Loan Charge

Debate between Stephen Metcalfe and Sarah Wollaston

Thursday 11th April 2019 Commons Chamber

[Stephen Metcalfe]

I do not know what the rules are on my hon. Friend reading the next line of my speech over my shoulder, because it says here that my constituent continued with these arrangements and, each and every year, dutifully declared on his tax return the amount he had received in loans and the amounts he had returned thereof. It came as a surprise that, years later, HMRC intends to use its newly granted powers—in what my constituent describes as “winding back the clock”—to retrospectively claim that the arrangements my constituent and others had used were not legal, had never worked and that the tax on the loans was always due.

[Dr Sarah Wollaston (Totnes) (Ind)]

I thank the hon. Gentleman for making these excellent points. Like me, does he find that he has several constituents who had no option but to be self-employed and were required to enter such vehicles?

[Stephen Metcalfe]

The hon. Lady makes an excellent point. For many there was no option. In many cases, as in the case of my constituent, people had to enter these schemes. My constituent even checked whether there were alternative options and checked the legitimacy of it, never thinking it would come back to haunt him.

I have to say that I do not like it. It feels wrong. I would like to think that I am a fairly reasonable chap, and when I feel that something is wrong or off and does not feel like natural justice, it tends to be true. Eventually, the Government will come round to my way of thinking, or I very much hope so.

As I said, I am not an expert on tax in general, but the charge is retrospective and HMRC failed to notify scheme users of the tax liability. Users sought professional advice or were advised to enter these schemes and, as in my constituent’s case, annually declared what they were doing.