Loan charge contractors switch focus to the courts, peers and HMRC

Campaigners against Loan Charge 2019 are largely adopting a ‘down but not out’ mentality to a Finance Bill amendment failing, with a comeback being eyed from three angles.

First, and as mooted following NC31’s no-vote, the House of Lords will be called to “raise the injustice” of the HMRC policy and “call for changes,” says Lib Dem MP Sir Ed Davey.

Second, there will be a “pushing” of the Revenue “to be far more reasonable” in its approach and treatment to customers affected by the charge, says Labour MP Ruth Cadbury.

'Realistic'

That will include asking HMRC to offer a “realistic voluntary settlement offer”, according to Tory MP Sir Mike Penning, a Loan Charge APPG co-chair like Ms Cadbury and Sir Ed.

And thirdly, there are legal or other means. This ‘third way’ ranges from a new petition calling for a parliamentary hearing for NC31, to the courts and the tax judiciary.

Tom Wallace, director of HMRC investigations at WTT Consulting told ContractorUK: “We live in a country which separates the powers of the executive from those that uphold the law.

“Therefore, it looks like it will now be for the courts to decide when and how the loan charge applies in the specific circumstances of each individual.”

'Huge financial pressure'

More immediately though, the Finance Bill will now pass into law and only reflect the outcome of the Morse Review, not NC31 or the two other amendments tabled by MPs.

“[NC31] proposed that ‘innocent parties’ who participated in schemes in good faith, unaware of their illegality, be exempted from being pursued by HMRC for repayment,” WTT said.

“This rejection leaves many people who were effectively sold schemes by those they trusted to advise them, still burdened by huge financial pressure and stress, exacerbated by the current economic climate.”

'Do what they can'

Even if Loan Charge APPG members who are Lords do soon raise the issue of the Loan Charge, they are unable to remove its retrospection, Sir Ed Davey has pointed out.

“We now urge the House of Lords to do what they can to raise the profound injustice of the Loan Charge,” says an undeterred LCAG, a lobbyist and support group for affected contractors.

“Even though we know they cannot overturn this pernicious piece of legislation and even though we know that, unlike the House of Commons…they cannot vote to prevent more suicides.”

'Utterly dismayed by Labour'

The ‘third way’ to tackle the charge could extend to action by the Labour party. But in reacting to Thursday night’s vote, the Loan Charge Action Group (LCAG), didn’t sound convinced.

“We are utterly dismayed that the Labour frontbench showed a profound lack of leadership in neither doing their job of opposing the government, nor standing up for the basic principle of citizens having a right to defend themselves in court.

“Considering that the Labour leader, Sir Keir Starmer, is a barrister specialising in human rights and a former director of public prosecutions and head of the Crown Prosecution Service, for the Labour frontbench to fail to support the right of citizens to access the justice system is appalling.”

'The guillotine falls in September'

The group added that “perhaps, before the guillotine falls in September,” when the charge must be declared to HMRC, Sir Keir “might” decide to “speak up and take on” the government.

With the payment deadline of September 30th now fast-approaching, others will be hoping that the tax department looks favourably on the idea of a voluntary settlement offer.

“This would allow people to pay a percentage of the disputed tax, as full and final settlement,” said Sir Mike.

“[It would also] allow people to do this and get on with their lives, if they are able to make such a settlement.

“Such an approach would prevent the many bankruptcies which we expect and would actually be likely to bring in more revenue that the current unreasonable and punitive approach.”

'They do not have the courage'

Sir Mike is among the MPs who on behalf of contractors, LCAG has expressed its gratitude to for backing the Finance Bill amendments. Other MPs, it said, it will be writing to:

“We are deeply disappointed with all those MPs who had previously indicated support but, when it came to it, showed that they do not have the courage to put their principles, their constituents and basic justice before party loyalty.

"We will be writing to all these MPs who were fooled into believing the government”.

'Unable to carry on with the fight'

The group added that in light of New Clause 31 not being moved in House of Commons,  “sadly some campaigners” against the Loan Charge have now “given up,” either because of “mental breakdown” or just sheer fatigue, meaning they are “unable to carry on the with the fight.”

Shaun Taylor isn’t one of them. “Please support this petition,” he said yesterday. “So far, seven lives have been lost as a result of the loan charge legislation. [Your] actions [in signing the petition] can help avoid a further loss of life.”