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man overwhelmed about bill | accountingweb | MPs pass motion calling for independent review of loan charge
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HMRC needs new strategy for loan charge scandal

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As MPs pass a motion calling for an independent review of the loan charge, Ray McCann says that only HMRC can bring the multifaceted scandal to an end.

6th Feb 2024
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Dave Chaplin recently raised important issues around how individuals (whether they be subpostmasters or other taxpayers) are protected from overzealous government departments and agencies who, typically, have very deep pockets when it comes to pursuing what they see as wrongdoing. 

Chaplin is not alone or wrong in describing the prosecution of subpostmasters as a scandal. With the loan charge and IR35 however it becomes more complex since, in my view, how we got here cannot simply be laid only at the door of HMRC. I have no problem describing the loan charge as a scandal – however, it is a multifaceted scandal. 

Passed on the nod

The most radical tax legislation of modern times (perhaps ever) was passed with hardly any scrutiny by MPs who now claim that insufficient time was left to do so in 2017 due to debate time being curtailed in Parliament. It’s not the first tax provision to be passed on the nod and unless there is change it will not be the last. And since HMRC has some involvement in our lives from cradle to grave we should all be concerned about that. 

Then there is the fact that over 50,000 individuals are caught by it with perhaps hundreds of thousands involved overall in loan schemes involving billions in tax and NIC. Without the various settlement opportunities offered by HMRC in the years leading up to 2016 the number caught would have been much greater. It is undeniable that among that number are many individuals (perhaps several thousand) who were in one way or another duped or scammed. 

Giles Mooney, one of the UK’s most respected tax experts mentioned to me recently that a banker had grumbled to him that “he would have to sell one of his holiday homes to pay the loan charge.” Mooney’s experience mirrors mine, but I have also seen the luxury properties bought by employee benefit trusts (EBTs) in the Bahamas and other desirable locations for the exclusive use of employees/beneficiaries before soft loans became the benefit of choice and it’s anyone’s guess how many expensive London properties were funded by soft EBT loans.

Soft loans

Therein lies the difficulty for very many tax advisers – our experience is mainly at the wealthier end of these tax schemes. We don’t see, or at least not easily, those on low incomes who have been misled, scammed and defrauded. And we all knew that it was a matter of time before the “soft loan” gravy train was brought to an end. 

Even 20 years ago there were few tax advisers who did not find the reluctance of the special commissioners to see the Dextra loans for what they were – loans so soft that if you had fallen from a tall building and landed on them you would have walked away unscathed. And for many advisers it is a challenge not to put all of those involved in the same bracket as individuals who knew full well that it was tax avoidance. 

Again, as Mooney puts it, “I have huge sympathy for the people who were forced into it. I heard of some who were still given monthly ‘payslips’ with 20% tax deducted. It later transpired that the 20% was a commission and no tax had been taken. The commission takers had disappeared off the face of the earth but, thankfully for those affected, the Revenue were sympathetic and helped as much as they could. Even those who entered into schemes themselves have been given the chance to declare, settle and deal with the position. Many have chosen not to. My sympathy for them reduces with every day they don’t work with HMRC to resolve the problem.” 

Radical approaches

I understand Mooney’s final point but for very many of those involved the settlement terms offered by HMRC offered no real possibility of coming to terms that were in any way capable of being met. HMRC should have been more aware of the difficulty thousands would have in reaching a settlement and the determination to bring the schemes to a close by way of a radical legislative approach should have been matched by a radical approach to settlement. HMRC had the Morse Review foisted on it and the end result was a widening of the escape hatch and many of those who should have been caught were able to slip away, including, most likely, Mooney’s banker. 

Scandalous list

So if the loan charge is a scandal, added to the way that the loan charge was passed by a seemingly unsuspecting Parliament the following are also the case.

• It’s a scandal in that hundreds of thousands signed up to tax schemes happy to believe that being paid by way of a loan was something that HMRC would be content with and where a quick Google search would, even 20 years ago, have shown that HMRC had not gone away in trying to pursue tax and NIC.

• It’s a scandal that these schemes went on so long.

• It’s a scandal that even after 2010 some lawyers were happy to approve new schemes claiming to circumvent Part 7A or that Part 7A was ineffective against “self employed loan schemes”, while ignoring the tax code more broadly.

• It’s a scandal that ministers seem to have been so poorly advised by HMRC/HMT over how easily 50,000 individuals (becoming more angry by the day) could be persuaded to settle. 

• And it’s a scandal that HMRC has allowed itself to be seen (with some justification) as callous and uncaring in the face of more and more evidence that its strategy was not working and was causing very significant harm. 

