More Haste, Less Speed: HMRC, The April 2019 Loan Charge & Tax Debtors

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.

More Haste, Less Speed: HMRC, The April 2019 loan Charge and tax debtors

Since the April 2019 loan charge was introduced in the 2016 Budget, both its Treasury proponents and its many critics have become gradually more entrenched in their respective positions.

Many of the tens of thousands facing substantial penalties for not repaying loans taken from schemes which HMRC later determined to be tax avoidance have consistently called for it to be scrapped on the basis of its likely negative impact.

Campaigners have even claimed that a number of those individuals were so fearful of the consequences that they have taken their own lives (Source).

Readers of this ‘blog will have seen a recent article about how HMRC had been rather pugilistic in its defence of the charge (), brushing off objections and remaining focused on the likely administration involved in processing the bills of all those who might have missed the remaining opportunity to put their tax affairs in order.

As I write, that deadline of midnight on the fifth of April is looming awfully large, so it might seem a strange time for the Revenue to possibly reframe its approach.

Almost by way of a last-minute reminder, it has issued a statement aimed at men and women who face having to make payments, informing them of their options (Source).

In place of the defiant and rather belligerent tone repeatedly struck by Mel Stride MP, the Financial Secretary to the Treasury and, therefore, the Commons’ spokesman for HMRC, the statement is more warm and fuzzy.

It details how HMRC is making various kinds of help available to those worried about what the loan charge means for them.

More than merely expanding the work of its Needs Extra Support service, the Revenue’s promise to “do all that it can to help people get out of avoidance for good” positively oozes compassion.

Lest anyone imagine, however, that the taxman has gone soft, HMRC’s parting shot is decidedly not gentle.

The ‘disguised remuneration’ schemes which granted the loans at the heart of the controversy were established, it notes, “to avoid tax and simply do not work”.

So far, so sweet and sour.

Yet the Revenue’s ‘good cop, bad cop’ routine doesn’t wash with its most ardent opponents.

Take, for instance, the tax barrister who wrote in the Financial Times, joining the multitude – including myself, by way of admission – with those questioning the fairness of HMRC legislation making loans granted over the last two decades subject to the new charge (Source).

His comments included the tart observation that Philip Hammond had himself insisted during one Commons’ debate – long before he became Chancellor of the Exchequer – that taxpayers were entitled to be “retrospective or retroactive legislation” (Source).

The severity of shift from Mr Hammond’s position in June 2005 is made even more stark by allegations that HMRC staff are not only keen on chasing outstanding taxes but are making those owing the cash pay it off quicker than they really need to. (Source).

Taken in the round, it suggests that HMRC’s attempts to sugar coat its headlong pursuit of income tax risks losing sight of its obligations to treat taxpayers fairly – something which the House of Lords indicated might already be the case in a report published last December (Source).

I suspect that no increase in helpline staff or avowed flexibility in repayment terms will be truly be of comfort to those fixed in the sights of the dreaded loan charge.

Even those who acknowledge that the Revenue is being more than a little over-eager can do little help them now.

 

If you have any queries on this article or are suffering as a result of the April 2019 loan charge then please do not hesitate to get in touch.

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