Contractors’ MPs to sign ‘pivotal’ EDM on 2019 loan charge

An Early Day Motion has been launched against the 2019 Disguised Remuneration Charge, in a move that advisers – not just affected contractors – say is “welcome and long-overdue.”

Early Day Motions (EDMs) allow MPs to put on record their opinions, with a view to a full debate in the House of Commons to demonstrate parliamentary support on a specific issue.

Stephen Lloyd MPs’ EDM “expresses concern” at the 2019 charge, notably that it is “unfair” that HMRC is “retrospectively taxing something that was technically allowed at the time.”

‘Aggressively’

So “rather than pursuing the client organisations, agencies or umbrella companies” which all “benefited significantly,” HMRC is wrongly, “aggressively pursuing” contractors via APNs.

“The charge is likely to cause financial distress and bankruptcies…. causing a devastating impact on people,” adds the motion by the Liberal Democrat MP.

“[This EDM] calls on the government to revise the legislation to avoid significant damage to independent contractors and freelancers in the UK.

“And [it] calls for the charge to apply only to disguised remuneration loans entered into after the Finance Act 2017 received Royal Assent.”

‘Spiteful’

For chiming with the beliefs of contractors -- every contractor is said to know someone affected by the loan charge, the EDM is being cheered by freelancers, due to its wording and recommendations.

The EDM’s stance on HMRC retrospection (which HMRC disputes) is a case in point, as many fear that the tax backdating (beyond HMRC’s standard enquiry period) will ruin the livelihoods of people who were simply following the law as it stood at the time.

“[The motion’s] wording is absolutely spot on,” one IT contractor wrote online. “A spiteful, exceptionally unfair piece of legislation designed only to make up for gross HMRC failings over the past 15 years.

“[It’s] about time that someone picked up on this issue -- hats off to the Lib Dem’s [sic]; all contractors need to lobby their MP…to sign this.”

Under the charge, all loans received by contractors from third-parties between 2010 but as far back as 1999 will be taxed, with interest, from April 2019, as announced at Budget 2016.

‘Retrospective’

A dogged defence of this policy by HMRC has, until now, led some experts to conclude that “the charge will be implemented, however eloquently its opponents argue against it.”

A tax dispute advisory yesterday confirmed that, so far, support from some MPs about the charge being unjust has been silenced with ‘template-style’ responses from HM Treasury.  

But the advisory, WTT Consulting, believes Mr Lloyds’ EDM is a potential game-changer, assuming it attracts the support of a sufficient number of MPs.

“This is a pivotal moment in the campaign to find a sensible and fair settlement”, the advisory’s Graham Webber said in a statement to ContractorUK.

“[It’s also an opportunity] to bring to light some of the problems that HMRC has caused itself and which they now seek to resolve via retrospective law.”

‘Shame on HMRC’

A medical IT specialist reflected on social media. “Completely agree [with this EDM]. How on earth can they justify back-dating it to 1999? Utterly and completely ridiculous. Shame on HMRC.”

With four signatures so far (mostly by Lib Dem MPs), the motion states: “It is unfair that HM Revenue and Customs are pursuing people who acted in good faith.”

It also says: “The charge will affect contractors, freelancers and agency workers, including social workers, supply teachers and bank and locum nurses and doctors… [whose] employment [at the time] was not an option and in some cases the company or organisation insisted on those arrangements, including to avoid paying National Insurance.”

‘More MPs, more chance’

WTT says it will be encouraging all contractors to write to their MP to ask them to lend their support to the EDM, which is available online.

“This EDM is important because it’s a chance for MPs to make a public demonstration of their position in support of their constituencies,” said Mr Webber, calling it “long-overdue and welcome.”

He appealed: “The more MPs who sign this, the higher up the list it will go and the more chance it has of actually being debated.”