UK begins review of loan repayment policy

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The UK government has launched a review into the “debt charge” in a bid to “close down” the series of tax meltdowns since it was linked to a high number of suicides.

Finance Minister James Murray told the Financial Times that the impact of the review, published on Thursday, was to settle outstanding tax bills related to evasion schemes.

But he added that the review, led by former HM Revenue & Customs auditor Ray McCann, would also “maintain fairness (to) the public purse” and other taxpayers who did not contribute to the avoid taxes.

“Some of the people affected by the loan fee find it difficult to think of a way out of this situation they are in. . . For me, trying to solve this problem and complete it is the driving force behind this review,” Murray said in an interview before the announcement.

In 2019, then Conservative the government introduced a “loan tax” to try to prevent “hidden wages” schemes, which involved workers from various sectors who were paid on loans through foreign trusts and were widespread in the twenties the past.

HMRC has mentioned before Around 50,000 people were estimated to be affected by the loan charge and that users’ incomes were “on average twice that of the average UK payer”.

The loan waiver initially required affected individuals to pay taxes on up to 20 years’ worth of income in a single financial year, sparking public outcry and accusations that the government was imposing unconstitutional requirements. don’t make sense.

The former Tory administration later simplified the scheme, halving the 20-year term and making it easier to spread payments.

But six years on from the scheme’s launch, tens of thousands of people have yet to resolve their issues with HMRC. The tax authority has reported that this policy is linked to at least 10 suicides and 13 attempted suicides.

Labor called for a new independent review of the loan charge before last year’s general election. Lord Amyas Morse’s previous report in 2019 was criticized by MPs and campaigners including Treasury officials and HMRC.

Murray said the government has “invested a long time” in ensuring public confidence in the review, which will continue until the summer and will be staffed by public servants who have no connection or experience working on the debt repayment policy. They will work in a separate building from the Treasury.

McCann, who was president of the Chartered Institute of Taxation, said he was “pleased to be asked to help find ways” to resolve the dispute.

McCann has previously criticized how HMRC has sought to engage with loan service providers, noting that “all people (within the agency) who work on credit schemes can work in customer service”.

In a statement the government said the review would examine “the obstacles preventing those subject to a debt charge from reaching a settlement with HMRC and recommend ways in which they can be encouraged to do so”.

Campaigners calling for a wide-ranging investigation – looking at the role of scheme developers, umbrella companies, recruitment agencies, investors and tax advisers who promoted the schemes, as well as HMRC – made it clear announcement.

Steve Packham, of the Loan Charge Action Group, said the proposed review was “reckless” and “won’t solve the problem”.

He added: “We are very concerned about the impact on mental health that the announcement of this non-examination will have.”

Murray said his meetings with mortgage rate campaigners last year had alerted him to the impact of the policy and that the government wanted a McCann review, which he will respond to in the autumn Budget, “giving in a way that the concerned taxpayers can come to a settlement” .

While some called for a “differential assessment”, Murray added that his priority was to “help people who feel stuck”.