Finance Bill

Stephen Hammond Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

In conclusion, if we are to come out of this crisis on the other side, the scale of the Government’s ambition needs to be scaled up. I am worried that this Finance Bill addresses little of the challenges we face. The Government like invoking war references, so here is one: only a Labour Government with the ambition of the post-war 1945 Labour Government can steer us through this coming period. For the sake of our people, I hope that is a challenge that this Government can live up to.

[Stephen Hammond (Wimbledon) (Con)]

I am fortunate to have represented Wimbledon in this House, and it has seen unemployment levels driven to unheard-of low levels. However, as a result of this crisis, 10,000 people are on furlough and 4,000 self-employed have had help, so the suggestion that there is anybody in this House not concerned about unemployment must be false; it will affect all our constituencies, as will not only this Finance Bill, but the Government’s reaction in terms of the policies they put in place, flexibility about the furlough scheme, job support and, as my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) said, some consideration of how IR35 works. There needs to be some flexibility, because modern working sees people with the same employer for longer periods, and some employers will force people to do that. Therefore, in the context of the current crisis, forcing people to move away from arrangements that keep them in employment would undoubtedly be wrong.

I do not want to detain the House for too long, but I want to talk about the loan charge. Like many in this House, I have been contacted by a number of my constituents and others.

[Joy Morrissey (Beaconsfield) (Con)]

My concern about the loan charge is the repayment method that HMRC is pursuing. I ask that the Government look at alternative ways, or means-testing, rather than just demanding punitive repayment in full, which is causing extreme emotional stress and, for some, even suicide. If they would look at alternative ways of collection, rather than demanding all payment at once, I think we could find a much better way through this.

[Stephen Hammond]

My hon. Friend anticipates some of the questions I might have for the Minister in a moment. The loan charge raises particularly unique considerations; that is why 55 Members of the House have signed the new clause tabled by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). The whole aspect of proportionality and the unusual construction of the charge also raise issues about the capability of HMRC and the role of financial advisers.

I have spoken in various debates, and made representations to my right hon. Friend the Financial Secretary to the Treasury only this week, about the charge and the impact it is having on very many people. I am pleased that the Government set up the Morse review and that they have accepted most of its recommendations, but I ask the Minister to address a couple of points in his closing remarks.

First, Morse explicitly states:

“I am also very clear that I have no sympathy for the people who promoted…loan schemes after the law became clear.”

Will my right hon. Friend the Minister clarify this: if financial advisers gave recommendations when the law was not clear that the loans were illegal, why will the Government not accept that those individuals acted in good faith and look at the ability to treat them more leniently?

Secondly, given the Morse comment, will my right hon. Friend confirm whether HMRC is investigating the advisers? Is it seeking reparations from the advisers, and, if it intends to do so, would it agree that the amount of reparation sought from the financial adviser be set against the liability of the person who took the loan?

As my hon. Friend the Member for Beaconsfield (Joy Morrissey) said, we all want to ensure that bankruptcy, home loss and family destruction do not happen. My right hon. Friend the Minister has alluded in previous remarks to the fact that the Government are keen to ensure that that does not happen and that he has asked HMRC to work with individuals to ensure that it does not. Will he set out tonight exactly how he intends to instruct HMRC to do that?

Finally, I will just have a look at amendment 55. I absolutely support the intent, which is to help those affected and to alleviate the crisis that many face. Like most people, I absolutely oppose the concept of retrospectivity and retroactivity, so it is a bit of a disappointment to many of us that, in accepting the Morse recommendations, the Government did not feel able to accept the recommendation that loans between 2010 and 2016 be exempt. I wonder whether the Minister might, even at this late stage, choose to do so. I suspect not.

[Sir Mike Penning]

Don’t hold your breath.

--- Later in debate ---

[Stephen Hammond]

I am not very good at holding my breath, so I certainly shall not try it now—but probably people do not want me to expend much more breath in my remarks tonight.

