LCAG Press Release 29th October 2018

 

The Chancellor of the Exchequer, Philip Hammond MP, has been slammed by campaigners for a false statement made live on national television, that wrongly criminalised thousands of people.

On Sunday 28th October 2018, in an interview with Andrew Marr on The Andrew Marr Show, Philip Hammond said that arrangements impacted by the 2019 Loan Charge were, “illegal tax avoidance”.

This is quite simply, completely wrong.  Not only is the term “illegal tax avoidance” a complete contradiction but the schemes associated with these arrangements were legal and there has never been any suggestion that they were not, nor has the Treasury provided any evidence that they were ever illegal.

The Loan Charge Action Group (LCAG), a voluntary organisation set up to represent the thousands of people and their families that are facing ruin from the Loan Charge, have sent an urgent letter to Philip Hammond demanding he correct the record and apologise to those he has wrongly branded as criminals.

This letter has also been sent to all the MPs that have signed a parliamentary motion criticising the Loan Charge, including Stephen Lloyd MP who tabled the motion and called the Loan Charge “immoral”, and to Iain Dale the broadcaster, who called the Loan Charge “outrageous” and “a political crisis in the making”.

The Chancellor’s false statement follows similar false claims made by the Financial Secretary to the Treasury, Mel Stride, in the House of Commons earlier this year.  The false statement was made in response to a question from Conservative MP Peter Aldous during Treasury Questions, when he challenged the government over the bankruptcies the Loan Charge would cause and urged the government to revise the legislation to avoid this.

Mel Stride, who is the minister responsible for implementing the Loan Charge, has failed to provide any evidence the schemes were illegal or that any scheme providers have been prosecuted.  He has failed to respond to a letter from LCAG about his false claim in the House of Commons and perhaps more tellingly, he has also refused an invitation to appear before the House of Lords Finance Bill Sub-Committee to respond to allegations of “severe failures of oversight over HMRC enforcement”, under the broader question of the Powers of HMRC.

It has also emerged that HM Treasury failed to undertake a proper impact assessment of the Loan Charge.  The impact assessment that ministers refer to claims that the package of reforms, of which the Loan Charge is a part, “is not expected to have a material impact on family formation, stability or breakdown”.  This is demonstrably untrue – as many people have experienced severe detrimental impacts on family stability including relationship and marriage breakdown.  Most alarmingly there is a known suicide risk caused by the Loan Charge, yet Philip Hammond and Mel Stride have both failed to answer questions put to them about this during live media broadcasts, something that has been branded as shameful by those affected by the policy.

The Treasury have also failed to understand the impact on the contracting sector and on public services such as the NHS, leading to a total of 95 MPs calling on the government to revise this disastrous and ill-considered policy.

The LCAG letter that has been sent to the Chancellor is attached.

Richard Horsley, Spokesperson for the Loan Charge Action Group said:

“It is extraordinary and disgraceful that the Chancellor of the Exchequer has made a false statement live on national television and in doing so wrongly criminalises tens of thousands of hardworking people who have not broken the law.  Worse still, despite the fact that Philip Hammond knew about the suicide risk caused by the Loan Charge, he chose to completely ignore a question about this, which is shameful and utterly irresponsible.”

“The reality, which is in stark contrast to ministers’ increasingly desperate attempts to mislead, is that the Loan Charge is, as Andrew Marr pointed out, a retrospective tax grab and it will do huge damage to the temporary worker sector and moreover will destroy individuals and families.”

“Rather than misleading people in an attempt to avoid scrutiny, it’s time HM Treasury faced up to the fact that they failed to carry out a proper impact assessment of the Loan Charge and they must stop trying to blindly justify a policy that will not work and will cost lives.  It is time ministers got their facts straight and accepted the real consequences of this disastrous policy and scrapped it”.

 Dr Iain Campbell, Secretary General of IHPA added:

“The Independent Health Professionals Association are deeply concerned at the way the Loan Charge is being wrongly presented by ministers and even more concerned about the harm it will cause people in reality.  Andrew Marr was right to challenge the Chancellor over this unfair retrospective tax grab, but it is wholly unacceptable that the Chancellor ignored the very serious question put to him about the suicide risk that is now known to be presented by the Loan Charge.”

“The Loan Charge is not just 20 years of retrospective taxation, it is a preventable mental health time bomb, but if ministers continue to ignore the reality of what their policy is and what it will do to people, the consequences alas are likely to be serious.  We urge the Chancellor to listen and to act before it is too late”.

Notes to Editors

Media Contact: Mark Sebright – marks@imagenuk.com / 07504 042613

  1. About the Loan Charge Action Group (LCAG): The Loan Charge Action Group seeks to raise awareness and reform of the 20 yrs retrospective 2019 Loan charge introduced by HM Treasury in the 2017 Budget and build a community where affected individuals can find information and support.  The Group does not provide any form of chargeable service or professional advice.  Visit loancharge.info

 

  1. LCAG members’ survey: In summer 2018, LCAG surveyed 500 of its members about the impact of the Loan Charge and the following were the responses as to how it was affecting people:

Depression / Anxiety / Mental health impact:                 68%

Bankruptcy:                                                                    71%

Loss of residence / home:                                              49%

Divorce / Relationship breakdown:                                 31%

Loss of career:                                                                30%

Suicidal thoughts / self-harm:                                          39%

 

  1. Blanket assessments: These are blanket ‘deemed employee’ assessments of formally self-employed public sector workers following the April 2017 IR35/Off Payroll reforms (ITEPA Chapter 10). Thousands of self-employed health workers have found themselves pushed into umbrella arrangements as public bodies seek to avoid paying employers NIC. Were it not for this, the number of doctors and nurses caught up would be small.

 

  1. The Independent Health Professionals Association (IHPA) is a Trade Association representing thousands of independent health care professionals, including locum doctors and nurses working in the NHS. See https://ihpa.org.uk/.

 

  1. House of Commons Early Day Motion 1239: That this House expresses its concern at the 2019 Loan Charge; notes that it is retrospective applying back to 1999; further notes that as a result of the introduction of IR35, umbrella companies were set up and recommended by professional advisers and employment agencies; recognises that the Charge will affect contractors, freelancers and agency workers, including social workers, supply teachers and bank and locum nurses and doctors; notes that employment was not an option and in some cases the company or organisation insisted on those arrangements, including to avoid paying National Insurance; notes that these individuals did not receive sick or holiday pay; believes it is unfair that HM Revenue and Customs (HMRC) are pursuing people who acted in good faith rather than the client organisations, agencies or umbrella companies all of whom benefited significantly; notes that HMRC are aggressively pursuing individuals through Advanced Payment Notices with no independent right of appeal; further believes that the Charge is likely to cause financial distress and bankruptcies, impeding HMRC’s ability to recover these tax liabilities and causing a devastating impact on people; believes that retrospectively taxing something that was technically allowed at the time, is unfair; calls on the government to revise the legislation to avoid significant damage to independent contractors and freelancers in the UK; and calls for the Charge to apply only to disguised remuneration loans entered into after the Finance Act 2017 received Royal Assent.

For the full register of MPs supporting this parliamentary motion see https://www.parliament.uk/edm/2017-19/1239

 

  1. Suicide risk – HMRC and HMT are aware of the suicide risk being caused by the Loan Charge (as reported in the Evening Standard):https://www.standard.co.uk/business/suicide-watch-the-preventable-tax-timebomb-looming-for-freelancers-a3861916.htmlYet so far they have refused to set up a 24 hour helpline for people needing urgent counselling:https://www.hmrcloancharge.info/news/hmrc_please_be_suicidal_during_office_hours/ .