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Warnings of ‘devastating’ bankruptcy and mental health concerns over HMRC loan charge introduction

PUBLISHED: 13:44 01 July 2020 | UPDATED: 15:06 01 July 2020

Campaigners warn planned tax changes could leave thousands at risk of financial ruin and further suicides as MPs are set to debate a finance bill. Photo: PA

Campaigners warn planned tax changes could leave thousands at risk of financial ruin and further suicides as MPs are set to debate a finance bill. Photo: PA

PA Wire/PA Images

Campaigners warn planned tax changes could leave thousands at risk of financial ruin and serious mental health problems as MPs prepare to debate a finance bill in parliament today.

Mid Norfolk MP George Freeman. Picture: Keiron TovellMid Norfolk MP George Freeman. Picture: Keiron Tovell

Activists fighting the introduction of the loan charge - a retrospective HMRC measure intended to tackle tax avoidance - have called on MPs to support amendments which would limit the charge’s impact.

They say the scheme would leave thousands risking “bankruptcies, family breakdown and mental health problems” and warned of “seven known suicides of people facing the loan charge”.

The loan charge applies to all earnings received via loans since 1999 in the form of 45pc back tax.

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Introduced in 2016, it is intended to recoup Treasury losses from “a series of disguised remuneration” schemes, which paid contractors by third-parties instead of the companies that employed them.

The measures were legal and went unchallenged by HMRC at the time, according to campaigners and an all-party parliamentary group formed to highlight fears around the issue.

The cross-party group has tabled amendments to the annual Finance Bill - legislation which brings into force measures set out in the government’s budget - which would limit the charge to those who deliberately evaded tax and refund those who settled.

And ahead of the vote, on Wednesday, Norfolk campaigners urged MPs to “vote to stop this injustice, save lives and still tackle tax evasion” by supporting the proposed changes.

One contractor, who asked to be anonymous, said he could be faced with paying a “six-figure” bill.

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“I’ve always tried to do the right thing and been responsible,” he said. “It pretty much broke me.

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“I’ve been back and forth to my doctors for years for stress.

“I don’t sleep very well with the problem of what this could mean for me and my family.”

While IT contractor Andy, who did not wish to give a surname, said he faced owing HMRC £176,000 - and risked having to sell his home.

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“It’s horrific,” he said. “We’ve put our life on hold since we first heard about it. I want to put more money into my pension but I can’t - we just want it to be done.”

And another contractor, who is also remaining anonymous due to the “stigma” surrounding the issue, added: “It’s had a significant impact on me. It’s the first thing I think about in the morning and the last thing I think about at night.”

He said if the loan charge went through, he would owe “in the range of a quarter of a million pounds” to HMRC.

“That will be devastating,” he said. “It will mean having to sell the family home.

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“It’s something I’ve tried to shield my family from - my kids have no idea.”

All three men have urged their MPs to support the amendments.

Mid Norfolk MP George Freeman did not confirm whether he would support them, but said it was “quite wrong for highest-paid millionaire employees to use a company structure to dodge tax”.

He added: “We need to clamp down on tax evasion but protect the genuinely self-employed.”

The Treasury have been contacted for comment.


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