Home Financials 100 MPs now support revision of Loan Charge legislation

100 MPs now support revision of Loan Charge legislation


100 MPs now support revision of Loan Charge legislation

The number of MPs backing an Early Day Motion to amend the Loan Charge legislation has risen to 100 on Wednesday, a day after lobbyists slammed Chancellor of the Exchequer Philip Hammond, accusing him of defamation after he made a statement to the House of Commons Treasury Sub-Committee claiming that arrangements targeted by the new legislation were tax evasion.

The Loan Charge Action Group, a lobby group of over 2,000 affected contractors, said in a press release: “Even in the context of the disgraceful campaign of misinformation by the Treasury and HMRC about the Loan Charge, it is shocking and appalling that the Chancellor of the Exchequer has made a false statement, using Parliamentary Privilege, to the House of Commons Treasury Sub-Committee”.

Tax evasion refers to the act of breaking the law in order to pay less tax.  Campaigners and lawyers dispute that the loan arrangements targeted by the new rules were ever unlawful, arguing that HMRC has never successfully defeated them in court and that the new rules were crafted out of the need to close a regulatory “loophole”.

On Wednesday the number of MPs to have signed a parliamentary Early Day Motion backing a revision to the Loan Charge legislation rose to 100.  The Early Day Motion, tabled by Lib Dem MP for Eastbourne Stephen Lloyd, calls for a revision to the legislation to “avoid significant damage to independent contractors and freelancers in the UK”, and calls for the charge only to apply to loan arrangements entered into after the Finance Act 2017 received Royal Assent.  The EDM is fairly well represented across party lines, with 58 Labour MPs, 18 Tory MPs and 12 Lib Dem MPs already having indicated their support.  Signatories include Vince Cable, Zac Goldsmith and Dominic Grieve.

On 24th October hundreds of affected taxpayers met at Parliament Square in Westminster to protest the Loan Charge and lobby for a revision to the legislation, when several members of Parliament expressed support for the campaign.

The comments by Mr Hammond follow similar comments during an interview last week on the Andrew Marr show, where he said the arrangements affected by the Loan Charge were “illegal tax avoidance”.  Financial Secretary to the Treasury Mel Stride has also said in the House of Commons that “the arrangements … were not legal when they were entered into”.  Legal experts argue that these claims are false.  Robert Venables QC said “The statements by the Chancellor were completely misconceived and plumb wrong, as well as highly defamatory of many innocent people”.

Keith Gordon, barrister at Temple Tax Chambers, responded “In my mind it is extremely regrettable that both the Chancellor and Financial Secretary seem to be using terms such as ‘evasion’, ‘illegal’ and ‘unlawful’ in relation to DR schemes when defending the 2019 loan charge.  One possible explanation is that they are themselves confused about the meaning of these terms or are being deliberately mis-briefed by officials who will clearly be aware of the distinctions. Another possibility is that the ministers are using the wrong terms intentionally so as to try to regain the moral high ground and deflect criticism from the fact that the disguised remuneration arrangements flourished because of inaction (and therefore tacit acceptance) by HMRC for nearly 20 years.”

The Loan Charge was introduced at Budget 2017 and will apply employed tax and National Insurance to any outstanding loan balances accrued using Disguised Remuneration schemes, and can be applied to loans issued up to 20 years ago.  It will come into effect on 6th April 2019.

7th November 2018.