Loan Charge 2019: Sir Amyas Morse Review

Debate between Rupa Huq and David Davis

Thursday 19th March 2020 Commons Chamber

[Mr Davis]

As usual, my right hon. Friend trumps my argument in advance, but I will come back to that in a second.

What that demonstrates—and what my right hon. Friend’s point demonstrates—is a failure of the Treasury and HMRC to write clear and comprehensible legislation. If the judges cannot understand it, what chance is there for ordinary laymen—people who cannot afford to employ an accountant? We are not talking about city slickers or international bankers; we are talking about locum nurses, social workers, careworkers and hospital cleaners.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

The right hon. Gentleman’s point that these are not city slickers and tax-avoiding, money-grabbing sorts reminds me of my constituent, Caroline Cheasty. She was a social worker in the public sector, with 24 years’ experience in local authorities. She had a career break, and when she wanted to go back as a locum, she was advised to either form a plc or go with an umbrella company—that is what she did. She came to my surgery in tears. Does he agree that the Government should go after the promoters of these schemes, not the little people?

[Mr Davis]

I do. The hon. Lady tempts me into a political point, because the Blair Government were the most active promoter of these schemes, but she is right in general.

When something is as unclear as this tax law obviously was, we do not take the date of resolution from the first date that HMRC wins—we do not keep going until we get the answer that the Government want. We take it from the day it is finally resolved in the Supreme Court. The case was not finally and definitively settled by the Supreme Court until 2017, when it found in HMRC’s favour on the Rangers, Dextra and Sempra cases. The Government—this relates to the point made by my right hon. Friend the Member for New Forest West—then passed further legislation to clarify the law. Even after the court case, they passed legislation to clarify the law. If it was so clear, why did we need a new law in 2017? That is the fundamental point.

--- Later in debate ---

[Mr Davis]

My hon. Friend is, of course, a skilled businessman; he knows what he is doing, and he is across this sort of thing—it is his job to be across it—but I am not so sure we could say that about a locum nurse or a social worker. This issue was actually at the centre of Sir Amyas Morse’s arguments. He took the view that the attitude from 2017 should apply back to 2010, even though the law was not clear. He took the view that the principle of a taxpayer’s responsibility for their own tax affairs must be upheld. That is the point my hon. Friend is making, and it is right—but only when the law is clear. That means that the Government have a responsibility to make the law clear and not to punish ordinary, hard-working taxpayers when Ministers fail to live up to that responsibility.

HMRC itself seems to disagree on the importance of the taxpayer’s responsibility. Why do I say that? Because until 2014, it did not approach the individual taxpayers; it approached the advisers. It approached the companies that insisted—they did not ask, but they insisted—that these locums and social workers took up this option. HMRC went to the advisers until 2014—until the issue suddenly started to become quite controversial.

Last year, the Prime Minister himself commented on this issue. He said:

“The real culprits in this matter, if I may say so, are not so much the individuals themselves who have decided to use the loan charge as a way of minimising their tax exposure. It’s the people who advised them that it was a sensible thing to do. In my view, we should find a way of going after them.”

That is the Prime Minister’s view, and I happen to agree, unusually.

[Dr Huq]

Will the right hon. Gentleman give way another time?

[Mr Davis]

If the hon. Lady will forgive me, I am trying to constrain my speech to 15 minutes, and it is beginning to be a struggle with so many interventions.

In summary, these people are now suffering because of a history of poorly drafted regulation and legislation and poor management by HMRC, targeted on the wrong people.

On many occasions, the Minister and his predecessor have told me and the House that the loan charge is not retrospective. In his report, Sir Amyas Morse states:

“The Loan Charge can look back 20 years…This design has been described by HMT as ‘retroactive’.”

The report describes the loan charge throughout as backward looking. HMRC denies that it is retrospective; it says it is retroactive. If I may say so, that is a distinction without a difference. When I looked up “retrospective” in a thesaurus, guess what it said? It defined the word as “retroactive or backward looking”.

Oral Answers to Questions

Debate between Rupa Huq and David Davis

Thursday 14th December 2017 Commons Chamber

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

T6. Yesterday, the EU warned that the Secretary of State risks damaging trust in the negotiations with his contradictory statements, so I wondered whether he could regain some trust by telling us what the difference is between an impact assessment and a sectoral analysis.

[Mr David Davis]

The hon. Lady voted against the Second Reading of the Bill, so she plainly does not want to make progress with it. She perhaps ought to put a dictionary on her Christmas list. An analysis—[Interruption.] Ready? An analysis outlines the components of a problem—the regulatory structure, the markets, the size and so on—and that is what we are doing. An impact assessment is played out in the Whitehall guidelines and involves a forecast.

Oral Answers to Questions

Debate between Rupa Huq and David Davis

Thursday 27th April 2017 Commons Chamber

[Mr Davis]

I thought so. It was the very first piece of employment legislation in this House, brought in by a Conservative Government long before the Labour party existed. I suspect that we will still be bringing in such legislation long after the Labour party has ceased to exist. My hon. Friend is absolutely right: we will continue to protect workers’ rights. Indeed, the Prime Minister has made it plain not just that we will protect rights, which was the line I started promulgating last summer when I took this job, but that we will expand them. She has appointed the Taylor commission, under Matthew Taylor, with the explicit aim of ensuring that these rights are appropriate to the modern age and will protect people in the modern age.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

All the evidence shows that public holidays improve the productivity and wellbeing of workers, including those in the NHS still awaiting their £350 million a week as promised by the leave campaign. Does the Secretary of State agree with having an additional four days, as the Labour party proposes? Although that would still be short of the number in Finland and Spain, which have 14 and 15 days respectively, it would bring us in line with the European average of 12. At the moment we only have eight. That is an example of how, when we leave—