Senior members of the UK’s ruling party have weighed into the row over the tax authority’s controversial loan charge, criticising the government for the “retrospective” policy and backing calls for an urgent delay.
The charge will see at least 50,000 contractors, who avoided national insurance and income tax, pay tax on up to 20 years of income in a single financial year, and comes into force on Friday.
The policy has attracted criticism from tax and accounting bodies, MPs, peers and lawyers for the devastating impact it is having on thousands of people, and its erosion of statutory taxpayer protections. A number of reported suicides have been linked to the charge and there are fears it could lead to mass bankruptcies.
In a parliamentary debate on Thursday, dozens of MPs from several parties spoke in favour of a motion tabled by Conservative backbencher Ross Thomson demanding a six-month delay to the policy and an independent inquiry into the charge.
The motion was based on the conclusions of a recent inquiry held by the Loan Charge All-Party Parliamentary Group, of which Mr Thompson is vice-chair.
Justine Greening, a former Treasury minister, described the loan charge as unfair. “HM Revenue & Customs have simply got it wrong and the balance that is being struck is in the wrong place,” she said. “The approach HMRC has taken has been punitive rather than proportionate.”
She also criticised the lack of action taken by the tax authority to pursue the scheme providers, some of which are still operating.
David Davis, former Brexit Secretary, described the loan charge as “a tax policy that is destroying families, homes, mental health and even lives”.
He criticised successive chancellors for having “blurred the distinction between tax avoidance and evasion”, and given too much judgment to HMRC to work this out. “How does an ordinary lay person forecast what HMRC will decide in 10 or 20 years’ time?” Mr Davis asked.
Zac Goldsmith, MP for Richmond Park, said that the tax authority had been “tone-deaf” in communicating with individuals. “Some of my constituents who entered schemes based on good faith and professional advice, are being punished retrospectively and face utter ruin,” he said.
Andrew Rosindell, MP for Romford, took issue with the fact the loan charge had been brought in under a Tory government.
“This is a deeply unconservative action by a Conservative government,” he said. “The mood of the house is clear, nobody wants to see this loan charge implemented and the government needs to act and act immediately.”
Before the debate could be concluded, the session was unexpectedly suspended because of a water leak that flooded the Commons chamber.
The session will resume on April 11 — after the policy is due to come into effect. Members of the Loan Charge APPG have written to the financial secretary, Mel Stride, to petition him for a delay.
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