EXPOSED: “You owe us beers”

Freedom of Information responses show that Morse Review was NOT independent and HMRC and the Treasury interfered from start to finish

The Loan Charge APPG, one of the largest All-Party made up of 223 MPs and peers, has published a damning report based on the evidence revealed by Freedom of Information requests that clearly shows that the Morse Review into the Loan Charge, presented as ‘independent’, wasn’t and that HMRC and Treasury officials interfered throughout.

The evidence is some 376 pages of internal emails (link1, link2) and 670 pages of the attachments to those emails (link3 , link4) that clearly shows direct interference in the review by HMRC and the Treasury as well as an inappropriately close relationship between the review team, made up of HMRC and Treasury staff and the two Governmental bodies whose policy the Morse Review was scrutinising. In one extraordinary exchange, the Review Team member of staff who is a senior Treasury official agrees to buy beers for the Chancellor’s press secretary. In this exchange, when offering to help deal with incoming press enquiries directed at the review, about the report, the Chancellor’s own press secretary was asked to find someone to help with this and tells the Loan Charge Review “Cool. Yes we can help. You owe us beers”. The reply from the supposedly independent Review Secretariat is “Great really appreciate it. And happy to line up the beers”.

The Morse Review has been presented by the Government as independent. It was titled as the “Independent Loan Charge Review” and has been used recently by the Government to justify making no further changes to the Loan Charge beyond those which the review recommended, despite there being thousands of people still facing huge bills for tax that has never been legally proven to be due from them and despite the ongoing risk of suicides, as well as bankruptcies.

However, internal documentation revealed in a two Freedom of Information (FOI) requests exposes a clear attempt by HMRC and the Treasury, including senior HMRC management, to direct the review from the outset. The Treasury sought to influence the choice of ‘independent experts’ used to advise the review and HMRC sought to change the report before publication. It had already been exposed that one of the experts appointed later admitted that she did not have any detailed understanding about self-employed schemes and therefore they were unable to comment on those schemes; an extraordinary admission for someone whose advice was being relied on. The Treasury queried whether any expert who had appeared before a Select Committee should be appointed as “it means they are slightly compromised”.

The Loan Charge APPG make clear they are making no criticism of Sir Amyas Morse, nor for his delivery of this report in what was an unreasonably short timeframe considering the scale of the evidence and with a team made up entirely of HMRC and Treasury staff. Instead, the APPG make clear that it is the interference by HMRC and the Treasury that has rendered the already flawed report conclusions as unsound.

Overall, the information revealed by the emails clearly shows that the review fails basic tests of what would constitute an independent review into a Government policy.

The key points revealed are as follows:

  • HMRC and the Treasury sought to influence the review from before the start of the review until the date that the final report was issued.
  • The Review secretariat team had an improperly close working relationship with HMRC and Treasury staff.
  • There was clear cooperation and collaboration between the Treasury/HMRC and the Review over dealing with the press. In at least one case, lines were provided for the review team/Sir Amyas to use. Extraordinarily, the Review secretariat discussed responses to press approaches with the Chancellor’s press secretary. They also received and used suggestions from the Treasury as to how to respond to the press.
  • The Treasury sought to influence the choice of experts appointed to advise the review, suggesting that those who have spoken before Select Committees should be avoided. Notably, experts appearing before Select Committees who have been critical of the Loan Charge and of HMRC. This can be seen to be an attempt to steer the review away from any experts who were known to be critical.
  • The Review secretariat team afforded HMRC and the Treasury privileged early access to the report’s conclusions. This early access was not extended to other interested parties who were not given any opportunity to raise concerns on its factual accuracy.

Each of these points is based on the evidence contained in the emails disclosed through the FOI requests.

Previously the Loan Charge APPG published a report exposing that that the Treasury-commissioned Morse Review came to a flawed and unjustified conclusion. The Morse Review claimed that the “law was clear” from 2010 when that is not the case according to tax experts. The flawed conclusion now makes more sense considering the clear lack of genuine independence and the fact that HMRC interfered with which experts should be appointed to advise the review. This appears to have prevented those experts who have been critical of the Loan Charge from being involved.

