The All-Party Parliamentary Group on the Loan Charge has today published their Loan Charge Inquiry report into the 2019 Loan Charge. The dangerous reality of the Loan Charge, with its impact on people’s mental health, is exposed. The MPs have called for a delay and review, given there are lives at risk.  

The report from Loan Charge APPG’s formal Select Committee-style inquiry had over 900 written submissions, held two oral evidence sessions: one with tax professionals including tax advisers, accountants and a tax lawyer and a second with people facing the Loan Charge. As part of the second session, the Inquiry heard from the family of a person who tragically committed suicide due to the pressure from the Loan Charge. The third and final oral evidence session was to be with HMRC and the responsible Treasury Minister, Mel Stride, but they both refused to attend. The Inquiry also included a survey, completed by 1,768 people facing the Loan Charge.

The 91-page report documents the history of loan arrangements and the reasons people entered into such schemes, and examines the conduct of HMRC and the Treasury. The report exposes HMRC’s profound failure to tackle such arrangements over many years, and the cynical way they and the Treasury instead introduced a damagingly retrospective tax.

The report shows that the retrospective Loan Charge essentially tries to bypass normal legal processes and overrides previously sacrosanct statutory taxpayer protections, denying people their legal right to challenging HMRC’s decisions.  The MPs are deeply concerned that the Loan Charge undermines the rule of law, damages enterprise and sets a very dangerous precedent. 

Most shockingly, the Inquiry exposes the devasting consequences the Loan Charge is having on thousands of individuals and their families. Many thousands of people face bankruptcy, with some people already having sold their homes to pay HMRC’s disputed liabilities.  It also shows that HMRC and the Treasury were warned about the suicide risk from early on.

The Inquiry also reveals a cynical campaign of misinformation waged by both HMRC and the Treasury, to try to justify their policy and a cover-up of HMRC’s past failings and current conduct. The Inquiry concludes there has been deliberate misinformation and misrepresentation by both HMRC and the Treasury, in breach of both the Civil Service Code and the Ministerial Code.

The Loan Charge Inquiry’s key findings can be summarised as follows:

  1. The Loan Charge is retrospective, overrides taxpayer protections and undermines the rule of law.  HMRC are pursuing people for ‘closed’ tax years, including in cases where people have only closed tax years. In some cases, HMRC failed to open inquiries when they could have done. In other cases HMRC opened an inquiry, then closed it deeming the tax return acceptable, yet are now re-opening that year retrospectively, pursuing tax.
  2. HMRC have systematically abused the rules around ‘open’ cases, leaving taxpayers confused as to whether a tax year was settled or not, not explaining a taxpayer’s right to seek closure and keeping cases open far longer than is reasonable as HMRC fail to investigate.
  3. In the vast majority of cases examined, these arrangements were not entered as “aggressive tax avoidance”, but after professional advice about complying with IR35 rules and to avoid the administration of a limited company. A substantial number of people, especially in the public sector, did not even understand their pay involved loan payments.
  4. The APPG concludes that real reason for the introduction of the Loan Charge was to bypass normal legal processes and to allow HMRC to collect tax where they failed to do their job.
  5. The original impact assessment published by the Treasury was flawed and inadequate to the point of being negligent, and totally failed to assess the health, social and economic damage the Loan Charge is causing.
  6. Worst of all, the evidence seen and heard by the APPG shows there is a clear risk to the mental welfare of people facing the Loan Charge, including a known suicide risk. The APPG was notified that there have already been suicides of people facing the Loan Charge, including one acknowledged by HMRC.  The Inquiry criticises in the strongest possible terms HMRC’s failure to set up a proper 24-hour counselling helpline, despite knowing the clear suicide risk of people facing the Loan Charge. 
  7. There will be many bankruptcies as a result of the Loan Charge, reducing the estimated tax take and hitting the real economy. Some people will be forced to sell their homes and some people have already sold their homes.
  8. There has been a cynical campaign of misinformation waged by HMRC and the Treasury. The Loan Charge Inquiry has concluded that HMRC officials may well have breached the Civil Service Code and that Financial Secretary to the Treasury, Mel Stride, may have broken the Ministerial Code.

The key recommendations of the Loan Charge Inquiry are:

  1. An urgent 6-month delay and suspension of the Loan Charge and all associated settlements
  2. An independent Review into the Loan Charge led by an experienced tax judge
  3. An immediate policy change ahead of the Review to remove ‘closed years’ (also known as ‘unprotected years’) from the scope of Loan Charge entirely
  4. A return of taxpayers’ statutory rights to defend against HMRC’s enquiries into ‘open years’
  5. For Treasury Ministers to change policy and instruct HMRC to offer the option of a 10% full and final settlement rate on any open/protected years for any taxpayers who wish to simply draw a line under the past and move on with their lives
  6. The ending of the application of late payment interest rates, on any tax demands relating to tax years before 2015/16
  7. An automatic 10-year Time-To-Pay (TTP) for all taxpayers, without reference to income levels
  8. An urgent 24-hour counselling helpline for those facing the Loan Charge

In addition, the APPG backs the recommendation of the House of Lords Economic Affairs Committee for a ‘Powers Review’ into HMRC, and believes there must be an independent investigation into the conduct of HMRC with regard to the Loan Charge. 

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

“Our Inquiry demonstrates the devastating consequences of this draconian policy. The lives of thousands of individuals and their families are being damaged by this retrospective tax, that itself breaches the rule of law. Our report concludes the Loan Charge was brought in to cover up HMRC’s own failures.

“Prior to the Loan Charge Inquiry there was little evidence about the reality of the Loan Charge. Now the evidence exists there is clear risk of harm to people. The Government must do the only responsible thing and delay the Loan Charge and announce an independent review into it.”

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

“The Loan Charge Inquiry received over 900 submissions as well as holding two oral evidence sessions. The evidence we have received clearly exposes the reality of the Loan Charge and the damage it will do to people and how different this is from the false picture being painted by HMRC and the Treasury.

“The callous and cynical way that Ministers and HMRC have sought to mislead people is a disgrace and something that in itself needs a proper investigation. Knowing the serious risk to people, the Government must now announce an immediate suspension of the Loan Charge and any settlement discussions and a proper and independent review into the dreadfully ill-considered and deliberately mispresented policy”.

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

“The All-Party Parliamentary Loan Charge Group wish to thank the hundreds of people who sent evidence to the Loan Charge Inquiry. This is evidence that HMRC and the Treasury should have gathered and considered to show the real impact of the policy. Now this evidence and the Loan Charge Inquiry report is in the public domain, the only responsible thing to do is to immediately suspend the Loan Charge and announce an independent review. With lives at risk and with suicides already confirmed, this is the only responsible thing to do and I urge MPs to support our motion on Thursday to do this”.      


Notes to Editors

  1. The full Loan Charge Inquiry Report is available for download here:

  • 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 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 and Twitter @LoanChargeAPPG. The Loan Charge APPG is an officially registered Parliamentary Group, as described on the UK Parliament website

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)