The survey, conducted by Loan Charge Action Group, examined the age profile of those facing the Loan Charge and within scope of the limited McCann Review into settlement terms, in other words into the amounts HMRC is demanding. In opposition, senior Labour figures, including the Chancellor Rachel Reeves and Chief Secretary to the Treasury James Murray had promised a “genuinely independent review” of the Loan Charge, yet then appointed a former HMRC inspector to merely review settlement terms.
The age of people facing the Loan Charge has a fundamental impact on people’s ability to pay both now and through time to pay (TTP) arrangements and the results of the survey show that a very significant proportion of those affected are either close to retirement or already retired.
- Nearly a quarter (24%) are 65 or over.
- Over 40% (41%) are aged 60 or over.
- Nearly two-thirds (63%) are 55 or over.
The survey highlights several key concerns:
- For those who have retired, income is fixed and people are reliant on pensions, therefore the ability to pay the demands is limited and in many cases, impossible even over an extended period.
- Even for those in their late fifties and early sixties, people’s careers are likely to be limited and therefore any period of repayment has to take this into account. For those within five to ten years of retirement, there is only a short window in which they may be earning at or near their peak. That is not taking into account that many contractors have actually seen incomes fall and opportunities reduce due to the deeply damaging, ill-considered and failing IR35 off-payroll rules.
- Others, especially small company directors, have faced real hardship due to their unfair exclusion from Covid support, something that many have not recovered from, meaning incomes since 2020 have been much lower than previously (and with ongoing debts in many cases).
- Even those currently on good incomes will see their incomes drop sharply on retirement and any payment arrangements based on their current earning levels become unaffordable at that point. Expecting this group to maintain high payment levels into retirement is not realistic, nor fair. Few people in pre-retirement have the option to increase earning capacity to pay off the historic Loan Charge demands.
The Loan Charge Action Group has written to the Chancellor, in advance of the announcement of the McCann Review publication and the Government’s response, making clear that unless demands are slashed, people will simply not be able to pay.
The McCann Review may recommend very long Time to Pay (TTP) arrangements, but in reality this will not make a difference, due to the increasing levels of interest. With late payment interest currently around 8%, even paying at approximately 10% of the outstanding balance per year will have limited impact on the sum HMRC is demanding. Most of the payment will be absorbed by interest, leaving taxpayers trapped in unsustainable, open-ended arrangements with no realistic prospect of ever clearing the debt.
For all groups, enforcing payment demands over even a ten or fifteen year period is life-ruining for the majority of people affected. A considerable proportion of those surveyed will die before that period ends.
What makes this so unfair, is that Minister acknowledge that people were victims of mis-selling. This was exemplified by the recent reports exposing the industrial mis-selling of schemes by accountants and recruitment agencies. It is also profoundly unfair, because Loan Charge demands relate to working years nearly ten or more years ago from when HMRC failed to act, failed to warn people, failed to collect PAYE from agencies/employers and failed to shut down schemes.
The stark reality is that unless the McCann Review recommends very significantly lower payment levels, without interest, many people will simply not be able to pay and this will push hundreds, if not thousands of people, into bankruptcy, every case of which has a cost to the taxpayer. There have already been people pushed into bankruptcy and others forced to sell their main home, despite HMRC giving the false impression this would not happen. With people simply not being able to afford to pay even reduced demands, this risks HMRC continuing to resort to increasingly aggressive enforcement tactics. The whole experience of HMRC’s unyielding and unfair approach to all caught up in the Loan Charge nightmare shows that this is exactly what HMRC will do and that makes further Loan Charge suicides highly likely, if not inevitable. HMRC is well aware (and still aggressively pursuing) several people it knows have tried to commit suicide in some cases more than once.
LCAG has previously written to Ray McCann expressing concern that the very serious restrictions imposed upon him mean he cannot make recommendations that will actually resolve cases and the wider scandal. The Terms of Reference made clear that he cannot recommend anything that will “undermine the fiscal position” meaning that in reality he will not be able to recommend the significant changes needed that could resolve cases.
The Loan Charge Action Group has also raised in the letter the fact that Ray McCann himself exposed the fact that HMRC did deals with large corporates for around 15% of HMRC’s demands. He has made clear publicly that the way HMRC has treated contractors in comparison is uniquely discriminatory. The reality, as the LCAG survey reaffirms, is that people facing the Loan Charge cannot afford to pay anything like the sums being demanded. This is in stark contrast with large corporations, that clearly could have afforded the tax being (and cannot be said to be victims of mis-selling, which is what Ministers have called those caught up in the Loan Charge nightmare).
Unless all those affected (including those who settled under duress) are offered at least the same terms as the large corporations were, then as well as being unfair, the McCann Review will not resolve cases and this will lead to further hardship, breakdowns and an ongoing mental health crisis.
Steve Packham from the Loan Charge Action Group said:
“The new survey shows clearly that the Loan Charge is disproportionately impacting people who are either already retired or in the later stages of their working lives, with limited earning years left and limited remaining years to pay off these demands.
Yet the restrictions imposed on what is supposed to be an independent review means that Mr. McCann will not be able to make the kind of reductions that might resolve cases. With only modest reductions, that ignore the clear failures of HMRC and the appalling mis-selling, many people will simply not be able to afford the demands being made of them and for others, they will continue to be life-ruining.
Ray McCann himself has acknowledged that if people do not have the money, they simply cannot pay the demands and pursuing unaffordable demands is futile, but HMRC has shown no compassion nor commonsense in this regard. The stark reality is that unless the McCann Review recommends very significantly lower payment levels, without interest, many people will simply not be able to pay. The fear is that the McCann Review will merely tinker with settlement figures, yet leaving clearly unaffordable bills in place for many, which will continue the nightmare for thousands of families and alas lead to more bankruptcies, breakdowns and suicides.
As our recent reports show, there was industrial mis-selling of these arrangements by Chartered Accountants, recruitment agencies, tax advisers and promoters, yet instead of our pursuing the perpetrators of the mis-selling, as Rachel Reeves herself called on the previous Government to do, the Labour Government continues to pursue the victims of mis-selling as well as breaking their promise to commission a “genuinely independent review” of the Loan Charge. As well as not resolving cases, this partial and biased review will not lead to the truth about the whole Loan Charge Scandal and the failures and misconduct of HMRC, so there does still need to be a genuine independent inquiry”.
ENDS
Notes to Editors:
1. The Loan Charge Action Group surveyed a large group of those facing the Loan Charge and had responses from over 1000 people. From the survey, the age profile of respondents who are facing the Loan Charge is as follows:
| Age range | Percentage |
| Under 40 | 1% |
| 40 to 49 | 17% |
| 50 to 54 | 19% |
| 55 to 59 | 22% |
| 60 to 64 | 18% |
| 65 to 69 | 14% |
| 70 to 74 | 7% |
| 75 to 79 | < 3% |
| 80 and above | < 1% |
2. The survey also included comments, which can be accessed here.