Responsible behaviour

So, Chaplin is right, a Taxpayer Bill of Rights, (we have a “Taxpayers’ Charter”), would help but many inside and outside of HMRC will say “What about responsibilities?” Some years ago, I met a very successful entrepreneur who had simply closed his mind to an outrageous tax scheme (inevitably promoted from offshore.) His huge capital gains liability magically disappeared and in truth the scheme was a con on every level. After resolving matters with HMRC (very narrowly avoiding a large penalty) he admitted that despite being very diligent in his business affairs he had simply closed his eyes, signed on the dotted line and paid the fee. Such behaviour is difficult to explain, and I suspect that today HMRC would be much more inclined to impose that penalty. 

Only HMRC can bring the loan charge scandal to an end. Ever so slowly tax scheme promoters are being named and shamed, and as Mooney puts it: “Of course the sellers are also (in some ways even more) to blame. I firmly believe they should be held to account. And while laws are gradually catching up with the need to police and penalise agents, it is too little too late on the loan schemes.

“But this must never be allowed to happen again.”

Replies (35)

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By Justin Bryant
06th Feb 2024 12:37

I'm glad the author agrees it's mostly an HMRC scandal (a lot of people who should know better don't). However, just to be clear, it's not so-called soft loans that the SC in Rangers considered were taxable (before P7A). It's any (non-distribution treatment) EBT redirection of earnings (or "acquiescence" thereto). The loans are irrelevant, other than being potential evidence for such redirection/acquiescence.

The Rangers FTT dissenting judge got heavily criticized for saying otherwise (notwithstanding DN's wrong views on the matter).

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Replying to Justin Bryant:
Ray McCann
By Ray McCann
06th Feb 2024 14:50

Justin, just to be clear I don’t agree that it’s “mostly an HMRC scandal”. And your reference to Rangers only applies to Rangers and those who were paid by way of loan rather than were in line for discretionary bonuses paid by way of an EBT. I think it is not certain that “Rangers” determines such arrangements whereas the Revenue’s original arguments, directed at sub-trust transactions, should have done, as I mention in the article.

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Replying to RayM55:
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By Justin Bryant
07th Feb 2024 09:01

Well, in that case I entirely disagree with you, as it's most definitely a scandal mostly of HMRC's making (even ignoring their duplicity to try cover that up).

My point about the loans never being taxable is that lots of people (including of course HMRC) betrayed their ignorance (or in HMRC's case duplicity) by wrongly saying the loans were always taxable. That is a complete misreading of SC Rangers (see the rather typical example of such ignorance in one of the comments below), as such loans only became taxable (along with a lot of other things) under P7A. Your article was a bit sloppy therefore to suggest otherwise.

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Replying to Justin Bryant:
Ray McCann
By Ray McCann
07th Feb 2024 12:28

Justin it is difficult to overstate the level of distress I feel at the fact you entirely disagree with me.

As far as I am concerned the HMRC mantra that “the loans were always taxable” is incorrect on its own but I have always regarded it as shorthand for a more complex analysis involving the contributions to the trust or appointments to a sub-trust. Either way you end up in the same place. However perhaps you could point out where I say the loans were always taxable?

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Replying to RayM55:
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By Justin Bryant
08th Feb 2024 10:00

The gist of your article is that the EBT soft loans themselves were the real problem (which was never the case strictly speaking at least as far as the SC in Rangers and the lower courts/tribunals were concerned) and so is sloppy or disingenuous. No doubt HMRC used such soft loan disingenuousness to justify the 2019 LC in the first place.

The real cause of the scandal was HMRC's intense disliking of EBT (soft loan) tax mitigation planning generally that resulted in extreme bias and prejudice by them against such taxpayers (compared with other tax mitigation planning or tax avoidance if you want to call it that) as I have highlighted here over the years. Others have too elsewhere of course. See for example: https://www.taxation.co.uk/articles/hmrc-s-different-stance-on-similar-s...

That's what was undoubtedly the main (if not sole) cause of the 2019 LC scandal.

Possibly this was motivated by HMRC's vengeance against the likes of P B-W.

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Replying to Justin Bryant:
Ray McCann
By Ray McCann
09th Feb 2024 11:29

Justin as always you simply display your determination to show how smart you are. You know full well, or you should, that soft loans were and are precisely the issue and their prevalence prompted Part 7A and later the loan charge.

The point pursued by HMRC and the Inland Revenue before was never that soft loans were taxable per se but rather that in very many cases any fetter on the use of the money was illusionary so that the appointment to a sub-trust was payment for PAYE purposes.

This was precisely the structure adopted for Part 7A and the same argument the Revenue had pursued since around 2001 in Dextra. They tried it in various other cases including Rangers and failed with both Tribunals considering themselves bound to accept a loan categorisation. They succeeded in Rangers on what had been their contention even before the sub-trust point i.e. that the contributions to the trust were earnings at the point they were paid.

