Commons Sense

House of Commons · Ministers' Questions

Loan Charge: Bankruptcy

Tuesday 6 February 2024 · 4 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 0 Partly answered 2 Not answered 0

Key points

  • Greg Smith questioned the Minister about the impact of the loan charge on bankruptcy levels, citing an internal HMRC document that linked around 100 bankruptcies to the charge but noted these were often due to factors unrelated to the charge.
  • Smith raised concerns over the original impact statement's inaccuracy regarding the loan charge's effects on family formation and mental health, citing evidence of numerous divorces, mental health issues, and suicides.
  • Tim Farron called for a full investigation into how Parliament was misled regarding the loan charge's impact on families, noting a gross error in the original assessment.

Topics (select to filter)

Questions & Answers

Q1 Greg Smith Con Mid Buckinghamshire
Taxation
Context

MP expressed concern over the potential impact of the loan charge leading to increased bankruptcy cases.

Question

I am concerned about the potential impact of the loan charge on levels of bankruptcy. In an internal document from HMRC, there were around 100 bankruptcies linked to the loan charge. Can you tell me why this figure was never made public and what the current number is?

Answer from Nigel Huddleston

I have pushed HMRC for assurances on safeguards against forced bankruptcy due to the loan charge. However, where bankruptcies occurred, they were often due to factors outside the loan charge or individuals declaring bankruptcy voluntarily. If evidence suggests otherwise, I would like to know about it.

Partly answered

Not addressed: Specific number of current bankruptcies not disclosed

How: Reiterating Voluntary Declarations, Pushing For Further Evidence

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Q2 Greg Smith Con Mid Buckinghamshire
Taxation Mental Health
Context

MP noted concern over the impact statement made by Treasury which claimed no significant effect on family stability, but there have been numerous divorces and suicides.

Question

The original impact statement said the loan charge would not affect family formation or breakdown. Yet we now see countless divorces, mental health issues, bankruptcies, and at least 10 suicides. Why was this statement incorrect, and how can Parliament be misled in such a way?

Answer from Nigel Huddleston

The House is concerned about suicides related to the loan charge. Independent reviews have taken place, and HMRC provides generous support plans for those in debt. I urge engagement with HMRC to establish reasonable time-to-pay arrangements rather than fearing worst-case scenarios.

Not addressed: No commitment to new investigation or admitting fault

How: Redirecting To Engage With Hmrc, Mentioning Independent Reviews

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Q3 Tim Farron Lib Dem Westmorland and Lonsdale
Taxation Standards & Ethics Mental Health
Context

MP highlighted the negative impact on individuals due to misleading statements made by Treasury regarding family stability.

Question

The original impact statement said the loan charge would not significantly affect families, but there have been many divorces, mental health issues, bankruptcies, and suicides. This shows a gross error in assessment. We need a full investigation into how Parliament was misled on this matter.

Answer from Nigel Huddleston

We had an independent Morse review in 2019 which led to action. The review has occurred, but I challenge HMRC and listen to concerns from colleagues. If more needs to be done, we will take it, though another review is not necessary as the Government accepted most of the recommendations.

Partly answered

Not addressed: Refusal to commit to a new independent review

How: Mentioning Past Morse Review

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Q4 James Murray Labour (Co-op) Ealing North
Taxation
Context

MP expressed frustration over Government's approach to the loan charge causing financial ruin for individuals.

Question

The loan charge has become a nightmare for people across the country due to mis-selling and facing severe consequences. The current situation proves the need for reconsideration. Will you agree today to commission a new, independent review?

Answer from Nigel Huddleston

We had an independent Morse review in 2019 which led to action based on its recommendations. Another review is not necessary as the Government has already taken significant steps following the original one.

Not addressed: Refusal to commit to a new independent review

How: Referencing Past Morse Review

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