Taxmen going after ‘easy targets’ with devastating new loan charge, MP warns
- Credit: James Bass
A new tax is having a “devastating” effect on vulnerable people who are being pursued because they are “easy targets”, a Suffolk MP has said.
The 2019 “loan charge” has been brought in by HM Revenue and Customs (HMRC) to recover unpaid taxes from disguised renumeration schemes involving loans.
It is designed to claw back money from as long ago as 1999 from those who have purposefully evaded tax, often richer people or companies with accountants and financial advisors.
But instead of targeting wealthy tax evaders, Waveney MP Peter Aldous told a House of Commons debate: “My first concern is that HMRC is pursuing the easy targets—individuals who have acted in good faith, are not well off and do not have their own bespoke financial advisers and accountants.”
He said he had one constituent was was “at his wits’ end”, adding: “His family life has been turned upside down and, as he sees it, he has no alternative but to declare himself bankrupt.
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“The people affected have become a target.
“They are vulnerable people. They are not well paid and do not receive many of the benefits and protections that payroll employees do - sick pay, holiday pay and maternity and paternity leave.”
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In the loan charge debate at Westminster Hall on Tuesday, November 20, Mr Aldous also raised fears that many people were being pursued retrospectively over their earnings.
“It undermines the cornerstone of taxation, which is that a government should not seek to impose or increase a tax charge on income earned, gains realised or transactions concluded at a time before the legislation was announced,” Mr Aldous said.
“What I and, I believe, all honourable members in the chamber are concerned about is that a group of people—often vulnerable people—who have acted in good faith are now being asked to bear an excessive burden, which will have a devastating impact on their lives and their families’ lives.”
His concerns were backed up by a number of other MPs in the House of Commons.
The Loan Charge Action Group, set up to campaign against the new measure, also thanked MPs who took part in the debate.