Ross Thomson
Main Page: Ross Thomson (Conservative - Aberdeen South)
Ross Thomson (Aberdeen South) (Con)
I beg to move,
That this House expresses its serious concern at the 2019 Loan Charge which applies from 5 April 2019; expresses deep concern and regret about the effect of the mental and emotional impact on people facing the Loan Charge; is further concerned about suicides of people facing the Loan Charge and the identified suicide risk, which was reported to HMRC; believes that the Loan Charge is fundamentally unfair and undermines the principle of the rule of law by overriding statutory taxpayer protections; expresses disappointment at the lack of notice served by HMRC and the delays in communication with those now facing the Loan Charge, which has further increased anxiety of individuals and families; is concerned about the nature and accuracy of the information circulated by HMRC with regard to the Loan Charge; further regrets the inadequate impact assessment originally conducted; understands that many individuals have received miscalculated settlement information; calls for an immediate suspension of the Loan Charge for a period of six months and for all related settlements to be put on hold; and further calls for an independent inquiry into the Loan Charge to be conducted by a party that is not connected with either the Government or HMRC.
I want to thank the Backbench Business Committee for agreeing to bring forward this important debate. I also want to thank the members of the all-party parliamentary loan charge group for all their work and the many colleagues who have added their names to the motion before us today. The urgency of today’s debate cannot be overstated. As of tomorrow, tens of thousands of people and their families will face the huge cost, both physical and emotional, of the loan charge. HMRC has yet to show any regard to the enormous pain that this legislation has already inflicted on thousands of people across the country.
I represent Aberdeen South, which is Europe’s energy hub and the very heart of the UK’s oil and gas industry, and my surgeries have been inundated with people who are concerned about the damage that the loan charge will have on their financial security. Many of my constituents working in the oil and gas industry were actively encouraged by their companies and professional advisers to enter into these schemes, without a single peep from HMRC, and some did so for many years. The oil and gas industry is just one of many that has long relied on the hard work of contractors as a crucial element of its supply chains. These contractors provide a hugely valuable workforce, and concerns over the loan charge have driven away many of those who have worked in the industry and will deter people from contracting in the future. HMRC should be in no doubt this will be bad for business, bad for public finances and bad for the country.
Damian Green (Ashford) (Con)
I echo my hon. Friend’s praise for the good work of the all-party parliamentary group on this. I am sure that he will come on to talk about retrospection. When my constituents approach me about this, the strongest point they make is that HMRC allowed these schemes to run for very many years and then disallowed them retrospectively, all the way back to the beginning, which is why the potential losses are so great. Does he agree that that is one of the worst aspects of what is happening?
Ross Thomson
I could not have worded it better myself. Having been part of the all-party parliamentary group’s inquiry, and having looked into the retrospective effect of the legislation, I am even more convinced that what is happening is wrong. People coming into my surgeries are quite happy that the Government legislate to change things if they believe them to be wrong, but they are concerned that the Government are going back in history in this way, as am I.
Sir Roger Gale (North Thanet) (Con)
I congratulate my hon. Friend on securing this debate. The Financial Secretary to the Treasury, my right hon. Friend the Member for Central Devon (Mel Stride), is always meticulously courteous in his replies, and the Treasury has consistently taken the view that this is technically not retrospective. However, our constituents do not live in a technical world; they live in the real world, and this is causing them real distress.
Ross Thomson
I endorse what my right hon. Friend says about our Minister and good friend on the Treasury Bench, but he is right to say that our constituents have real concerns about the way in which HMRC has behaved, and about its tone and attitude. I will say more about that in my speech.
Sir Desmond Swayne (New Forest West) (Con)
The Minister has today sent us some warm words about the lengths to which HMRC is going to accommodate those who have fallen foul of these arrangements, but today in The Times there is a report of tax inspectors putting pressure on people to pay up ahead of time, even beyond the arrangements that have been agreed.
Ross Thomson
My right hon. Friend is right. The all-party parliamentary group’s inquiry took a lot of evidence on the impact that the policy will have. The behaviour of some, particularly on the Government side, is making people feel like criminals, and this has driven them to a place where they feel broken, mentally and emotionally. I am glad that this is being reported, and we need to continue to highlight it.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
I commend the hon. Gentleman for securing this important debate. Many of my constituents have got in touch and met me personally to express their distress and concern about the impact of the loan charge. Given that the inquiry by the APPG, of which he is a member, found that more than two thirds of those affected feared that their family relationships were breaking down, does he agree that the Minister must assure our constituents today that HMRC will support them with manageable repayments so that no one needs to be made bankrupt? Does he also agree that it is absolutely ridiculous that Her Majesty’s Treasury has downgraded the promised review of the loan charge to a report, as provisionally agreed by the House?
