Waveney MP says tax avoidance scheme users believed 'everything was above board'
PUBLISHED: 11:39 12 April 2019 | UPDATED: 11:46 12 April 2019
Waveney MP Peter Aldous has spoken out about the devastating impact a charge on those who used loan-based avoidance schemes to pay tax has had.
A number of suicides have been linked to the charge, and there are worries it could lead to mass bankruptcies.
And in the House of Commons on Thursday the government was accused of a “whitewash” in its handling of the charge after refusing calls to pause repayments or hold an inquiry into the issue.
Treasury minister Mel Stride also angered MPs when he said most people would have concluded after looking at the schemes “they probably were too good to be true”.
The schemes, which date back to the early 2000s, meant self-employed people could receive wages into an offshore trust and then loan the money back, avoiding tax payments.
When the law changed in 2016 up to 50,000 faced huge bills, but those affected have said they were recommended to the schemes by their own employers, only to find years later it was not legal.
Mr Aldous, Tory MP for Waveney, said: “My constituents who have been badly affected by the loan charge are not wealthy people, and they were doing only what their advisers and employers encouraged and perhaps even coerced them to do.
“They had no reason to doubt the validity of the advice they received, and they were led to believe that everything was above board and within the law. They are now being asked to pay tax for periods a long time ago, when their financial circumstances were very different and for which they thought the slate had been wiped clean, which is imposing very worrying burdens.”
He said the IT and North Sea gas and oil sectors were particularly affected, and he also said it was “both wrong and inherently unjust” that HMRC would pursue individuals but not the organisations behind the schemes.
Sir Henry Bellingham, Conservative for North West Norfolk, added it was “one the great iniquities [...] that HMRC knew what was going on but did not actually do anything about it with expedition and decisiveness at the time.”
Mr Stride said the tax office will not bankrupt anyone over the loan charge, nor will anybody “lose their primary residence as a result of settling their loan charge liability”.
And he said the government was working both to crack down on those who promote these schemes, as well as provide further support to vulnerable people involved in them, saying there is a new HMRC phone line solely for loan charge customers.
He concluded: “I appreciate that facing any tax bill is unwelcome but it is only right to deal with disguised remuneration.
“Where we fail to do so then we are effectively saying to the 99.8pc of other taxpayers who have not been involved in these schemes that we want them to pay more.”
But as he sat down one Conservative could be heard shouting: “Sounds like a whitewash.”