I wondered what’s the point of continuing, says Yorkshire consultant facing ‘devastating’ loan fees

The All-Party Parliamentary Group on Borrowing Charges and Taxpayer Equity (APPG) described the financial situation of many people facing borrowing charges as an ongoing nightmare.

It was also revealed that HMRC referred eight cases to the Independent Office for Police Conduct (IOPC) where a taxpayer committed suicide and used a “disguised pay” system.

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In a written response to a parliamentary question, Lucy Frazer, Financial Secretary to the Treasury, said: “Following the referral, HMRC conducted independent investigations and the completed investigations concluded that there was no evidence of misconduct. from an HMRC officer. Any loss of life is a tragedy and my hearts go out to the families of those affected. ”

The All-Party Parliamentary Group on Borrowing Charges and Taxpayer Equity (APPG) described the financial situation of many people facing borrowing charges as an ongoing nightmare.

The loan charge was designed to combat tax evasion schemes in which individuals receive income in the form of loans that are not repaid to avoid income tax.

The government announced a review in 2019 after the policy left thousands of low-income people with large and unexpected tax bills.

In December 2019, the government announced a package of loan fee changes in response to Sir Amyas Morse’s review, but the APPG still believes the policy is wrong.

Speaking during a debate on the finance bill, Labor MP Ruth Cadbury said: “The reality is that if HMRC applies the loan fees to the thousands of people who are now facing it, there will be many more bankruptcies, more mental anguish and potentially more suicides, as well as more and more people losing their homes and increasingly unable to continue working.

Ms Cadbury said the finance bill “does nothing to support those already affected by the loan burden and are still forced to sign illegal disguised compensation packages if they are to do the job they are in. qualified “.

At least 144 parliamentarians signed an open letter to the prime minister and chancellor calling for a resolution of the loan charges.

A computer software consultant, who lives near Sheffield and faces the cost of the loan, said: ‘I have lost my confidence, I don’t sleep well and am constantly worried and often feel so depressed. to wonder what the point of continuing.

He said an umbrella company told him the program was legal and approved by a tax lawyer every year to ensure compliance with HMRC.

He added, “The coordinating companies get away with this and just go out of business and leave all of this burden on their poor customers.”

In her written response, Ms. Frazer said, “The government takes concerns for the welfare of all taxpayers seriously and recognizes that loan fees can add significant pressure to some taxpayers.

“Following Lord Morse’s independent review of borrowing costs, the government has taken further steps to mitigate the impact of borrowing costs and ensure that the appropriate support is in place for those who do. need.

“HMRC operates a settlement hotline and debt hotline for taxpayers who have used disguised compensation avoidance programs.

“All call managers are trained to identify taxpayers who might need additional support. For taxpayers who need specialized help, HMRC advisers suggest contacting organizations like Samaritans or Mind. The government is working with HMRC to examine what additional specialist support could be provided to taxpayers who need additional help. “

Earlier this year, Chancellor Rishi Sunak told the Yorkshire Post that the policy, which was designed to tackle tax evasion schemes, had ‘already been’ the subject of numerous reviews and had been changed and adjusted.

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A spokesperson for HMRC recently told the Yorkshire Post: ‘The loan charge was introduced to ensure that those who have used disguised pay tax evasion schemes pay their fair share of income tax and contributions. to national insurance. Individuals are responsible for their own fiscal affairs, and it is fitting that we continue to fight against these types of avoidance schemes because they deprive our public services of vital funding.

“Sir Amyas Morse conducted an independent review of the policy in 2019 and concluded that it was fair for the loan charges to remain in place. The government recognized concerns about its impact, which is why it accepted all but one of the recommendations, which led to significant changes to the legislation.

“We encourage anyone who is concerned about paying their loan fees to contact us so that we can assist you.

“We are committed to working with taxpayers to put in place manageable payment plans to spread their tax liability and ensure they are affordable.

“HMRC will take action against programs marketed as allowing entrepreneurs to pay less tax than they should. Entrepreneurs who are concerned about being offered such a program can contact HMRC.

“About 20 promoters have completely dropped out of promotion in the past six years due to the activity of HMRC.

“In November 2020, HMRC launched a ‘Tax Avoidance – Don’t Get Trapped’ awareness campaign targeting entrepreneurs in the IT, medical and oil and gas sectors where developers are particularly active.

“This campaign advises taxpayers how to spot avoidance schemes, including those promoted by umbrella companies, explains the risks involved and where people can get more information to enable them to make informed choices if they want to exit. an avoidance ploy.

“The draft guidance on GOV.UK shows how the government is tackling the promoters of tax evasion. “

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