LCAG Press Release 6th November 2018


The Chancellor of the Exchequer, Philip Hammond MP, has been slammed by campaigners, accountants and lawyers for a false and defamatory statement made to the Treasury Sub-Committee, when he claimed that arrangements impacted by the 2019 Loan Charge were tax evasion, when they were nothing of the sort.

The Chancellor was appearing before the House of Commons Treasury Committee, who are doing an inquiry into the Budget 2018. He was responding to questions from Alison McGovern MP who challenged him about what she called the “Loan Charge Fiasco”. She raised the fact that he criticised retrospective legislation, but has introduced the Loan Charge, which is exactly that.    

The arrangements now subject to the Loan Charge have always been legal and were not challenged at the time, with HMRC knowing about them for years. There has never been any suggestion that the schemes were tax evasion, nor has the Treasury provided any evidence that they were not legal.

The Loan Charge Action Group (LCAG), that represents those facing ruin from the Loan Charge, have sent an urgent letter to MPs asking them to write to the Chancellor insisting he withdraw his false comments.   

The Chancellor’s incendiary and incorrect statement follows a similar claim he made in an interview with Andrew Marr on the Andrew Marr Show on Sunday 28th October. Philip Hammond said that the arrangements involved were “illegal avoidance” and Mel Stride, who is the Minister responsible for implementing the Loan Charge, also wrongly claimed the schemes are not lawful in what appears to be a campaign of deliberate deceit by Treasury Ministers, to try to justify the discredited Loan Charge.  

The Treasury have failed to provide any evidence the schemes were illegal or that any scheme providers have been prosecuted. Mel Stride failed to respond to a letter from LCAG about his statement and also refused an invitation to appear before the House of Lords Treasury Sub-Committee.  

It has also emerged that the Treasury failed to do a proper impact assessment of the Loan Charge. The impact assessment 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 patently not true – as many people have experienced severely detrimental impacts on family stability including relationship and marriage breakdown. There is also a known suicide risk caused by the Loan Charge, yet both Philip Hammond and Mel Stride have both failed to answer a question about that live on broadcast media, something that has been branded as shameful by those affected by the policy.  

The Treasury also have failed to understand the impact on the contracting sector and on the NHS, leading to a total of 97 MPs calling on the Government to revise this disastrous and ill-considered policy.

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

“Even in the context of the disgraceful campaign of misinformation by the Treasury and HMRC about the Loan Charge, it is shocking and appalling that the Chancellor of the Exchequer has made a false statement, using Parliamentary Privilege, to the House of Commons Treasury Sub-Committee.” 

“The fact is that Loan Charge arrangements were legal, which is why the Treasury had to introduce retrospective legislation, something that is against international legal conventions, to pursue them. HMRC knew about the arrangements and did nothing for years as people submitted their tax returns.”  

“As the Chancellor and Treasury know, tax avoidance, seeking to minimise tax within the law, is perfectly legal. This is wholly different from tax evasion, which is a crime. In deliberately and wrongly calling Loan Charge arrangements tax evasion, he wrongly criminalises tens of thousands of hardworking people who never broke the law. Already there are people reporting suicidal thoughts, this shameful statement will only cause more distress.”   

“We call upon all decent MPs to slam the Chancellor’s shoddy attempt to rewrite the law and to mislead people, including MPs. It is simply not acceptable for the person running the economy to make false statements and he must be forced to correct the record”.  

Tax experts and lawyers have lined up to attack the Chancellor for his false statement and to set the record straight:  

Robert Venables QC Old Square Tax Chambers and a leading tax QC commented:

“The statements by the Chancellor were completely misconceived and plumb wrong, as well as highly defamatory of many innocent people.

“The Chancellor is merely a politician and not a tax expert.  In these matters, he is literally just another ignorant politician.  As Chancellor, he ought to have available to him the expertise of competent civil servants.  It is quite clear that on this occasion the requisite expertise and backup to inform his replies were inexplicably lacking.”

“The Chancellor has confused two fundamentally distinct concepts, that of tax evasion, which is criminal, and that of tax avoidance, which is not.  HMRC would not be so foolish as to confuse tax evasion and tax avoidance.”

“Contractors who took out employment related loans were not guilty of tax evasion.  Nor were they guilty of tax avoidance. Such contractors were fully taxable on the value of the benefit (if any) conferred on them by the loans.  No tax has been avoided.”

