Autumn Statement 2022 'wasn’t the time or place for loan charge resolution'

Anyone who appealed to chancellor Jeremy Hunt to use Autumn Statement 2022 to clear up the “debacle” of the HMRC loan charge was always going to be disappointed.

Speaking last night, a campaigner against the HMRC policy – called a “debacle” by its boss Jim Harra – said Mr Hunt’s statement was neither the time nor the place to resolve it.

“There was never any chance of action [against the Loan Charge] in that kind of a very difficult fiscal announcement,” the campaigner told ContractorUK.

“Any action would [need to] come via an announcement that ministers are prepared to engage and…that they’ve instructed HMRC to draft a new settlement opportunity”.

'Toothless'

But the campaigner is surprised that the revenue-hungry chancellor didn’t use Autumn Statement to move against new disguised remuneration schemes.

Widely acknowledged to have experienced a resurgence since the off-payroll working rules took effect, such schemes are ‘oddly something that the government seems toothless’ about.

Fred Dures of payroll audit firm PayePass cannot work out the government’s inaction either.

'Combatting schemes isn't a government priority'

“The chancellor will be acutely aware of the eye-watering hole in the public purse as a direct result of tax avoidance schemes, many of which pose as umbrella companies.

“But for whatever reason, combatting these schemes clearly isn’t a priority for the government,” said Dures, the firm’s founder.

He added: “These schemes don’t just reduce the Treasury’s tax take – they pose a huge risk to contractors, recruitment agencies and the businesses engaging temporary workers. Doing more to tackle these firms is a no brainer. Why it’s being overlooked is beyond me.”

'Treasury ignoring fair return on investment'

Payment intermediary compliance specialist Professional Passport echoed: “The government needs to tackle the dodgy schemes that are capitalising on people’s pockets as a matter of urgency.  

“By targeting the architects of these schemes, the Treasury would see a fair return on the investment and save the country millions of pounds.”

Professional Passport's CEO Crawford Temple added: “It makes perfect economic sense but we heard nothing about that in [the chancellor’s Autumn] Statement. Which is very disappointing.”

'Efficiency savings'

Potentially further disappointing to those hoping for a new investment to tackle such schemes, Autumn Statement announced that departments, including HMRC, must identify “efficiency savings in day-to-day budgets.”

Meredith McCammond of the Low Incomes Tax Reform Group (LITRG) sounds concerned.

“[Before his statement], Hunt said ‘all departments will need to re-double their efforts to find savings.’

“But HMRC performance standards and customer services issues are already in need of [improvement], if the tax authority is to play an essential role in the supporting taxpayers and businesses – including your readers,” McCammond told ContractorUK.

'Inflationary pressures'

At Autumn Statement, the chancellor said for the remaining two years of this Spending Review, “we will protect the increases in departmental budgets we have already set out in cash terms.”

Hunt also said resource spending would then grow at one per cent a year “in real terms,” for the duration of the following three years.

“Although departments will have to make efficiencies to deal with inflationary pressures in the next two years, this decision means overall spending in public services will continue to rise, in real terms, for the next five years,” claimed the chancellor, adding:

“ We are going to grow public spending – but we’re going to grow it more slowly than the growth of the economy.”

'Need to watch HMRC's budget carefully'

Ms McCammond, the LITRG’s technical officer warns: “We will need to watch carefully about what any steep falls in their day-to-day budgets means for HMRC.”

The government said on Thursday that £79million is incoming for HMRC over five years to “allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers.”

According to Autumn Statement, the investment into the tax office is forecast to raise £725m in additional revenue over the next five years.

'Make schemes liable'

Steve Packham, co-founder of the Loan Charge Action Group hopes some of that extra tax yield comes directly from those who promote and provide disguised remuneration schemes.

He told ContractorUK: “Where schemes that are not compliant with tax law are being mis-sold, the government and HMRC must take swift and decisive action both to shut them down and penalise them, including making them liable from any tax that is later deemed to be due.”