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Loan Charge 2019: Sir Amyas Morse Review
19 March 2020
Lead MP
David Davis
Debate Type
General Debate
Tags
NHSTaxationHousing
Other Contributors: 43
At a Glance
David Davis raised concerns about loan charge 2019: sir amyas morse review in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Opened the debate
Commends the courage of Sir Desmond Swayne in raising the issue, highlights the injustice caused by the loan charge affecting lives severely. Mentions seven suicides due to stress, anxiety, and financial hardship from this policy; details how it impacts people's livelihoods including depression, bankruptcy, and potential homelessness; argues that HMRC should cease action on loans paid before 2017 based on natural justice principles.
Desmond Swayne
Con
New Forest West
Presents a point of order regarding the Financial Secretary's biography of Adam Smith not being laid on the Table; emphasises that taxation should be fair, proportionate, and not arbitrary.
Comments on Desmond Swayne's remarks indicating they are relevant to current debate.
David Davis
Con
Goole and Pocklington
Elaborates on the devastating impacts of the loan charge including suicides, depression, bankruptcy, and potential homelessness; criticises HMRC for taking guidance from draft legislation rather than settled law; highlights judicial difficulties in understanding the tax law leading to its ambiguity.
Edward Davey
Lib Dem
Kingston and Surbiton
Supports Davis's motion, shares evidence of traumatic impacts on individuals due to being made to feel like criminals despite their law-abiding status.
Reiterates the financial struggles faced by constituents post-2017 when they were told previously that all was well; highlights lack of extra funds for these individuals to cope with sudden massive bills.
Desmond Swayne
Con
New Forest West
Questions the logic behind 2017 legislation, stating it proves previous insufficiency in taxing involved parties.
David Davis
Con
Goole and Pocklington
Agrees with Swayne's point; discusses HMRC’s losses in court cases before the 2017 resolution, emphasising need for clear and comprehensible tax legislation.
Rupa Huq
Lab
Ealing Central and Acton
Supports Davis's argument that these are not rich individuals engaging in financial schemes; shares a story of Caroline Cheasty, advocating for targeting scheme promoters rather than the individuals involved.
Julian Lewis
Con
New Forest East
Compliments Davis on his logical arguments and acknowledges bipartisan efforts from Labour and Liberal Democrats in addressing this injustice.
David Davis
Con
Goole and Pocklington
The complexity of tax laws made it impossible for ordinary citizens to understand, even financial experts could not agree. Changing professional guidelines in 2017 reflected a shift in attitude towards taxpayers' responsibility. However, HMRC's approach was flawed, targeting individuals rather than advisers and companies who promoted these schemes.
Kevin Hollinrake
Con
Thirsk and Malton
Agrees with the notion that individuals must understand risks associated with tax avoidance schemes. However, not everyone has the same level of business acumen or access to professional advice.
Rupa Huq
Lab
Ealing Central and Acton
Intervened but did not provide a full contribution within the provided text.
Julian Lewis
Con
New Forest East
Contributed briefly, questioning the clarity of HMRC's stance on retrospective measures.
Agrees that disguised remuneration loan schemes were a tax dodge but criticises the unfair and unjust application of the loan charge retrospectively. Highlights cases where individuals have suffered due to changes in legislation, including loss of business and homes.
Edward Davey
Lib Dem
Kingston and Surbiton
Supports Julian Lewis's argument, acknowledging that the debate has brought together Members of Parliament from across the House due to the issue of natural justice. Highlights the work done by his all-party parliamentary group on the loan charge, which includes 227 members and has produced a detailed report. Criticises HMRC for rejecting recommendations made by the Morse review and argues that the legislation does not apply to many people affected by the loan charge.
Asks Edward Davey if evidence was received indicating that chartered accountants or financial analysts had warned taxpayers since 2010 about the dangers of their payment methods.
Stephen Metcalfe
Con
South Basildon and East Thurrock
Congratulates right hon. Friend on securing the debate, highlights injustice faced by constituents involved in tax avoidance schemes. Criticises Morse review for not going far enough. Presents a case study of his constituent who was advised to join an ICAEW-regulated freelancer scheme which later turned out to be problematic. Emphasises HMRC's role in reassuring his constituent and the need for reassurance from HMRC regarding legality of such schemes.
Rosie Winterton
Lab
Stockport
Ordering hon. Members to limit their speeches to five minutes to accommodate all speakers, ensuring fair representation in the debate.
Neale Hanvey
Lab
Dagenham
Argues against current Government position on tax avoidance schemes as unjust and harmful to individuals facing significant bills. Discusses case of his constituent Doug Aitken who is at risk of losing home, car, business, and contribution to the Exchequer due to loan charge. Criticises HMRC's approach and calls for amendment of legislation to make loan charge prospective from 2017 onwards.
Paul Holmes
Con
Hamble Valley
Congratulates the Member for Haltemprice and Howden on securing the debate. Highlights the impact of the loan charge on small business owners, emphasising fairness and proportionality. Expresses concern over HMRC's retrospective approach, the burden on financial advisers, and the need for a compassionate team to handle vulnerable individuals.
Emphasises HMRC’s lack of compassion and calls for certainty and finality in dealing with those affected by the loan charge situation. Supports the idea of setting up a bespoke, compassionate team to deal with people affected by this issue.
Richard Fuller
Con
North Bedfordshire
Questions who is running the show—HMRC or the Government—and emphasises that HMRC's own ambition falls short when it comes to dealing with individuals impacted by the loan charge. Urges the Minister to ensure fair treatment of those affected.