So before you accuse me of being sloppy, read more.

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Replying to Justin Bryant:
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By GDavidson
07th Feb 2024 10:09

Hopefully most people on here will disagree with you or I'll lose my faith in the accounting industry. Being paid by a loan with a nod and a wink that it doesn't need repaid, even to a five year old, is taxable income. And always has been since the days of Peel.

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Replying to GDavidson:
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By Justin Bryant
08th Feb 2024 10:02

You (and your thankers) have unwittingly proved my point here. I doubt even the above author would wrongly claim these loans weren't real and legally valid (but I admit could be wrong there).

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By GHarr497688
06th Feb 2024 13:22

Let' see this as a Drama on ITV - think it would beat the PO drama. Numerous people tricked into schemes and then lives ruined by HMRC as they would rather go for Mr Average than Top notch Accountants. Would be another hit TV show. This is what people want rather than just reality TV.

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By Postingcomments
06th Feb 2024 14:55

"some lawyers were happy to approve new schemes"

What authority did they have to "approve" anything? None. They merely issued (paid for) opinions.

Maybe I am being pedantic, but it is sloppy use of the language such as this that is part of some of the problems you are writing about. eg clients being told that a scheme has been "approved by a barrister".

The word was deliberately used to give their opinion an air of authority which it did not have and mislead clients.

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Replying to Postingcomments:
Ray McCann
By Ray McCann
07th Feb 2024 12:48

Precisely, on reflection I should have, like you, used quotation marks.

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Replying to Postingcomments:
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By moneymanager
07th Feb 2024 21:15

During my dealings in this area barrister's 'opinion' was always couched as such, you can walk down Bedford Row until you get the answer you want.

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Replying to moneymanager:
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By FactChecker
07th Feb 2024 22:24

One of the few walks in WC1 where 'window-shopping' can cost more than actually buying something!

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the sea otter
By memyself-eye
06th Feb 2024 17:17

Is it not the case that these individuals thought, or were duped into believing that by entering one of these schemes, no (or little) tax would be due?
Clearly, they were stupid enough to believe the snake oil salesmen: more fool them.
If so, they were quite happy to reap those rewards and now squeal when HMRC, correctly (because it has won many cases on the issue) demands past tax 'avoided' - or evaded depending on your standpoint.
I can't see any reason to sympathise with said individuals now.

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Replying to memyself-eye:
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By Mallock
07th Feb 2024 11:11

That's a very simplistic view of the issue. I have dealt with two cases where, partly as a consequence of IR35, individuals were forced down the route of using an umbrella company. These umbrella companies had been set up to use a loan scheme and out of the "savings" increase their fees. None of this was at all clear from any of the documentation and two very average earners were caught up in the loan scheme demands from HMRC. The amounts involved would have bankrupted them both and in reality neither had benefitted greatly.

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Replying to Mallock:
By cfield
07th Feb 2024 12:28

I echo that 100%. I've got 3 individuals who were steered into dodgy umbrellas by equally dodgy agencies. Luckily, just 1 of them faces the loan charge as it only goes up to 5/4/19. In all 3 cases, they knew nothing about it and didn't even unwittingly sign any contracts assenting to these dodgy schemes, or so they say anyway. It's so long ago now that memories are probably fading.

But it begs the question, can the loan charge apply if there was no loan? Suppose it was straightforward PAYE fraud by the umbrella/agency/ scheme administrator? I don't see how a loan can exist if the so-called borrower is not aware of it. Schedule 11 Finance (No. 2) Act 2017 talks only of loans & quasi-loans, so is it even in point when no formal loan or similar arrangement exists?

I'm sure there must be something to prevent individuals arguing that point, as it would be too easy to claim otherwise, unless HMRC can produce a smoking gun like a signed contract or an email despatching it. If that's right, then thousands of people, mainly NHS locums, could have validly claimed that they knew nothing.

There is a 3rd cohort too - those who did sign up under pressure from the agencies and gradually became aware that it was blatant tax evasion, even before the HMRC letter, but just carried on working through the umbrella due to inertia or simply not knowing what to do. Bear in mind, the NHS trusts and local authorities they work for only hire locum staff through certain agencies. They won't put them on the payroll, they won't use other agencies, they won't let them work off-payroll via their own companies and they won't let them work freelance even though a lot of them are genuinely self-employed, so if the locums want the work, they have no choice but to register with those agencies. The agencies won't even let them choose their own umbrellas. They have to choose the ones on their preferred lists, and the agencies just shunt the locums from one dodgy umbrella to the next. They are in it up to their necks, yet we haven't heard of a single agency being brought to book yet under the scheme facilitator legislation. Too hard to prove I suppose.

