon) (Con)]

I am grateful to the right hon. Gentleman for his courtesy on this occasion. I share his comments about Sir Tony Lloyd, who was a member of the Northern Ireland Affairs Committee, which I chair.

The right hon. Gentleman makes an important point about the regulation of promoters. Where is the regulation of those individuals? This is an ungoverned space. Surely, as they are trying to sell financial service products, they should at least come under the control of the Financial Conduct Authority. We have to not just focus on what has happened in the past, but look at what is happening now, where innocent people are being exploited.

[Sammy Wilson]

I intend to come on to that point.

The parallels, as I say, are frightening. I ask myself this question and the Minister should be asking it of himself, too. In one, two, four, five or 10 years’ time, will we see the same embarrassment and see Ministers who parroted the Department’s line being asked the question, “Why did you not raise the alarm at the time? Why were the explanations not challenged, and why were the calls for help not heeded?” That should be a salutary warning to Ministers.

--- Later in debate ---

[Sir Iain Duncan Smith]

Absolutely, which brings me back to the point I was just making. I mean no insult to the civil servants, who work very hard; it is simply that the culture of HMRC is one of impunity. It does not behave like many other Government Departments. We have problems with other Departments—I ran one, so I know what that is all about—but HMRC acts very differently from them, and ultimately it is protected by the Treasury. That is where one of the biggest problems arises, and it is why it is so difficult to get any information out of HMRC, because even the Ministers who are in charge of it seem unable to command or direct it to provide that information. I make that observation from having worked in government.

[Sir Robert Buckland]

My right hon. Friend is making a very powerful point about HMRC. It was the product of a forced merger of the Inland Revenue and Her Majesty’s Customs and Excise by, I think, Gordon Brown and the Labour Government. The merger was rushed—they were pushed together—and HMRC has never enjoyed the proper scrutiny and ministerial involvement that it should have received. Does my right hon. Friend agree that now is the time for a root-and-branch review and a change to the nature of HMRC—retaining its independent functions, of course, but allowing for greater ministerial oversight?

[Sir Iain Duncan Smith]

I agree. I did not intend my speech to head off down this track, but I will observe that it has now become clear that HMRC is unable to find any legal basis to justify its claim that it has to pursue individuals, but not those who promoted the schemes. HMRC has tried to deny that for some time, but it has now become very clear; even its head, the permanent secretary, has stated that

“In recent months I have repeatedly tried to obtain legal analysis to understand the strength of our claim with very little success. For yesterday’s hearing we were initially given a summary of avoidance wins, some of which seemed to have nothing to do”

with the schemes. I simply say that HMRC still cannot justify the legal basis for pursuing individuals and not going after those who promoted the schemes.

[Sir Robert Buckland]

Will my right hon. Friend give way?

[Sir Iain Duncan Smith]

I am conscious of time. If my right hon. and learned Friend will forgive me, others have to speak, and I am going to try to stick to Madam Deputy Speaker’s prescription. I apologise to him.

I will quickly raise the cases of three of my constituents —Gareth Lloyd, Joe Green and Karen Duberry—all of whom have been facing terrible impositions. I am sure many colleagues have seen similar cases. Gareth Lloyd says that

“Facing and now paying the loan charge has meant years of stress with a constant stream of demands and letters from HMRC…when I should have been enjoying watching my young family grow up I’ve been constantly at fear of potentially losing our home.”

Joe Green says

“Nine years of worry, nine years of anxiety, nine years of not knowing what to expect from HMRC other than continual bullying tactics to try and extort monies from me”

with threats. Karen Duberry says that she was

“Shocked and alarmed when I learnt of the loan charge. I felt alone, scared, threatened and worried for me and my family…The mental stress on me and my family has been immense”.

We know that because at the far extreme of these cases, people have committed suicide, but there are many other problems between the extremes. All these people deserve a process that is better, fairer, open and reasonable and that goes after those who originally promoted the schemes. These people were under the impression—as was the case—that the schemes were quite legal.

The important point is that HMRC conjured up a retrospective process to deal with this, which is appalling. Historically, that has not been done—you deal with where you were at the beginning—but HMRC felt it had lost a whole load of taxation and did not want to blame itself. What it did was to go after those individuals, threaten them and cajole them.

An inquiry took place, but it now appears that the Morse review was not entirely independent. I gave some evidence, as many did, to the original inquiry, and I assumed at the beginning that it was completely independent. In fact, it turns out that it was not. HMRC got to see elements of the report before it was even published, which is astonishing to me as we were given a clear understanding that it was to be independent. There is much more that needs to be done, and that review is by no means the end of it.

I was surprised when my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who was the Minister at the time, said:

“We…have plans under way to crack down further on the promoters of these avoidance schemes.”

It turns out that he did not. Why is a Minister allowed to stand at the Dispatch Box to make a statement drafted by civil servants, which we then find out is not right? He was not right: HMRC was going after the individuals, not those who promoted the schemes. As we have discovered, HMRC has no legal basis for doing that, so the whole thing has become a terrible mess.

I congratulate those who brought forward this debate, because there is so much more here that needs to be said. I just want to conclude by saying that this has been going on for too long, with laws changed retrospectively, denials about what HMRC was doing, bullying and intimidation, and a failure to come clean about the processes engaged in all of this. It is so familiar; as the right hon. Member for East Antrim (Sammy Wilson) said, we are in the middle of the problem over the Post Office, and we see the same things in that process. We have been seeing the same denials, protections and pretences with the loan charge for a long time. It is very clear now, and I hope the Minister agrees, that we are long past the point where we need to start recognising that this is not the way for any Government Department to behave when dealing with an issue such as this that has clearly created a huge problem.

My constituents and many others who have faced this issue should not be pursued in a way that treats them from the start as a criminal, rather than as somebody involved in something that HMRC never said was illegal at the time, but is now pretending that it is. I hope the Government will now recognise that we do not want to see a repeat of what happened with the Post Office scandal as a result of HMRC’s bad behaviour.