Presents a case study of his constituent who was forced into self-employment and used an employee benefit trust scheme, only to be hit with unexpected penalties. Argues that HMRC's approach is unjust and retrospective and calls for the cessation of action on loans paid before 2017.
Initially not sympathetic towards those who used loan schemes but changed his view upon understanding their circumstances better. Requests removal of the retrospective nature of the charge up to July 2017, a reduction in punitive interest rates and inheritance tax demands, and a delay in repayment due to the health crisis.
The hon. Gentleman talks about the system being just and fair, but retrospective legislation is against the rule of law.
Southgate and Wood Green
We must consider that we are dealing with real people who need to be treated with fairness and respect. We have a moral duty to ensure no more homes, businesses or lives are lost due to the loan charge policy.
David Simmonds
Con
Ruislip, Northwood and Pinner
I sympathise with those affected by this issue. I believe that Sir Amyas Morse’s report represents a reasonable attempt at a compromise. The problem lies in the fact that while schemes were lawful to receive loans, individuals thought they did not have to pay any income tax on it due to incorrect advice from professionals.
Jeff, who played by the rules and was advised everything was in order, found himself facing a substantial tax bill. This debate is about fairness and justice.
Matt Rodda
Lab
Reading Central
I put on record my fundamental support for a fair tax system and highlight the importance of the issue of the loan charge, especially during the current national crisis. Constituents from Reading and Woodley have contacted me about this problem, affecting many people across the country. I draw attention to specific industries where self-employed individuals face significant issues due to the loan charge. For instance, in my constituency, there is a high level of employment in IT, with subcontractors often setting up limited companies to serve larger organisations. The loan charge adds immense pressure on these workers and their families at an already difficult time. I urge the Minister to thoroughly review the evidence in this context.
Ruth Cadbury
Lab
Brentford and Isleworth
I thank the Backbench Business Committee for allowing this debate and acknowledge my fellow sponsors and the loan charge APPG. This is a time of incredible worry, especially with the coronavirus outbreak adding to the stress for victims of the loan charge scandal. Despite initial resistance from the Treasury, the Morse review was released recently, recommending changes such as a ten-year limit on the loan charge for people earning less than £30,000 a year. However, these recommendations have been rejected by the Government. HMRC's behaviour in pursuing payments without justification or evidence of previous disclosures adds to the anxiety and uncertainty faced by taxpayers. I urge the Government to reconsider its stance and adhere to Adam Smith’s principles of fair taxation and Nolan principles of public service.
Sarah Olney
Lib Dem
Richmond Park
Committed contributions to the debate from other members, highlighted issues faced by constituents due to tax schemes and urged HMRC to consider rebates for those who have already paid large sums.
Fleur Anderson
Lab
Putney
Expressed concern over the mental health and economic impacts on constituents due to the loan charge, advocated for six specific changes to mitigate these issues, including adjusting the look-back period and offering relief for those with low incomes.
Congratulated Mr Davis on introducing the debate, shared stories of two constituents affected by tax schemes, expressed anger towards HMRC's actions, and emphasised the need to address bogus self-employment practices.
Richard Fuller
Con
North Bedfordshire
Questioned whether HMRC was unfairly targeting individuals involved in loan charge schemes compared to those who receive sweetheart deals from large corporations.
Peter Dowd
Lab
Bootle
Tax avoidance should not be allowed and discouraged. The HMRC's use of retrospection has been commensurate with the nation's needs, but it is important to consider whether enablers are getting away scot-free. The Government must ensure that people are treated fairly and take a balanced approach towards dealing with such matters.
David Davis
Con
Goole and Pocklington
Asked about the historical context of tax avoidance schemes, noting they have existed for a long time before his term in office.
Believes many financial analysts and chartered accounts acted in good faith, thinking their actions were legal. He acknowledges that some enablers may have been dodgy but does not elaborate further.
Jesse Norman
Con
Hereford and South Herefordshire
Congratulated Members for securing the debate and acknowledged the Government's commitment to reviewing the situation under extraordinary circumstances like the outbreak of COVID-19. Emphasised that disguised remuneration schemes are contrived tax avoidance practices that should be treated as such, reflecting on the Morse report which details efforts made by HMRC at various stages.
Julian Lewis
Con
New Forest East
Asked why HMRC did not clarify the nature of these schemes earlier, referencing the need to review the Morse report for detailed insights into HMRC’s actions before and after 2010.
Suggested that creators of disguised remuneration schemes are not being pursued as aggressively as victims of these schemes.
Ruth Cadbury
Lab
Brentford and Isleworth
Ms. Cadbury questioned why such schemes continue to be marketed to low-paid workers despite being recognised as contrived, urging the Government to take more decisive action against promoters of these schemes.
Jesse Norman
Con
Hereford and South Herefordshire
Mr. Norman responded to Ruth Cadbury's concerns by emphasising his commitment to addressing the issue through various strategies outlined in a detailed document, while also noting that legislative actions must be based on existing laws.
David Davis
Con
Goole and Pocklington
Mr. Davis expressed strong criticism of HMRC's approach, stating it allowed employers and advisors to exploit the system and forcing ordinary workers into unfair positions due to unclear law. He called for HMRC to cease action on cases before July 2017.
Government Response
Acknowledged the concern over retrospection and the need for balance. Emphasised that disguised remuneration is a form of tax avoidance and detailed how such schemes operate, emphasising their contrived nature. Stated HMRC's commitment to reviewing the situation under extraordinary circumstances and providing support to those affected.
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