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MPs have written to Chancellor Sajid Javid urging a review of HMRC’s controversial loan charge.
In a letter to Chancellor Sajid Javid, MPs have called for an independent, judge-led review of HMRC’s loan charge and a delay to the 31 October payment deadline.
The loan charge, which came into effect on 5 April this year, was introduced to tackle the use of disguised remuneration schemes. The charge applies to all loans made since 6 April 1999 if they are still outstanding on 5 April 2019 and the recipient has not settled the tax due.
Earlier this year, HM Revenue & Customs said that the loan charge policy package is expected to raise £3.2 billion.
Commenting on the loan charge, a Treasury spokesperson told local media: “The loan charge is designed to tackle tax avoidance and ensure everyone pays their fair share. It builds on more than two decades of HMRC action to challenge these schemes.”
However, several MPs have written to the Chancellor this week urging him to launch a loan charge review. Ross Thompson, MP for Aberdeen South, has even launched a petition calling on the government to suspend the 2019 loan charge and arrange a “proper review of the policy which is independent of HMRC and the government”.
“I would urge all of those affected to sign my petition to make your voices heard,” Mr Thompson said on his Twitter earlier this week.
Leader of the Liberal Democrats Sir Vince Cable also published his letter to Mr Javid on Twitter, explaining that while “I do not support tax avoidance, I am against the government’s plans to tax retrospectively people who took part in employee benefit trust loan plans which, at the time, were not illegal”.
Sir Cable warned that the impact “is substantial for many of the affected individuals”.
“They are contractors and freelancers who do not have regular protections and benefits such as holiday and sick pay or pension contributions and are more financially vulnerable,” Sir Cable said.
“It is unreasonable to expect that many of those affected can pay the back tax by the end of the 2019–2020 tax year.”
According to Sir Cable, over 260 MPs are questioning the loan charge, with significant support for a proper review on both sides of the House.
Earlier this year, the Financial Times published claims by MPs who suggested that the UK tax authority is aware of six individuals believed to have committed suicide in connection with the controversial charge.
“We have now been informed that there are believed to have been as many as six suicides of people facing the loan charge and we have also been informed that HMRC [is] aware of this,” the MPs said in the letter.
Responding to the allegations, HMRC said it is extremely concerned and has reached out to campaigners and individuals for more information.