The All-Party Parliamentary Loan Charge Group have today slammed the ‘report’ issued by the Treasury into the Loan Charge, repeating that the Treasury have acted in bad faith for refusing to conduct a genuine review into the controversial policy and have instead merely published an updated version of the same misleading documents that have been already circulated to MPs and journalists.

In January, the Government was forced to accept a cross-party amendment by Loan Charge APPG Chair, Sir Ed Davey MP. MPs and peers had understood that this would lead to a review of the Loan Charge. However the Loan Charge APPG was then told, in writing and in a meeting, that there would be no such review. The Treasury would merely publish a report ruling out any changes to the controversial Loan Charge, despite the risk to health and wellbeing faced by thousands of people.

Ross Thomson MP (Conservative MP for Aberdeen South) at Prime Minister’s Questions on 6th March 2019, shared the APPG’s feeling that the Treasury was acting in “bad faith”, and that the Prime Minister must now personally intervene and delay the Loan Charge before thousands of lives are damaged. Despite that request, the report was published today confirming that there has been no review and no personal intervention by Number 10. Fifty-five Conservative MPs had also called on the Treasury to conduct a proper and independent review, including taking external submissions. All of this has been ignored by the Treasury and HMRC who are pressing ahead with the Loan Charge regardless.

The Treasury report has been described as a sham, a whitewash and a cynical and misleading attempt at justification of an unjust policy.

Notably, the report repeats the dishonest presentation of HMRC’s supposed pursuit of promoters. An FOI published yesterday confirmed that convictions of these promoters, previously cited by HMRC, had nothing to do with loan arrangements or the Loan Charge.

HMRC responded to a Freedom of Information request yesterday, 25th March, asking about these prosecutions – previously described in the Guardian newspaper as, “more than 15 individuals”. The response shows that none of them relate to arrangements subject to the Loan Charge (FOI2019/00534):

“None of the convictions referred to in the statement above were therefore for offences directly related to arrangements that will be subject to the 2019 (DR) loan charge”.

The report includes a tacit admission that the Loan Charge was introduced so HMRC could avoid having to pursue taxpayers through the normal process, admitting that litigating cases would not be “effective”. This allows HMRC to demand the liabilities they think people owe without any right of appeal and overriding basic protections in the tax systems.

Section 3.85 – “Some have asked that the charge is restricted only to DR loans entered into after 2011 or 2017. The government believes this would be unfair to ordinary taxpayers as it would mean enquiries for earlier years would continue to have to be pursued through the courts or would allow some people to continue to benefit from highly contrived tax avoidance.”

There is also an admission that they are going after people for ‘closed’ tax years:

Section 3.95 – “If someone wants to settle only for years for which an assessment has been made or an enquiry has been opened, they can do so without the benefit of the concessions included in the published settlement terms. Where they do not settle a year for which a loan is outstanding, they will have to pay the charge on DR loans for that year, unless the loan is repaid.”

The report also included an entirely false claim that the APPG had failed, as agreed, to send HMRC taxpayer submissions, stating,

“The Chair of the APPG had volunteered a commitment, when meeting the Chancellor and the Financial Secretary, that these testimonies would all be provided on the basis that the taxpayers concerned would give their consent for HMRC to respond transparently to the many particular personal tax issues that they raised. Unfortunately, that commitment was not sufficiently met, and none of the submissions have been provided on that basis. The government is therefore not able to respond to the detail of those cases in this report.”

In fact the APPG sent 70 submissions to Ruth Stainer of HMRC and made clear that these 70 taxpayers had given permission to have their cases shared with HMRC. It was expected that HMRC would then write to the APPG, as discussed, on each one. HMRC have not written to the APPG about any of these submissions. This is yet more evidence of bad faith and in this case a downright lie that the APPG failed to do what it had agreed.

The report also gives the false impression that the Treasury engaged with the APPG. In fact both they and HMRC refused to give evidence to the APPG’s Loan Charge Inquiry and instead (as with this report) sent out typically misleading statements in a letter.

The Loan Charge is a retrospective charge that comes into effect in April this year and overrides existing statutory protections, allowing HMRC to go back and demand tax for arrangements that were legal. This includes ‘closed’ tax years, where HMRC failed to raise any concerns at the time and missed the statutory time limits in which to challenge tax returns. The Loan Charge was passed into law in late 17 with scant parliamentary scrutiny, a flawed impact assessment and with the Treasury ignoring many submissions that expressed grave concerns about the measure.

The Loan Charge APPG is soon to publish the report of the Group’s Loan Charge Inquiry. Both the Minister, Mel Stride and HMRC were invited to attend the third and final oral evidence session. Both declined to do so.

A detailed response by the APPG to specific points raised can be found here.

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

“The Treasury report fails to deal adequately with the widely held view that the Loan Charge represents a change in the tax law for past years – and offends against the rule of law.

“The Loan Charge is retrospective in many aspects and sets a dangerous precedent as an attack on long-standing taxpayer protections.

“This is not the review that MPs were expecting, or the Prime Minister promised, and MPs on all sides will want to come back to this issue on behalf of their constituents who are being so badly treated.”

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

“It is no surprise at all that the Treasury have tried to fob off MPs and journalists with this whitewash, considering the way they have mishandled the whole Loan Charge scandal from start to finish. It is disgraceful that they have failed to review the impact the Loan Charge will have and are still trying to pretend it will not ruin many lives. Considering that HMRC have now admitted they are aware of a suicide, as well as knowing about the anxiety many people are facing, the fact that they and the Treasury continue to refuse to delay the Loan Charge is a disgrace.

“It’s also outrageous that the Treasury is somehow suggesting we didn’t send HMRC the taxpayer submissions as agreed. As is clear and explicit in the letter to Ruth Stanier when we sent them, we were sharing the 70 submissions where taxpayers had given their permission. We expected HMRC to consider them as discussed and they have failed to do so. To say we haven’t done what we said we would is a downright lie and another attempt to obscure the reality of this awful policy.

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

“We already knew that the Treasury were acting in bad faith, but it is deeply disappointing that they have failed to even consider a pause in the knowledge that the Loan Charge will have a disastrous impact on many individuals and families.

“About the only bits of this ‘report’ that are worth reading are the bits where it is acknowledged that the Loan Charge has been brought in so that HMRC can demand disputed liabilities from people without them having the right to appeal, plus the veiled admission that they did indeed fail to open inquiries and are now demanding tax for closed tax years. Not only does this show the reality of the motivation for the Loan Charge, to wipe away taxpayers’ basic rights to appeal, but it also proves that the Loan Charge is retrospective: to try to pretend otherwise is as nonsensical as it is dishonest”.


Notes to Editors

1. 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

2. 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)