Loan charge suicides: Government has ‘a lot to answer for’
HMRC has confirmed that a 10th related suicide has occurred
UK contracting market experts have argued that the government should be “ashamed” of “aggressive” revenue-raising tactics amid reports of a 10th loan charge-related suicide.
“This is tragic. The government has failed these people and their families on an industrial scale,” said Julia Kermode, founder of IWORK, a support body for independent workers.
“It’s abhorrent that HMRC continues to hound thousands of other temps, freelancers and contractors for tax under the Loan Charge, without any regard for the devastation being caused.”
Introduced in 2017, the loan charge was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid.
Crucially, it is thought that the schemes were mis-sold to many workers by lawyers or accountants, and therefore that the promoters of the schemes should be liable.
The policy requires taxpayers to pay the outstanding tax retrospectively as a lump sum, which has led to a string of related suicides.
A 10th suicide linked to the loan charge was confirmed earlier this month in correspondence between HMRC CEO Jim Harra and the Treasury Select Committee.
‘A conscious decision from HMRC’
For IWORK’s Kermode, the government’s perseverance with the loan charge is a deliberate and aggressive attempt to raise tax revenue. She also argued that HMRC is consciously contradicting its own Agency Legislation, which should theoretically see agencies liable for tax avoidance.
“The loan charge is a conscious decision from HMRC to circumvent the regulations it created, to pursue individuals rather than businesses.
“This is a deliberate move from HMRC to aggressively chase tens of thousands of people for sums that often amount to hundreds of thousands of pounds.”
This is echoed by Fred Dures, founder of payroll auditor PayePass, who urged HMRC to bring spurious agents to justice through fresh regulation rather than targeting innocent contractors.
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“The main players and serial offenders are well known in the sector and to HMRC. The crooks behind tax avoidance schemes have become extraordinarily wealthy by abusing the people who trusted them.
“Until regulation arrives, the risk of tax avoidance schemes posing as umbrella companies will remain.”
‘Real risk of more suicides’
In January, responding to the most recent Loan Charge-related death, the All-Party Parliamentary loan charge and Taxpayer Group (APPG) published an open letter to Rishi Sunak and Jeremy Hunt, warning that persistence with the loan charge poses a “real risk of more suicides”.
The letter, which enclosed the signatures of 120 MPs, urged the government to seek a “fair resolution” to the “deeply controversial Loan Charge”.
“If the government does not act to instruct HMRC to change course, we are fearful of what the consequences will be as thousands of people simply cannot pay the huge sums being demanded.
“We urge you to act, not just out of compassion, but also commonsense. A resolution is in everyone’s interests, not only the tens of thousands of families stuck in the loan charge nightmare”
Echoing the sentiments of the APPG’s letter, Kermode argued that, in spite of the numerous tragedies, the government “ploughs on with its head buried in the sand”.
“A resolution must be agreed to prevent any more needless losses,” she said.
HMRC analysis estimates that 50,000 people in the UK have used a loan scheme, and that the loan charge policy is expected to “protect” £3.2bn.
