MPs pass House of Commons motion calling for a scrapping of “unjust and retrospective” Loan Charge

MPs voted unanimously for a House of Commons motion to scrap the controversial retrospective Loan Charge by making it apply only from 2017, the year it was brought into law, not back as far as 2010 as the Government currently proposes.

In spite of the Covid-19 crisis and restrictions in force on attendance in the House of Commons, on the 19th March 2020 dozens of MPs attended the debate on a motion put forward by David Davis, Ruth Cadbury (a Co-Chair of the Loan Charge APPG) and Dr Julian Lewis and supported by the Loan Charge APPG. Over twenty MPs spoke in support of the motion and over forty signed the motion before it was tabled. MP after MP spoke in support of the motion, following David Davis’s introductory speech which powerfully laid out the case for why the Treasury commissioned Morse Review was wrong in concluding that the Loan Charge should remain in force from 2010.

Dr Julian Lewis MP (a member of the APPG) made an early intervention to highlight the leading roles played by both Labour and Liberal Democrats in trying to put this injustice right. Dr Lewis spoke about how he had previously tabled a question to the minister asking why war widows are not being granted pensions retrospectively, in contrast to the treatment of those being hit retroactively by the Loan Charge. He summed up his speech by saying, “I come to the conclusion that HMRC fell down on the job. It was asleep at the wheel. It bullied the victims, and let the villains who created these schemes get away with it. HMRC in this case is not just a bully; it is a negligent bully. The Government should know when they are beaten both morally and intellectually, stop flogging this dead horse and finally do the right thing.”

The Loan Charge APPG published a report prior to the debate exposing that that the Treasury-commissioned Morse Review came to a flawed and unjustified conclusion. Another Co-Chair of the Loan Charge APPG, Sir Ed Davey, laid out the arguments from the Loan Charge APPG’s report and clearly explained to the House of Commons why the Morse Review had got it wrong.

Other members of the Loan Charge APPG contributed to the debate, including: Mike Amesbury MP, Fleur Anderson MP, Bambos Charalambous MP, Rt Hon David Davis MP, Allan Dorans MP, Peter Dowd MP, Patrick Grady MP, Neale Hanvey MP, Sally-Ann Hart MP, Paul Holmes MP, Dr Rupa Huq MP, Anthony Mangnall MP, Christian Matheson MP, Stephen Metcalfe MP, Sarah Olney MP, Matt Rodda MP, Chris Stephens MP, Bob Stewart MP and Rt Hon Sir Desmond Swayne MP.

Wrapping up the debate, David Davis MP, a long-standing member of the Loan Charge APPG, paid tribute to the APPG, its officers and the Loan Charge Action Group, as well as the MPs who participated in the debate. David Davis MP also contrasted the treatment of people facing the Loan Charge to that of large companies such as Vodafone and Google whom he suggested have done deals over their tax rates. Concluding, he said, “There is only one answer in this debate. I am afraid that Amyas Morse is wrong. The answer is laid out in our motion. HMRC should cease action on all cases before July 2017, and then justice will be done.”

The debate motion was passed unanimously and it was resolved:

That this House believes that the Loan Charge is an unjust and retrospective tax; notes that the law on the Loan Charge was not settled until 2017; and calls on HMRC to cease action on loans paid before 2017.

The motion expresses the will of the House of Commons and doesn’t force the Government to act, but with such strong cross-party opposition to the retrospective nature of the Loan Charge, the pressure increases on the Government to go further than they currently plan to when amending the Loan Charge in the forthcoming Finance Bill.

Speaking during the debate, the Loan Charge APPG Co-Chairs said:

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

“This is a time of incredible worry for most people in this country for their loved ones, their neighbours and themselves, and many of our constituents—perhaps most of them—are facing catastrophic and even absolute loss of income. While this debate is wholly unrelated to the covid-19 virus, for the victims of the loan charge scandal, who are already worried about their financial futures, the coronavirus outbreak only heaps more agony on top.”

“The new suggested cut-off date of 29 December 2010 is based on the law being clear, yet we know now that this was not the case. If the law was clear then why did we need the loan charge and another change in legislation in 2016?

“Is applying the loan charge from 2010 justified and proportionate? The answer to that from the all-party group is, no, it is not.

“I urge the Government to listen to the strong opposition to this retrospective, unjust and unfair tax and, quite simply, to do the right thing”.

Ruth Cadbury MP also commented outside the debate:

“The reality is that the Morse Review recommendations simply do not properly resolve the Loan Charge scandal and still leave thousands of people and families facing huge and, in many cases, simply unaffordable bills for tax that has never been legally proven to be due”.

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

“It is the nature of this debate that it has brought those on all sides together. For people who normally are not necessarily in total agreement on economic and tax affairs, this has brought us together.

“There can be no doubt that the legislation on which Morse was relying does not apply to many people, because they are just not covered by that legislation. It is not a question of debate; it is just a fact.

“The whole reason why this has been such a big issue and has united the House is that the loan charge is retrospective, and that is unfair and wrong”.

Sir Ed Davey MP also commented outside the debate:

“We call on the Government to do the right thing and make the Loan Charge only apply prospectively and not retrospectively. Only this change can restore the rule of law”.

Sir Mike Penning MP, Co-Chair of the Loan Charge APPG (Conservative) was unable to attend the debate, but commented:

“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, which is not acceptable.

“The only fair thing to do is to make the Loan Charge apply from when it was introduced, not retrospectively. So we hope that Ministers will now look at our report and will agree finally that having any retrospection of the Loan Charge is wrong and amend the Finance Bill to this effect”.

[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)
  • Andrea Jenkyns MP, MP for Morley and Outwood, Vice-Chair (Conservative)
  • Rt Hon Sammy Wilson MP, MP for East Antrim, Vice-Chair (DUP)

3. The official transcript of the debate is available in Hansard https://hansard.parliament.uk/Commons/2020-03-19/debates/D73627C3-68B1-4CD1-B8F5-369C15708A95/LoanCharge2019SirAmyasMorseReview

4. 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