“The Chancellor has completely misunderstood the circumstances of those on whom HMRC is trying to impose the 2019 Employee Loan Charges.  The loans were loans and not outright payments which the parties fraudulently pretended were loans. If there really had been outright payments disguised as loans, then they would already be taxable and no further legislation would be needed.  HMRC is seeking to impose the 2019 Loan Charges precisely in those cases where the loans were genuine loans. They are seeking to tax the borrowers as if they had received not loans but outright payments.”

“Like the Chancellor, “I am astonished.”  When reading the transcript, I was reminded of the saying of Dr. Johnson: “It is like a dog dancing on his hinder legs.  It is not done well. One is surprised to see it done at all.” One is not surprised that a politician ignorant of the fundamentals of our tax law should utter such balderdash.  One is surprised that he should deign to pontificate on such matters without at least having received and mastered an accurate brief”.

“The Chancellor’s replies do explain something: how legislation so unjust, arbitrary and repugnant as the 2019 Loan Charges should have been voted through by clueless politicians who had no idea what they were doing.”

Keith Gordon, Barrister, Temple Tax Chambers said:

“The precise definition of “tax avoidance” is notoriously vague and imprecise.  However, it has long been established that it refers to arrangements that seek to reduce a person’s tax liability by using perceived loopholes in the law.  The key point is that, with avoidance, there is no intention to pay less tax than the law demands, merely to arrange one’s affairs in a more tax-efficient manner so as to reduce the amount payable under the law.  Accordingly, tax avoidance must be contrasted with evasion which is, quite simply, deliberately paying less tax than one knows to be due under the law. Evasion is a criminal offence.”

“The disguised remuneration arrangements undoubtedly fall within the former rather than the latter category.  They therefore cannot constitute evasion or any other epithet suggesting illegality or otherwise unlawful conduct.”

“In my mind it is extremely regrettable that both the Chancellor and Financial Secretary seem to be using terms such as “evasion”, “illegal” and “unlawful” in relation to DR schemes when defending the 2019 loan charge.  One possible explanation is that they are themselves confused about the meaning of these terms or are being deliberately mis-briefed by officials who will clearly be aware of the distinctions. Another possibility is that the ministers are using the wrong terms intentionally so as to try to regain the moral high ground and deflect criticism from the fact that the disguised remuneration arrangements flourished because of inaction (and therefore tacit acceptance) by HMRC for nearly 20 years.  If, as the ministers are so keen to point out, HMRC were always of the view that these arrangements did not work, then why did HMRC fail to take action at the time, before statutory time limits prevented them from doing so?”

Phil Manley of DSW Tax Resolution said:

The Finance Minister and the Chancellor have now both repeatedly declared the use of tax avoidance schemes to be illegal. This claim is quite simply incorrect. Avoidance has always been legal with tax evasion being illegal. This basic fact has been delivered by HMRC themselves to their own employees (including myself in my time at the department) as part of the Inspector Training Course. All HMRC internal training manuals therefore confirm this point. The HMRC website further confirms. There is therefore no doubt on the matter nor any alternative interpretation available.”

“Indeed, if avoidance was illegal then there would not be any requirement for the 20-year retrospective loan charge legislation which is effectively in existence to sweep up the fact that HMRC failed to undertake the appropriate enquiries at the time as statute allowed.”

One can only assume that, given this incorrect statement regarding legality has been repeated a number of times, that this is a purposeful manoeuvre agreed as policy.”

“It is depressing to state that after seeing HMRCs behaviour deteriorate over the years that this does not surprise me. The HMRC charter promise to taxpayers to ‘respect you and treat you as honest’ has never seemed so far away as it does today”.

Graham Webber of contractor tax specialists WTT Consulting said:

“The Government continues to ramp up the misleading rhetoric and to reinvent the past in their increasingly desperate attempts to justify the retrospection imposed by the loan charge.”

“Mr Hammond now claims that the use of loans was “evasion”. We all know that evasion is illegal activity. Presumably this now clears the way for the Government to use their criminal powers to arrest and bring to book all those promoters and intermediaries who profited from the arrangements that they claimed were “compliant, legal and supported by leading QCs”? I suspect not. I very much suspect that the action against the users of such arrangements will continue, partly because they remain an easier target. It is now therefore more important than ever that contractors join together through endeavours such as WTT Big Group and LCAG”.

Notes to Editors

Media Contact: Mark Sebright – [email protected] / 07504 042613



  • About the Loan Charge Action Group: The Loan Charge Action Group seeks to raise awareness and reform of the retrospective IR35 tax 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


  • 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%


  • The Independent Health Professionals Association is a Trade Association representing thousands of independent health care professionals, including locum doctors and nurses working in the NHS. See


  • 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 full register of MPs supporting Parliamentary motion see