Ross Thomson
I thank the hon. Gentleman. I am sure that his constituents will be grateful to him for raising their concerns in the Chamber. I will refer to some of my constituents later on, because this matter is causing genuine concern, and I hope that those on the Treasury Bench will be listening to the various cases throughout the debate.
Several hon. Members rose—
Zac Goldsmith (Richmond Park) (Con)
I congratulate my hon. Friend on securing this important debate. In normal times, I think it would be considered even more important and taken even more seriously than it is being taken today. Does he share my concern that some of HMRC’s language seems totally tone deaf? Its factsheet says that it has
“no desire to make things difficult for taxpayers, and will always take a fair and even-handed approach to those who genuinely want to settle their affairs.”
That is the opposite of the experience of some of my constituents who, based on good faith and professional advice, are being punished retrospectively and face utter ruin.
Ross Thomson
I could not agree more. My hon. Friend sums the situation up well. This is not just about HMRC being tone deaf, because I have found through my interactions with constituents that it has also been tin eared. I must admit that I am deeply concerned by some of the tactics that have been employed and how some normal people have been made to feel. It is not right at all.
Ross Thomson
I will make a little more progress, but I am keen to take as many interventions as possible.
Nobody should be in any doubt that the loan charge has left people living in genuine fear of losing their homes, being unable to care for their families, and seeing their life’s work reduced to less than nothing. As we debate this matter, it should not be lost on us that many of those affected and their families will be watching this Chamber today, and they will listen closely to the Government’s response.
I want to put it on the record at this point that we live in a time when politics is heated and is becoming more personal than ever before, and we have seen some disturbing consequences for some colleagues in this House as a result. However, I must make it clear that I have found the Financial Secretary to the Treasury incredibly helpful, supportive, engaging, and willing to listen to my concerns.
This debate has come about following the efforts of Members from across the House and the many campaigners fighting this injustice. The all-party parliamentary loan charge group recently launched a report following a long inquiry, and I commend it to Members because it contains truly worrying, emotional and harrowing responses.
James Cartlidge (South Suffolk) (Con)
My hon. Friend is making some good points, which I do have sympathy with having met people in this situation. However, we must remember that if anyone using one of these schemes had gone to hospital, they would have expected not to wait any longer or less than anybody else who pays their taxes. These schemes were taken up because people wanted to reduce the tax they were paying. We must remember all the other taxpayers who pay their taxes legitimately without this kind of professional advice.
Ross Thomson
I thank my hon. Friend for his point. He talks about the legitimate paying of taxes, and I will touch on that later in my speech. The people who entered into such schemes, whether they were in oil and gas, social care or healthcare, did so legitimately and because they were advised to do so. Some did so because their employers asked them to.
Alex Burghart (Brentwood and Ongar) (Con)
My hon. Friend is being generous with his time and is making some excellent points. Something that struck me from the correspondence that I have received from constituents is that they were often advised by accountants to enter into arrangements that would allow them to take home a large proportion of their income, and they were told that that was not illegal, that it was totally above board, and that any tax liabilities would lie with the employer, not the employee. Part of the problem is that we are dealing with people who were acting in good faith and yet feel that they are now being penalised.
Ross Thomson
I cannot add much more to that, because my hon. Friend is absolutely right.
Alex Chalk (Cheltenham) (Con)
Does my hon. Friend agree that one of the problems with the situation in which some people find themselves is that the advice was given so long ago that the opportunity to seek redress from advisers who gave negligent advice may have gone? Those advisers may now be out of business or otherwise unavailable for litigation.
Ross Thomson
I echo my hon. Friend’s point. He is right that many of those who gave advice seem to have disappeared.
Andy Slaughter (Hammersmith) (Lab)
The hon. Gentleman is making an excellent speech and is capturing the mood on both sides of the House. Over 200 people in my constituency are affected by the loan charge, and the situation is unfair because the affairs were fully declared on their tax returns. HMRC was aware of what was happening. There was no attempt to hide. To characterise this as tax avoidance retrospectively seems wholly unjust.
Ross Thomson
The hon. Gentleman is right about HMRC being aware, because people even had to fill out disclosure of tax avoidance schemes, or DOTAS, forms.
