A leaky roof provided a temporary respite for the Treasury before the loan charge debate. However, despite over 70 MPs writing to the Treasury Minister Mel Stride and heart-felt pleas for a delay or review of the Loan Charge 2019, it has been refused.
This means that despite 160 MPs having called for a six-month delay and the motion having been accepted, the loan charge will stay in effect.
Ross Thompson MP, Vice-Chair of APPG said: “I’m disappointed that there will not be a delay or an independent review of the loan charge. Fundamentally [this] has been about the retrospective effect of the loan charge. People – our constituents – who have acted in good faith and now face enormous [tax] bills.”
An illustration of the potential effects of the loan charge was given by Stephen Metcalfe MP, who spoke in the debate about a contractor who had checked with HMRC if his scheme was compliant or not. In 2012, HMRC responded to the checks by saying that there was “no hallmarks of avoidance” and so the contractor continued to employ the scheme and declared it on his tax return. Initially, there was no challenge.
The MP said that it was this damaging sense of security which was given to contractors. Around 50,000 contractors continued with schemes that they believed to be compliant and now 24,000 of these are settling with HMRC.
Had HMRC acted back in 2012, the contractor would have had the opportunity of finding alternative solutions for his payroll needs.
Many contractors have complained that the retrospective nature of the loan charge will destroy their quality of life and that of their families.