April 2019 Loan charge legislation - Hope for thousands that the Treasury will reconsider their immoral retrospective taxation

The Prime Minister has committed the Chancellor to meeting a cross-party group of MPs to discuss the review of the controversial 2019 Loan Charge, after the Government was forced to concede a cross-party amendment to the Finance Bill.


Sir Edward Davey MP (Liberal Democrat, Kingston and Surbiton) made the request at Prime Minister’s Questions today asking the Prime Minister, Theresa May, if she would meet with him and “a cross-party delegation of MPs to discuss this new review into the Loan Charge” and “which offends against the rule of law and has caused misery to tens of thousands of people”. Sir Ed pointed out that the issue had united the House. In the current political climate, this unity shows the importance of this issue and the damage the loan charge will cause.


The Prime Minister said that, as a first stage, the cross-party delegation should meet with the Chancellor. Sir Ed Davey’s office is now arranging that meeting which needs to happen quickly as the review will need to be conducted in the next 11 weeks.


Yesterday, in the Report Stage of the Finance Bill, Sir Ed tabled a cross-party amendment, New Clause 26 (#NC26) to the Finance Bill, calling for a review of the controversial 2019 Loan Charge. A total of 38 MPs from across the political spectrum had already signed the amendment before the debate. Many more MPs came forward to support NC26 during the day and joined the debate on the clause. With it clear that the Government would lose the vote, with even Conservative and DUP MPs expressing their opposition to the retrospective nature of the Loan Charge, the Government gave in and accepted the review. This review will now be enshrined in law and must happen. A report must be presented to the House of Commons by the 30th March 2019.


The Loan Charge, due to come into effect in April this year, would see thousands of freelance workers facing bankruptcy, homelessness and breakdown. The draconian Loan Charge overrides all regular taxpayer protections and allows HMRC to go back twenty years, demanding huge tax bills for employment arrangements that were legal and fully declared to HMRC at the time. Victims, which include social workers, teachers, doctors and nurses as well as IT contractors, followed professional advice. They submitted their tax returns every year, with HMRC never challenging them at the time. They now face life-destroying tax bills that they cannot pay or appeal to an independent tribunal or court.


Opposition to the retrospective Loan Charge has already attracted widespread political support. Over 100 cross-party MPs, including Conservatives and DUP MPs, have signed an Early Day Motion calling on the Government to ‘revise the legislation to avoid significant damage to independent contractors and freelancers in the UK’.


HMRC’s unfair and aggressive pursuit of retrospective Loan Charge tax has also been damned in a powerful report published by the House of Lords Economic Affairs Committee on 4th December 2018, which said there is “disturbing evidence” and “reports of increasingly aggressive behaviour towards taxpayers”. It calls on the Government to reform the Loan Charge, which Lords declared is “clearly retrospective” and ”undermines basic principles of tax fairness and certainty.


Many people would be unable to work again if hit by the charge and two people facing the Loan Charge have tragically committed suicide, one citing the policy.


Sir Ed Davey commented:


“I am pleased the Prime Minister has said the Chancellor will meet me and a cross-party delegation to discuss the review into the Loan Charge, established by my amendment to the Finance Bill last night.

“This is an issue affecting tens of thousands of people up and down the country – and MPs have heard from their constituents how the retrospective nature of the Loan Charge is so unfair and will cause bankruptcies and ruin lives.


“The review that’s been established must be a genuine review and look at the reality of the policy and the disastrous impact it will have on many individuals and families up and down the country.

“So far the Government has refused to listen but now, with the Prime Minister taking an interest, it is time they did and reformed this flawed policy”.


LGAG spokesperson, Steve Packham, said:


“Thousands of families are extremely grateful to Sir Edward Davey for asking this question to the Prime Minister and pleased that a cross-party delegation with be meeting with the Chancellor, but we are disappointed the Prime Minister ducked the request to meet.


“We know full well that so far the Treasury have failed to listen and worse still have consistently misled MPs about the reality of this pernicious and unfair measure. So we are deeply concerned that the Chancellor, who already has had to correct his false statement to the Select Committee, will carry on in the same vein and ignore the scrutiny.   


“The review into the Loan Charge must be a genuine one and not a whitewash by the Treasury, who have spent months misleading MPs and covering up HMRC’s failures and we urge all the cross-party MPs and peers who have so far expressed concern to tell the Chancellor the policy must be changed.


“It’s time for the Chancellor and the Prime Minister to start looking at the reality of their deeply flawed policy before it destroys the lives of tens thousands of people in just three months’ time.”

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