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A cross-party group of MPs are broadening their investigation into the impact the government’s controversial anti-disguised remuneration loan charge policy is having on the IT contractor community.
Having invited contractors in-scope of the policy to share their experiences of living under the shadow of the loan charge in March 2022, the Loan Charge and Taxpayer Fairness All-Party Parliamentary Group (APPG) has now launched a second call for evidence.
This one is set to run until Friday 15 July 2022 and is seeking input from accountants, tax advisers and lawyers who provide help and support to contractors as they negotiate their loan charge investigations with HM Revenue & Customs (HMRC).
The APPG said in a statement: “Since the formation of the APPG back in 2018, considerable amounts of important evidence have been provided, both in writing and in oral evidence, by professional advisers… and it is hoped that the second tranche of evidence will further demonstrate the reality of the policy on people and their families, something that HMRC and the Treasury continue to seek to ignore and deny.
“The insight from professional advisers, who represent and are assisting individuals, will be invaluable in giving an oversight of the situation their clients are in and of their own experiences of dealing with HMRC.”
The APPG said that even in instances where contractors have reached a settlement with HMRC, it is still keen to hear from the advisers who worked with them through that process and is inviting them to share their feedback via a PDF form on the group’s website.
The loan charge policy, introduced in the 2017 Budget, is geared towards recouping the tax HMRC claims that contractors avoided paying by opting to have part of their salary paid to them in the form of non-taxable loans when working on assignments between December 2010 and 5 April 2019.
Loan-based remuneration schemes are known to have proliferated in the wake of the IR35 reforms being introduced at the turn of the millennium, with setups commonly marketed through non-compliant umbrella companies as an HMRC-approved means for contractors to bolster their take-home pay by artificially minimising their employment tax liabilities.
Thousands of IT contractors who took part in these schemes in the nine-year period to 5 April 2019 have since been landed with six-figure tax bills from HMRC, reportedly resulting in mass bankruptcies and contributing to at least eight suicides.
Read more about the loan charge
MPs are calling on HM Revenue & Customs (HMRC) to suspend its enforcement of the UK government’s controversial loan charge policy on the basis that there remains no “relevant or justified legal basis” for it.
A document dump of emails shared between HMRC officials has prompted loan charge campaigners to further question the legal footing of the government’s controversial disguised remuneration 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.
HM Revenue and Customs must do more to reduce the exposure of contractors to tax avoidance-focused disguised remuneration schemes, the House of Lords Economic Affairs Finance Bill Sub-Committee has concluded.
Sammy Wilson MP, co-chair of the Loan Charge APPG, said the information it had received so far from participants in the contractor-focused call for evidence had provided a “harrowing” insight into the toll the policy was taking on people.
“The evidence sent to us so far from individuals is compelling and also harrowing, with a shocking number of people reporting serious problems including marital breakdown, mental health issues and with a very worrying 15% of people saying they have had suicidal thoughts or actual intent,” said Wilson.
“We now wish to hear from advisers, many of whom work extremely hard doing all they can to support clients, often in the face of communication issues with HMRC. So we believe their insight will also be very valuable in demonstrating the reality of the situation – something that is, alas, ignored and denied by HMRC and the Treasury.”
Greg Smith MP, fellow Loan Charge APPG co-chair, said the group remained “deeply concerned” about the impact the policy was having on the individuals in-scope of it and their families.
“It is clear from the evidence received so far that the situation is very serious and that without change from the Treasury and HMRC, there will be devastating consequences,” he said. “We now wish to hear from advisers about the situation they face dealing with HMRC and supporting clients and we hope this will further add to the picture, which is becoming increasingly difficult for ministers to continue to ignore.”
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