Conservative MPs call on Boris Johnson and Jeremy Hunt to sign pledge to stop the Loan Charge if they become PM

A group of Conservative MPs have called on Boris Johnson and Jeremy Hunt to sign a pledge to suspend the Loan Charge and launch an official review if they become Prime Minister.

The group of MPs – David Davis, Dame Caroline Spelman, Ross Thomson, Bob Neill, Philip Davies, Chris Green, Adam Holloway, Andrew Selous, Richard Benyon, all members and supporters of the All-Party Parliamentary Loan Charge Group – have written to both of the candidates for the Conservative leadership asking them to agree to suspend the Loan Charge, to commission an independent review and to remove the retrospective element.

The Loan Charge is a retrospective charge that came in in April this year and overrides existing statutory protections. It allows HMRC to go back and demand tax for arrangements that were legal at the time. This includes issuing demands for ‘closed’ tax years, where HMRC failed to raise any concerns at the time and missed the statutory time limits in which to challenge a person’s tax returns. The Loan Charge was passed into law in 2017 with scant parliamentary scrutiny, a flawed impact assessment and with the Treasury ignoring many submissions from respected institutions expressing grave concerns about the measure.

The letter from the MPs says, “We are writing to ask you to commit to tackle the Loan Charge Scandal, if you are elected as Conservative Leader and become Prime Minister. The Loan Charge, in its current form, is something that no Conservative Government should have introduced. It clearly undermines the rule and law and, in one fell swoop, wipes away existing statutory taxpayer protections. It undermines one of the most basic principles of taxpayer certainty and is clearly retrospective in its effect”.

In April, the House of Commons passed a motion, in the name of Ross Thomson, for a pause to the Loan Charge and independent review, and 200 Parliamentarians have now signed an open letter calling for this, however this has so far been ignored by Treasury Ministers.

The letter refers to the fact that the Loan Charge “is causing businesses to close, leading people to give up work and some people are being pushed into bankruptcy – meaning they will not work again”. It also describes “the real damage to thousands of individuals and families”. It states, “Already, many people are facing the prospect of financial ruin, of losing homes and pensions, and of having no choice but to go bankrupt. Suicides of people facing the Loan Charge have been confirmed and in one case HMRC has reported itself to the Independent Office of Police Conduct”.

The Loan Charge Pledge, sent to the two candidates for them to sign, reads:

If elected as Conservative leader, I commit that I will suspend the 2019 Loan Charge before the end of September and will order a proper review of it that is independent of HMRC and the Government. I will instruct the Chancellor to tell HMRC that all settlement activity be put on hold and that all settlement agreements, including agreed payment plans, be suspended until this review is completed and Parliament has considered its conclusions. I will instruct the Treasury to implement the conclusions of this review. I further commit to bring forward legislation to remove the retrospective element of the 2019 Loan Charge completely so that it applies from the date of Royal Assent of the Finance Act, 16th November 2017.

Commenting, the Rt. Hon. David Davis MP, Loan Charge APPG supporter and MP for Haltemprice and Howden said: 

“The retrospective Loan Charge is absolutely wrong. The people affected by this policy are not wealthy city slickers, bankers or financial specialists. They are nurses, doctors, locums and care workers. All of whom are suffering mental strain day in, day out. It must be a priority for the next Prime Minister to put right this serious injustice.”

Bob Neill MP, Loan Charge APPG member and MP for Bromley and Chislehurst said: 

“The Loan Charge will have a considerable impact on thousands of individuals and businesses. Common justice indicates that, out of decency and fairness, we should pause this process, ensure there is an independent review of the Charge, and have time to fully and properly digest its findings. That is the pragmatic thing to do, which is why I’m urging both Conservative leadership candidates to sign the pledge.”

Chris Green MP, Loan Charge APPG member and MP for Bolton West said: 

“We want a rules based system of taxation that is seen as fair. Clearly the retrospective nature of the loan charge changes are demonstrably unfair to a group of people that contribute so much.”

Ross Thomson MP, Loan Charge APPG Vice Chair and MP for Aberdeen South said:

“The next Conservative leader has the opportunity to take decisive action on the deeply unfair Loan Charge. Whoever becomes Prime Minister should immediately suspend the process and order an independent review. Hundreds of people in my constituency have been affected by this scandal I am sure they would welcome a cast-iron commitment from both candidates to order a review.”