HMRC out of control !!

HMRC has been accused of being out of control, following the publication of an excoriating report into HMRC’s conduct in enforcing its controversial loan charge, by a cross party group of MP’s

On Thursday, MPs from both sides of the house lined up to support a motion tabled by Conservative backbencher Ross Thomson which demanded a six-month delay to the policy and an independent inquiry into the charge.

Senior MPs from both sides of the House stood up to criticise the loan charge, with former Brexit Secretary David Davis describing it as a tax policy that is “destroying families, homes, mental health and even lives.”

Former Treasury minister Justine Greening stated that HMRC had “simply got it wrong” in its approach to the loan charge, describing the tax authority’s approach as “punitive rather than proportionate.”

‘An organisation out of control’

The House of Commons debate followed the publication of a report from the Loan Charge APPG examining the circumstances surrounding the loan charge and HMRC’s conduct.

The report received more than 900 submissions from those affected, and the main conclusions from it are as follows:

  • There is a clear risk to the mental welfare of people facing the loan charge, including known suicide risks and a number of suicides linked to the charge.
  • There will be many bankruptcies as a result of the loan charge.
  • The original impact assessment published by the Treasury was flawed and inadequate, to the point of being negligent.
  • The ‘disguised remuneration’ arrangements were not entered as “aggressive tax avoidance” and were often a condition of employment, especially in the public sector.
  • The Loan Charge is retrospective, overrides taxpayer protections and undermines the rule of law.
  • The real reason for the introduction of the loan charge was to bypass the normal legal processes and to allow HMRC to collect tax where they were ‘out of time’ under existing legislation.
  • There has been a cynical campaign of misinformation waged by HMRC and the Treasury.

The inquiry recommended a number of action points including an immediate six-month suspension of the charge and an independent review led by an experienced tax judge to assess its impact and legal justification.

The report also called for a wider investigation into the conduct of HMRC with regard to the Loan Charge and an independent assessment of HMRC’s use of behavioural psychology and behavioural insights, “the knowing use of which should be suspended in the light of the suicide risk and the known suicides of individuals facing the loan charge”.

A section marked ‘HMRC conduct overall’ stated: “HMRC’s conduct with regard to the loan charge indicates that it is an organisation out of control, urgently needing better and proper scrutiny and genuine accountability.”

In an open letter to HMRC’s chief executive Jonathan Thompson accompanying the report, MPs expressed “serious concerns” that both HMRC and Treasury Ministers are “consistently issuing misleading information in documents, letters and press statements regarding the loan charge”.