Several hon. Members rose—
Mr Robertson
Following on from the point made by my hon. Friend the Member for Cheltenham (Alex Chalk), not only may advisers have gone out of business, but there is a legal disjoint here. As I understand it, if someone were to seek redress, they can go back only six years, or maybe nine years if they have only just become aware of the problem, whereas HMRC is going back 20 years. There is a big difference between how they are being pursued and how they can obtain redress.
Ross Thomson
My hon. Friend is right. I do not know whether he has read today’s Financial Times, which has a good article about the effects of retrospection and how some of the legal safeguards for taxpayers that ensure continuity in tax affairs are being broken.
Several hon. Members rose—
Ross Thomson
I will make a little more progress, but I will take some more interventions.
I was talking about the APPG’s report. Of the 1,768 responses received by the APPG, nearly a third of people have received no information whatsoever from HMRC about the loan charge. That flies directly in the face of HMRC’s repeated claims that people were given three years’ notice of the impending changes to legislation. A similar number of respondents also believe that they have no possible means of settling their case with HMRC. The Government are leaving them to face bankruptcy—a fate facing more than half those affected. I receive new stories from constituents every day detailing the pain that they and their families are enduring with the threat of the loan charge hanging over them.
Ross Thomson
I will happily give way to my hon. Friend, and I will then take an intervention from my hon. Friend the Member for Hendon (Dr Offord).
Joseph Johnson
I echo my hon. Friend’s words about the Minister, who has always been assiduous and diligent in all his dealings with me on this matter. I congratulate my hon. Friend on his work in leading the APPG inquiry, but does he agree that the time has come for HMRC to acknowledge that we must now have an independent inquiry led by an experienced tax judge?
Ross Thomson
I wholeheartedly agree. That is what today’s motion calls for, because it is the best way of giving our constituents certainty.
Dr Offord
In Hendon, 170 of my constituents have been affected by the charge, but many of them entered into the scheme in good faith. Just two weeks ago, a constituent came to see me at one of my surgeries, and she had been sent a bill by HMRC for £91,000, but it was revised down to £41,000 when she challenged it. There seems to be some discrepancy between the bills and the discretion that HMRC is showing in withdrawing its request for moneys.
Ross Thomson
My hon. Friend makes a good point that forms part of the evidence that we have gathered from the inquiry. It is deeply concerning that many of the demands sent to constituents have been miscalculated by HMRC, and that must be addressed.
Several hon. Members rose—
Ross Thomson
I will make some progress, but I will take some more interventions before I finish.
I receive stories from constituents every day detailing the pain that they and their families are enduring with the threat of the loan charge hanging over them. That is why we are here today, because it is about real people and real lives, not just lines on a spreadsheet.
One of my constituents recently wrote to me:
“The Loan Charge has very likely cost me my marriage and I stand to lose everything. I cannot believe that this is happening.”
That is far from an isolated case, and I am sure Members on both sides of the House have had similar stories from their constituents. The loan charge is breaking apart families before us, yet HMRC has remained both intransigent and tin-eared.
I have a simple request today: the Government should place the loan charge on hold to investigate the true impact these changes will have on countless families across the country. I have heard from colleagues who believe that those involved in such schemes are somehow devious, mega-wealthy people, but one constituent, at the end of a career working in health and social care, recently attended my surgery and told me of his guilt because he feels he has let his family down.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I am deeply aware of this. The all-party group took evidence from a family whose father had committed suicide. If the House will indulge me, I received this email from a constituent:
“I find all this massively worrying and stressful and I try not to discuss with my wife otherwise she would feel the same. At times I have considered suicide but realise that that will help no one and impact my family most.”
The loan charge is having a terrible effect on people’s mental health, isn’t it?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. A lot of people want to speak this afternoon, and I am sure the hon. Member for Aberdeen South (Ross Thomson) will bear that in mind.
Ross Thomson
I could not agree more with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). We have all heard harrowing testimony in our constituencies. My constituent talked about the stress and anxiety keeping him awake at night and his fear for his family’s future. He cannot escape the fear brought about by a crippling demand from HMRC that will leave him unable even to keep a roof over his family’s heads. He went on to say that the loan charge has removed all joy from his life, leaving him unable to concentrate on everyday tasks or even to enjoy time with his wife and young children.
My hon. Friends and I are proud of this Government’s record on mental health. However, we will jeopardise that hard work if we continue this cold approach to people in our communities who face this charge.
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.”
Richard Burden (Birmingham, Northfield) (Lab)
Will the hon. Gentleman give way?
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.
Several hon. Members rose—