Loan Charge suicides – HMRC refute charges of negligence

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HMRC filling out a tax form

Loan Charge suicides – HMRC refute charges of negligence

The HMRC chief executive, Sir Jonathan Thompson, has denied that HMRC has failed to act in an appropriate manner in a strongly worded letter to a Parliamentary committee set up to investigate the controversial Loan Charge tax, after a series of reports that taxpayers facing crippling tax liabilities have taken their own lives.

The Loan Charge targets past users of Disguised Remuneration tax avoidance schemes, many of whom were contractors.  Controversially, it charges tax to multiple years’ payments in one lump sum, which has led to many people facing the prospect of very high tax bills in 2019-20.

Lobbying by affected taxpayers led to the creation of the Loan Charge All-Party Parliamentary Group (APPG), a cross-party committee of MPs that have been investigating the effect of the tax.  They received tragic reports in both oral and written evidence of taxpayers who have apparently committed suicide as a direct result of facing large tax liabilities under the Loan Charge, prompting the committee to write a letter to Sir Thompson accusing the tax authority of negligence on Monday.  An HMRC whistleblower has indicated that HMRC are aware of six suicides.

The response from the HMRC permanent secretary, dated Wednesday, stresses that he is concerned about the reports of suicides and that HMRC takes the welfare of their “customers” seriously.  However, it appears to imply that they have not been able to identify a single individual that has taken their own life due to the Loan Charge.

In reference to the tax authority’s alleged negligence in failing to set up a dedicated helpline for suicidal taxpayers, Sir Thompson said “counselling is not an area of expertise one would associate with a tax authority”, although he did point to a helpline for avoidance scheme users that is staffed with call handlers with training in the identification of vulnerable people and said that people would be directed to the Samaritans where appropriate.

The HMRC chief then appeared to criticise the APPG’s handling of their investigation into the Loan Charge: “constant tweets implying that the loan charge will be dropped and therefore people should hold off approaching us does nothing to help those with disguised remuneration liability”.  The APPG Twitter account to date has 843 followers and has published 199 tweets since its creation in January.  Although some tweets call for the Government to delay implementation of the Loan Charge, or adjust its scope to apply only from 2016 onwards, we have been unable to find any tweets by the APPG that imply that the Loan Charge will be scrapped.  Curiously, HMRC themselves announced the publication of the letter from Thompson to the APPG on their own Twitter feed.

Relations between the group of MPs and Government have soured after both HMRC and the Treasury failed to attend an oral evidence session of the committee last Tuesday, precipitating criticism from the APPG.

In an interview with the Evening Standard yesterday, tax adviser Graham Webber said “We have talked people down off ledges … We were supposed to be closing early for Christmas and I got very worried about this client who was making threats on public forums about killing himself. He came in, and the first thing he said was, ‘I’m not afraid of death’. I’ve been doing this job 40-odd years, and I’ve never had a client tell me that before”.  The individual in question owes some £180,000.

Thousands of health workers, such as locum doctors, are also affected, says Dr Iain Campbell, secretary-general of the Independent Health Professionals Association. “It’s not just 20 years of retrospective taxation, it’s a preventable mental health timebomb.  Sadly, we’ll see more suicide attempts.  Where’s the state’s duty of care?”

The Loan Charge APPG tweeted their response to Sir Thompson’s letter today: “a typically misleading statement from @HMRCgovuk. The @loanchargeAPPG letter wasn’t about ‘customer’ welfare, it was asking how many suicides related to the #LoanCharge #HMRC are aware of.  Mr Thompson has evaded the question & refused to answer! #LoanChargeScandal”

The APPG’s deadline for evidence submissions was last Wednesday and their report is expected in the next few days.  The report was intended to assist a wider review of the effect of the tax by HM Treasury, which was forced by an amendment to the Finance Bill.  The Treasury have since confirmed that said “review” will now take the form of a simple report, written by HMRC, sparking accusations of a Whitehall whitewash.

The Loan Charge is due to take effect on 6th April 2019.  HMRC have launched a settlement opportunity which allows individuals earning less than £50,000 to spread payments over five years, and individuals earning less than £30,000 can spread repayment over seven years, but settlement must be reached before 6th April 2019.  The settlement helpline is 03000 534 226.

The Samaritans can be reached by calling 116 123.  Calls are free.

14th March 2019.

Sources:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785948/Letter_from_Sir_Jonathan_Thompson_to_the_Loan_Charge_All_Party_Parliamentary_Group_-_13_March_2019.pdf

https://www.standard.co.uk/business/suicide-watch-the-preventable-tax-timebomb-looming-for-freelancers-a3861916.html

https://www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-on-loans/hmrc-issue-briefing-disguised-remuneration-charge-on-loans

https://twitter.com/HMRCgovuk/status/1106181489434214401

https://twitter.com/loanchargeAPPG/status/1106186643105636354

https://twitter.com/loanchargeAPPG/status/1105176831391608832

https://www.samaritans.org/