Loan Charge is Not Cricket

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Loan charge is not cricket

Recently, Boris Johnson declared that the cricket ball was a ‘natural vector for disease.’

Over the years, many teammates have described my bowling as filthy, but I am not sure that anyone has caught anything from it, especially whilst stood in the slip cordon.

But like many of our Prime Minister’s statements, it seems to have been totally unsupported by the facts.

Fortunately, we are now told that the virus is now gone within thirty seconds of being smeared on the ball. It seems that, rather than developing a vaccine, if we simply taught everyone to bowl a decent in-swinger then the disease would be wiped out.

So cricket was the winner.

Sadly, the same can’t be said for those that remain affected by the loan charge.

Last week, there was a proposed amendment (NC31) to the Finance Bill that would remove those with loans advanced in 2015/16 or earlier unless they ‘knew’ that it should have been subject to income tax. It is hard to fathom who would have known in these circumstances so this essentially made the loan charge prospective from the time the Treasury made clear it was going to introduce the charge.

This is something we have asked for in our submissions to the Finance Bill Committee.

That said, it was our view that there was little chance of this happening. Despite unprecedented opposition to the loan charge, there was not enough critical mass to overturn a significant Government majority and it being too early in a new Parliament for a rebellion.

Sometimes it is not the defeat but the manner of defeat that smarts.

Going back to cricket, and England’s triumph at last year’s world cup. It must have been doubly hard for New Zealand to take. Not only did they lose on boundaries scored following a ‘super over’ but also seemed to be cruising to victory before the overthrows scored from the back of a diving Ben Stokes’ bat.

In Parliament last week we saw the equivalent.

First of all we saw a dodgy dossier being circulated by, one assumes, the Treasury. This made statements that were manifestly false – whether deliberately or recklessly false is another matter. Still, it did it’s trick as at least one MP who had opposed the loan charge felt that the amendment was inappropriate after reading the circular.

Further, and presumably to spare the blushes of those who would withdraw their previous opposition, no vote was taken on the amendment at all. Despite the fact it had by far the most signatories of any amendment tabled.

At least cricket introduced Hawk-eye to prevent such howlers.

What next?

The loan charge has long represented a failure of legislation and by HMRC. However, we can now add a failure by Parliament to that list.

But what can be done now?

Our view is that there are still a number of things that need to be pushed forward with the Government and these formed the backbone of our submission to Parliament last month:

  • Better settlement terms such that we can all draw a line under this episode in the most practical fashion;
  • A clear statement that these loans are no longer loans and that there should be a strong presumption to this affect that anyone trying to enforce them should need to rebut (unless they are parties who are unaware of the fact that these were disguised remuneration loans; and
  • On the assumption that the Government wants to prevent the ongoing sale of schemes, then they should actually introduce legislation which targets them as the loan charge plainly does not

These are set out in more detail in our submission.

 

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