On Wednesday, the Government is facing a challenge from many MPs, including members of the Loan Charge APPG, who have tabled amendments to go further than the flawed Morse Review. New Clause 31, tabled by a cross party group of MPs including APPG member David Davis and APPG officers and members seeks to remove the Loan Charge for everyone before 2016 apart from those who deliberately evaded tax.

Commenting, the Loan Charge APPG Co-Chairs said:

Sir Ed Davey MP, Co-Chair of the Loan Charge APPG (Liberal Democrat):

“The information exposed by Freedom of Information responses clearly shows that the review commissioned by the Government and presented as independent was, in reality, nothing of the sort. There was a clear attempt by HMRC and the Treasury to interfere and to direct it from start to finish. We make clear we make no criticism of Sir Amyas Morse, but his review was set up in such a way so as to make an independent review impossible. There was clear and inappropriate interference from the two Governmental bodies which were being reviewed. The flawed conclusion of the review must be rejected and Parliament must seek to resolve the Loan Charge Scandal properly.”

Ruth Cadbury MP, Co-Chair of the Loan Charge APPG (Labour):

“We now know that the Chancellor’s own press secretary was involved in dealing with press enquiries to the review and that there was an inappropriately close relationship between the review Secretariat team, made up of Treasury and HMRC staff, and the Treasury and HMRC, whose policy the review was scrutinising. This shatters any illusion of genuine independence and the fact is that this review fails even basic tests of how an independent review should operate. Now it is clear that the conclusion of the Morse Review cannot be relied on, it is up to MPs to do the right thing and to remove the retrospective Loan Charge for everyone other than those for whom HMRC can prove they were deliberate tax evaders”.

Sir Mike Penning MP, Co-Chair of the Loan Charge APPG (Conservative):

“Colleagues from across the House of Commons have consistently expressed their opposition against retrospective legislation, but the now discredited Morse Review recommends that retrospection back to 2010 should remain. This recommendation is flawed and it doesn’t address the basic injustice of this clearly retrospective legislation. So we hope that finally Ministers will agree that the retrospective nature of the Loan Charge is wrong and accept the amendment to the Finance Bill to tackle this and allow thousands of people to have the chance to defend themselves in the normal way they are entitled to within our legal system”.

[Ends]

Notes to Editors

1. The All-Party Parliamentary Loan Charge Group (Loan Charge APPG) consists of parliamentarians of all parties from both Houses of Parliament who have concerns about the nature and impact of the ‘2019 Loan Charge’ which will come in to force on the 5th of April 2019 and also concerns about the wider context of fairness of tax legislation and HMRC’s conduct in enforcing it. See www.loanchargeappg.co.uk and Twitter @LoanChargeAPPG. The Loan Charge APPG is an officially registered Parliamentary Group, as described on the UK Parliament website www.parliament.uk/about/mps-and-lords/members/apg/.

2. The Officers of the Loan Charge APPG are as follows:

  • Rt Hon. Sir Ed Davey MP, Co-Chair, MP for Kingston and Surbiton (Liberal Democrat)
  • Ruth Cadbury MP, Co-Chair, MP for Brentford and Isleworth (Labour)
  • Sir Mike Penning MP, Co-Chair, MP for Hemel Hempstead (Conservative)
  • Rt. Hon. Baroness Kramer, Vice-Chair (Liberal Democrat)
  • Rt Hon Sammy Wilson MP, MP for East Antrim, Vice-Chair (DUP)

3. The APPG’s Loan Charge Inquiry Report was published in April 2019 and can be found on the Loan Charge APPG’s website http://www.loanchargeappg.co.uk/wp-content/uploads/2019/05/Loan-Charge-Inquiry-Report-April-2019-FINAL.pdf

4. The APPG’s report on the Loan Charge FOI requests – Exposing HMRC interference in the supposedly ‘independent’ Loan Charge Review: The Truth as revealed by Freedom of Information was published on 29th June 2020 and can be found on the Loan Charge APPG’s website http://www.loanchargeappg.co.uk/wp-content/uploads/2020/06/2020-06-29-Loan-Charge-APPG-report-on-the-FOI-exposing-that-the-Morse-Review-wasnt-independent.pdf