Evidence shows HMRC has been misleading MPs over the shocking ways they are treating those facing the Loan Charge

The All-Party Parliamentary Group on the Loan Charge have published a dossier of evidence that exposes the reality of the way HMRC is treating people facing the Loan Charge. 

The dossier identifies a number of key themes in HMRC behaviour: wholly unaffordable offers, aggressive communication, threats of bankruptcy, unreasonable delays in HMRC’s responses, inconsistencies in HMRC calculations and unreasonable contractual terms for settlement including punitive levels of interest. All taxpayer rights are ‘surrendered’ where terms of settlement are agreed and signed under the Loan Charge legislation.

The Loan Charge APPG held a packed meeting on Tuesday June 11th to discuss HMRC’s behaviour and their pursuit of individuals impacted by the Loan Charge.

MPs were visibly shocked at the clear pattern of HMRC behaviour towards people facing the Loan Charge. This behaviour was described by tax professionals as “bullying”, “aggressive” and even “openly lying” in some cases.  

Prior to the meeting, the APPG had asked for evidence of how individuals were being treated by HMRC. These were added to the many submissions received as part of the Loan Charge Inquiry.

HMRC and the Treasury have repeatedly stated that HMRC is helpful and has a sympathetic approach to the collection of tax deemed owed under the Loan Charge and in settlement negotiations. The evidence however clearly shows that the reality is very different to what is presented to MPs by HMRC and the Treasury.

The evidence shows that ‘settlement’ is not voluntary: HMRC uses the threat of the Loan Charge to coerce people into settling. Taxpayers are charged exorbitant interest rates and receive no beneficial terms.

Three professional advisers, who are currently representing and supporting many clients facing the Loan Charge, were invited to the APPG meeting. The evidence from Rhys Thomas (WTT), David Logan (TAG Tax) and Chris O’Hara (Harts Ltd) further demonstrated the aggressive and unreasonable nature of HMRC’s behaviour. Examples were given of clients waiting for ten months to receive replies to queries from HMRC, and then being given a matter of days to settle disputed tax or be threatened with the Loan Charge.  

Other key themes were irregularities with calculations, intimidating treatment of people known to be vulnerable and a refusal to engage in discussions over client positions. There were a number of quoted cases of actual clients who have been asked to voluntarily settle spurious amounts of tax not legally owed.  These situations have led many clients to be in a constant state of anxiety, depression and severe worry, with no ability to regain certainty over their tax affairs. Tax experts are also experiencing their own mental health problems by having to provide 24/7 counselling services to distressed clients.

The meeting also heard from Dr Dia Miller who assisted with the development of the APPG survey and the analysis of the results. Dr Miller has a Doctorate in Sociology and offered her skill set to the Loan Charge Action Group in May 2018.   Dr Miller provided expert insight regarding the behavioural psychology that HMRC has used in relation to the Loan Charge and the psychological impact on individuals from HMRC’s treatment of them. People are made to feel worthless, that they have done something shameful, and that their actions are akin to criminality.

The meeting also heard from volunteers who staff the phones of the Loan Charge Action Group helpline and talk to desperate – and in some cases suicidal – people facing the Loan Charge, often as a direct result of HMRC’s communication with them. Blanche Zaph, Claire Swallow, Maria Hauret gave numerous examples of the despair people were feeling: MPs and peers were shocked and appalled to hear the stories and background.

The LCAG volunteer helpline was started in July 2018 when LCAG was increasingly contacted by desperate people, some threatening to take their own life. Loan Charge APPG member Stephen Lloyd MP asked the Treasury in the House of Commons to set up a helpline to assist people in distress. The Treasury and HMRC have refused to do so, merely offering people advice on how to settle their tax affairs, the very thing that has led them to a position of such despair.

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

“MPs have been told, time and again, that HMRC will treat taxpayers facing the Loan Charge in a fair way, taking their circumstances into account – yet the evidence suggests that simply isn’t true. The reality is that HMRC are pursuing people aggressively and unreasonably, with what they must know are unaffordable demands, backed up with the threat that if people don’t settle, they will be hit with the punitive Loan Charge. To make matters worse, it seems HMRC continue to make gross errors in their calculations and keep taxpayers waiting for months for answers whilst expecting taxpayers to respond within days. 

“Ministers so far have utterly failed to realise that HMRC is out of control and are using the Loan Charge powers like robber barons. So we urge the new Treasury Minister, Jesse Norman, to listen and suspend the Loan Charge. We hope to arrange a meeting with Ministers soon and we will be pressing for both that suspension and an independent review, as this appalling affair is blighting the lives of tens of thousands of decent people.”

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

“So far the Treasury have refused to accept the reality of the impact that the Loan Charge is having on thousands of people and families and the mantra has always been to contact HMRC, who will be sympathetic and helpful. It’s clear that this simply isn’t the case and that HMRC are being ruthless and unsympathetic and this is leading to severe distress and anxiety for many. We urge the Government to finally listen and look at the evidence, rather than listening to HMRC, who are not presenting an accurate picture of their behaviour”.

Ross Thomson MP, Vice-Chair of the Loan Charge APPG (Conservative) said:

“The evidence shows that ‘settlement’ is not at all voluntary as presented, but that people are being coerced into settling, with no beneficial terms and exorbitant interest, due to HMRC threatening them with the Loan Charge. This shows why a suspension of the Loan Charge is needed and an independent review. There are many thousands of people who lives are being ruined and HMRC are behaving in a way that is making this much worse. The House of Commons clearly backed a delay and independent review, so now it’s time that the Treasury agreed to do this”. 


Notes to Editors

  1. The dossier is here:  https://www.loanchargeappg.co.uk/wp-content/uploads/2019/06/Loan-Charge-APPG-document-on-HMRC-conduct-June-2019.pdf
  • The All-Party Parliamentary Loan Charge Group (Loan Charge APPG) has been created to bring together parliamentarians of all parties from both Houses of Parliament who have concerns about the nature and impact of the ‘2019 Loan Charge’ which came into 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/.

The Officers of the Loan Charge APPG are as follows:

  • Rt Hon. Sir Ed Davey MP, Chair, MP for Kingston and Surbiton (Liberal Democrat)
  • Ruth Cadbury MP, Vice-Chair, MP for Brentford and Isleworth (Labour)
  • Ross Thomson MP, Vice Chair, MP for Aberdeen South, (Conservative)
  • Rt. Hon. Baroness Kramer, Vice-Chair, (Liberal Democrat)
  • Liz Twist MP, Vice-Chair, MP for Blaydon (Labour)