Contract workers and taxpayers affected by the 2019 Loan Charge are being urged to participate in a protest against the controversial tax rules this Saturday, 15th June, in Chancellor of the Exchequer Philip Hammond’s constituency of Runnymede and Weybridge in Surrey.
The demonstration will begin at noon in Weybridge before proceeding to Egham and then ending at the Magna Carta monument in Runnymede.
The protest’s organisers, the Loan Charge Action Group (LCAG), hope that the event will apply pressure on the Chancellor to rethink the contractor tax Loan Charge by compromising one of the MP’s most invaluable assets – his relationship with his constituents.
“Protesters from our Loan Charge Action Group are travelling to Philip Hammond’s constituency of Runnymede and Weybridge to tell his constituents the truth about this Chancellor, and the arrogant way that both he and his Treasury Ministers are undermining the basic rights and certainties understood as sacrosanct in our country and constitution,” wrote LCAG co-founder Steve Packham on ContractorUK.com.
Packham is responsible for much of the constituency’s historic significance as the location of the signing of the Magna Carta in 1215, even comparing Philip Hammond to King John, due to the “unconstitutional” Loan Charge allegedly undermining the rule of law. To illustrate his point, he cited the lack of a right to appeal under the tax rules.
Tax barristers have suggested that the Loan Charge may breach the terms of the Human Rights Act.
Previous LCAG demonstrations have been well attended, with the Westminster protest in October being a key contributing factor behind both an amendment made to the Finance Bill that compelled the Treasury to review the Loan Charge, and the formation of the Loan Charge All-Party Parliamentary Group (APPG), a cross-party committee of MPs spearheaded by former Lib Dem Cabinet minister Sir Ed Davey that undertook an extensive inquiry into the Loan Charge earlier this year.
On Monday the Loan Charge APPG met to “discuss the reality of HMRC’s treatment of people facing the Loan Charge”. The APPG said the packed meeting, attended by MPs, peers, lobbyists and tax advice experts, heard “shocking evidence”, including testimony from LCAG volunteers who staff a helpline for affected taxpayers, some of whom have experienced suicidal thoughts. Former attorney general Dominic Grieve was also present and was said to be “horrified at the Loan Charge and the way it has been introduced.”
Stories of at least three contract workers taking their own lives emerged during an APPG enquiry. The primary reason for these suicides is directly linked to the financial instability the contractor tax has caused. An unconfirmed leak to the inquiry from an HMRC whistle-blower claimed that HMRC were aware for up to six suicides.
An anonymous online survey by the APPG of 1,768 self-employed people earlier this year indicated that 40% of respondents said that they had seriously considered suicide, and 60 individuals made direct or implied statements that they intended to end their lives.
One taxpayer submitted evidence to the inquiry that they had tried to “walk under a Range Rover” at Christmas in 2017; another told the APPG “my only option now is to starve myself to death.”
Self-employed people therefore have legitimate grievances aimed at the Loan Charge as it directly affects their net profit and financial stability with money deducted directly from their yearly income.
Saturday’s protest will coincide with the 804th anniversary of the signing of Magna Carta and will be carried out under the banner “Philip Hammond has ripped up our UK rule of law. SACK HIM!” The event will start adjacent to the Lloyds Bank on Weybridge High Street at 12pm, before continuing to the Waitrose on Church Road in Egham, and is scheduled to arrive at the Magna Carta monument in Runnymede at 4pm.
The link with Magna Carta is tenuous but does serve to illustrate the controversy over tax rules that allegedly bypasses universal taxpayer protections set out in the Taxes Management Act 1970 that give HMRC a limited amount of time to query tax returns once they have been submitted.
“Disguised remuneration” tax avoidance scheme users were paid in loans that were tax-free but were never realistically expected to be paid back. This meant that scheme users accrued loan debt as they used the schemes; the Loan Charge allows HMRC to apply income tax and National Insurance to those loan balances, in many cases resulting in total tax bills running into hundreds of thousands of pounds. Any loan issued in the past twenty years under a tax avoidance scheme falls under its scope.
Because the loan balances in question relate to payments made up to twenty years ago, with tax returns duly submitted and approved by HMRC and the statutory enquiry window long-expired, campaigners argue that the Loan Charge amounts to a retrospective tax return, which is unconstitutional and undermines the rights of taxpayers.
The Treasury argue that the Loan Charge is a new, prospective tax that applies only to loan balances accrued as a result of using “egregious” tax avoidance schemes that they claim never worked anyway (although this opinion is not reflected in the case law) – and taxpayers wishing to escape the Loan Charge could always repay the loans.
Tax barrister Keith Gordon of Temple Tax Chambers, an eminent critic of the Loan Charge policy, said: “The Loan Charge drives a coach and horses through taxpayer protections and removes the balance of fairness in the tax system. It is utterly immoral that HMRC could persuade MPs to pass this legislation without acknowledging HMRC’s prior failings.”
Speaking on LBC Radio, Conservative MP Andrea Leadsom committed to “investigate” the Loan Charge if she was elected as the conservative leader: “I absolutely would accept that retrospective tax is not the right thing to do… I certainly would commit to properly investigating the situation”, she said.
Since this interview, the first round of Conservative leadership elections saw Leadsom eliminated meaning her promise to review the contractor tax will likely remain unfulfilled.
Anyone unable to attend Saturday’s protest will be able to follow the day’s events on Twitter, using the hashtag #STOPtheLoanCharge.
13th June 2019