I must say to my right hon. Friend the Member for Haltemprice and Howden that my problem is with part of what his new clause does. I absolutely accept the premise, as everybody in this House must, that people are innocent until proven guilty. However, and I do not know whether this has really been addressed so far, his new paragraph 1(c)(1A)(c) says that condition 1 is that

“P knew that the loan or quasi loan should have been accounted for as income in the relevant year.”

There is a fundamental problem with that, in that anyone could say they did not know that, and how do we prove it? The clear problem is that, much as I support the intent of what he is trying to do, the effect of what he seeks would be to create a precedent that seems to me to take away the basis of the UK tax system, because I might say to someone, “We both know that we should not be paying tax on this and therefore we can proceed on that premise.” The precedent that that sets is a major problem for gathering tax.

[Mr David Davis]

If my hon. Friend thinks that this is the precedent, he should go back to the Finance Act 2008, which gives HMRC a 20-year assessment period in which it can assess whether the taxpayer participated in a transaction knowing that it was part of an arrangement attempting to bring about loss of tax. That is precisely what it says.

[Mr Davis]

Yes, it is on the statute book. The precedent is there.

[Stephen Hammond]

The precedent that I am looking at is very clear that there seems to be an issue with the whole tax system.

[Sir Edward Davey]

The hon. Gentleman has heard from the right hon. Member for Haltemprice and Howden (Mr Davis) that the way that new clause 31 has been designed has used words already on the statute book, so he cannot make that argument. Moreover, the real precedent that he ought to be worrying about is the loan charge itself and its retrospective nature. I know he is concerned about that, so should he not therefore be voting for new clause 31, which is based on existing tax vocabulary, and opposing the real precedent, which is the appalling way that taxpayers have been treated?

[Stephen Hammond]

I have already made the point about retroactive behaviour and retrospectivity. I have said that there is much that the Government can do. I want the Minister to set out exactly how a person who has no assets, is on benefits or is on earnings less than the national average could get forgiveness. I have explained what I am concerned about. I hear what my right hon. Friend the Member for Haltemprice and Howden has said, and perhaps the Minister will want to address the point I am raising. I may be wrong, but it seems to me that this is quite a dangerous precedent to embark on.

[Joy Morrissey]

Referring to the means-tested and alternative ways of looking at a nuanced approach to how this is handled, the point that has been raised about everyone denying culpability on a tax issue is valid. However, my concern is about the companies and advisers that promoted this scheme. Are we going to prosecute them? Are we going to investigate them? What are we going to do to hold them to account?

[Stephen Hammond]

I hope that my hon. Friend heard my earlier remarks on that point, so I will not repeat them.

I would be grateful to hear the Minister’s responses to the points that I have made and look forward to hearing them later.

[Dr Huq]

I think it was some time before Brexit, when we had that previous Speaker with his comedy antics, that it used to be said that we are gripped by an age of apathy in politics. Well, I have to say that this debate has engendered quite the opposite in my inbox, which has been flooded—if not quite on a Dominic Cummings scale—by dozens of requests from constituents asking me to speak in this debate, aided and abetted by the digital function that we debated earlier today.

Yesterday, like other right hon. and hon. Members, I was pleased to participate in the virtual “The Time Is Now” lobby. I know that this was the subject of the previous debate, but I promised my constituents that I would lobby vigorously for the adoption of a green new deal. Seeing as how everyone has been channelling their inner Roosevelt, it seems appropriate to put that on the record. We need a greening of our economy locally and nationally.

I want mainly to address an issue that has already come up time and again—IR35 and the loan charge—and perhaps some other little bits about job creation and regional impacts.

I am sure I am not the only one who has heard harrowing stories from constituents. There are people in tears at my weekly advice surgery—and I represent Ealing Central and Acton, a prosperous West London suburban seat. The two schemes are markedly different—we should not muddy the waters too much—but they have features in common. The undercurrent of today’s debate has been how we rebuild our economy after the pandemic —this health crisis that turned into an economic crisis.