Jana SchÃ¶nknecht - stock.adobe.
HM Treasury has assured the contractor community that it has received a copy of the independent review into the government’s controversial loan charge policy, but has stopped short of revealing when its recommendations will be made public.
In a statement to Computer Weekly, a spokesperson for HM Treasury confirmed that the organisation is in receipt of a copy of the review, which has been authored by ex-National Audit Office (NAO) chief Sir Amyas Morse, and will reveal details about the action that will result from it soon.
“We are considering his report as a matter of urgency, and will update on next steps in due course,” a Treasury spokesperson said.
The review, commissioned in September 2019 by the chancellor, Sajid Javid, is intended to ascertain whether the policy is the most appropriate way for HM Revenue & Customs (HMRC) to clamp down on the problem of disguised remuneration within the contractor community.
The policy is currently retroactive, in that HMRC is using it as a mechanism to pursue contractors for tax it claims they owe on work they did up to 20 years ago, for which they were remunerated in the form of loans, issued by third-party employee benefits trusts (EBTs).
Under the terms of the policy, because these loans were never intended to be repaid, they are now classified as income, and should be taxed according, which means anyone who enrolled in an EBT loan-remuneration scheme in the 20 years to 5 April 2019 could be liable for a sizeable tax bill.
As previously reported by Computer Weekly, the policy has seen thousands of IT contractors hit with life-changing tax bills, which need to be settled by 31 January 2020, under the terms of the policy in its current form.
Within the contractor community, there is hope that the review may result in either the retroactive elements of the policy being scaled back, or that it might be scrapped completely, given that it has been linked to seven cases of suicide within the contractor community to date.
Such is the toll it is said to be having on the health and wellbeing of the contractor community, a cross-party group of MPs, banding together as the Loan Charge All Party Parliamentary Group, previously described the fallout from the policy’s introduction as a public health emergency.
The lack of a concrete release date for the review is a source of growing frustration for contractors, given that the loan charge settlement date of 31 January 2020 is fast approaching.
Read more about the loan charge policy
- Thousands of IT contractors are at risk of financial ruin as HMRC pursues them for tax it claims they owe on work they did up to two decades ago and were reimbursed for via loan remuneration schemes. Computer Weekly investigates.
- Thousands of IT contractors are being pursued by HMRC for “life-changing” tax bills for work they did up to 20 years ago, as part of a disguised remuneration clampdown known as the loan charge policy. One of those affected anonymously shares his take on what it’s like to live with a six-figure tax demand hanging over you.
Meanwhile, the Loan Charge Action Group (LCAG), which has been actively campaigning for the policy to be scrapped, has reported via its Twitter account an uptick in the volume of calls it is receiving from contractors to its mental health support line.
Another factor is the uncertainty over when Parliament’s Christmas recess will begin, which has led to further concerns that should the report surface this side of the new year, that will leave too little time for its contents to be mulled over properly by MPs.
Computer Weekly requested clarification from the Treasury about whether or not the review is likely to emerge this side of Christmas, but has received no direct response to that question.
LCAG, meanwhile, has now doubled down on a letter it sent to the chancellor earlier this week requesting the immediate release of the review, by calling for Javid to make the contents of the review public now, and postpone the 31 January 2020 settlement date, in a post today on Twitter.
Its calls have also been echoed by several MPs, including David Davis from the Conservatives and Munira Wilson from the Liberal Democrats, who have both published letters they have separately sent to Javid, calling for the immediate publication of the review and a postponement of the settlement deadline.
“We have severe concerns for our members and others facing the loan charge who have pinned their hopes for the future on the outcome of this report,” said the LCAG in its letter to the chancellor.
“It would be grossly irresponsible not to suspend the loan charge deadline of 31 January 2020. If this deadline is not suspended, we fear for the safety of the thousands of people who are impacted by the loan charge.”
Read more on IT legislation and regulation
The Loan Charge scandal explained: Everything you need to know
Loan charge MPs want contractor adviser community to participate in latest call for evidence
Cross-party group of MPs calls on Loan Charge contractors to participate in call for evidence
Loan charge: Tax experts call on chancellor for simpler, more affordable policy settlement terms