On Thursday 4 April, MPs debated the 2019 Loan Charge in the House of Commons Chamber.
Rushanara Ali MP highlighted HMRC's admission of failure to be transparent over disguised remuneration schemes, which could have prevented the misery inflicted on people who now face retrospective charges of tens of thousands of pounds. You can watch her intervention in the Chamber here.
Rushanara has been campaigning for urgent action from the Government on loan charges. She has signed an open letter to the Financial Secretary to the Treasury, Mel Stride MP urging him to delay the Loan Charge which you can view here. Rushanara has also supported an Early Day Motion expressing concern at the Loan Charge and its retrospective application, you can read the full Early Day Motion here.
Commenting further on the Loan Charge, Rushanara Ali MP said:
"Government estimates suggest that the Loan Charge, due to come into effect on the 6th of April this year, will affect up to 50,000 individuals. This means that 50,000 people who are supply teachers, nurses, IT consultants and even doctors, will face loan charges, which in some cases involve payment of hundreds of thousands of pounds to HMRC. This policy has been devastating for some of my constituents, who now face very large bills, up to £150,000 each. I was saddened to find out that three of my constituents face bankruptcy, as a result of this charge.
The Treasury says that the Loan Charge is not a retrospective policy, however, the recovery of lost tax certainly is retrospective in effect. It is the retrospective application of this charge back to 1999 that is causing my constituents and people across the country to suffer extreme stress and financial pressure. People entered into these arrangements, often after receiving professional advice, and some were pushed into it by employers and contracting organisations.
I urge the Government to call a moratorium on tax demands, pending an inquiry. It is simply unfair and unjust for the state to impose heavy taxes, out of the blue, on honest hardworking people who thought, on expert advice, they were doing the right thing.
Innocent people are being punished, whilst HMRC fails to collect the taxes owed by large corporations. It goes against natural justice.
And I join colleagues in calling on the Government to amend the legislation, so that the charge only applies to disguised remuneration loans entered into after the 2017 Finance Act. This is not about reversing the policy altogether, it is about the problematic and unfair way that it has been imposed.
As our economy develops and more and more people work as freelancers or with independent contractors, we must ensure that they don’t continue to face damage because of unclear legislative changes to tax policy that were not made clear enough at the time".