HMRC could have put a stop to this years ago. It was obvious these firms were going to prey on the locums in the wake of the nefarious public sector IR35 reforms. Some of them even held meetings on NHS premises apparently, and glossed over all the awkward questions. All HMRC had to do was swoop on the agencies, find out which umbrellas they were using and then descend on them immediately with routine PAYE compliance visits. They'd have soon found out who the culprits were and nipped these dodgy schemes in the bud. At the very least, they could have written to all the employees warning them before the tax debts piled up into mountains. Instead of that, their laughingly-named Early Intervention Team are trying to pick up the pieces years later, but the horse has bolted, the damage has been done and the real villains have fled.

If they'd left well alone and not moved the goalposts on IR35, at least they would have got corporation tax and dividend tax, but we all know what a "success" the IR35 reforms have been in HMRC's eyes. If only somebody, Jim Harra perhaps, had had the common sense and wherewithal to order that easy fix back in 2015, perhaps it would not have turned into the huge scandal it is today.

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Stepurhan
By stepurhan
07th Feb 2024 08:54

I have sympathy for any individual who received payslips with a 20% "tax" deduction that was anything but. They can be excused for genuinely thinking all was in order.

For those that expected "loans" that had no real prospect of ever being repaid to be a realistic way of avoiding tax, I have no sympathy.

What I would support is a way to go after the original promoters of these schemes. They are always described as "long gone" but surely the individuals heading up those promoters, and thus those in control of promoting the schemes, are identifiable. A justification for lifting the veil of incorporation if ever I saw one.

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Replying to stepurhan:
paddle steamer
By DJKL
07th Feb 2024 09:08

My views are very similar, effectively either a large number of individuals were gullible or instead they chose to believe the truth of the salesmen's exhortations because it was in their financial interests to so believe.

I blame HMG, obviously our education system is not fit for purpose as it fails to impart any degree of scepticism but instead just creates unquestioning sponges.

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By rememberscarborough
07th Feb 2024 10:07

The big accountancy firms may not have been happy about the audit scandal but this loan charge one is going to dwarf it. An awful lot of people and firms relied on their tax advice even if the small print on the contract documentation specifically states that no fees were refundable if HMRC over turned the agreement. This has the same feel as the banks PPI scandal and I suspect solicitors up and down the country are licking their lips waiting to pounce.

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the sea otter
By memyself-eye
07th Feb 2024 10:19

Reminds me of the endowment mortgage scandal of the 1980's (yes I am that old). Untold thousands believed that stellar stock market returns from their endowment policies would pay off their mortgages.
Mostly didn't happen of course, but no tax consequences in that instance.

Maybe you can fool all the people all the time?

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Replying to memyself-eye:
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By Mallock
07th Feb 2024 11:20

I don't agree that there was any endowment scandal other than Gordon Brown's intervention when, at the very time the stock market was near its lowest, he prevented the endowment funds investing in equities and instead forced them in to gilts and other such "safe " investments. The stock market grew nearly 100% from those lows within a few years and had the endowment funds been left alone they would have benefitted hugely rather than be stuck in relatively poor returning investments. I kept my 2 endowments and both of them returned more than the sum assured after 25 years. It was a serious problem at a particular point in time but Government action made it a permanent one.

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Replying to Mallock:
paddle steamer
By DJKL
07th Feb 2024 13:18

The catch was a lot of the life offices were forced to sell out their equities within some funds (like With Profits) and the policy holders took the hit, my original contracted out personal pension was With Profits with Standard Life (taken out in the 80s), I took a 25% hit on same at the time (think something like £44k down to £32k), and then fled into units and departed to a SIPP as soon as the option was open for protected rights policies to be in same.

If performance since is taken as read that in today's terms re that part of my pensions is something like a £50,000 hit re my contracted out pension(Hard to keep records as contracted out and personally paid for all now mixed in one SIPP)

In addition there were our three endowments, my wife's two were not bad, mine, taken out on first property purchase in 1986, when it matured in 2006 would not have covered my first mortgage loan of £14,000, luckily I moved to cap and interest mortgage in late 80s so had no reliance on it( Thanks Bank of Scotland (who sold it to me and seemed to have a Standard Life tie up))

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Replying to Mallock:
the sea otter
By memyself-eye
07th Feb 2024 17:35

Yes and no.
I too had a life policy a 35 year one, but crucially not linked to a mortgage - I wouldn't loose my house if the policy 'underperformed'
It didn't - at one stage the yearly bonuses exceeded the premiums
I do take your point about Gordon Brown however, a situation that persists to this day; pension funds have lost out big time on lost equities investments.....

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Replying to memyself-eye:
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By FactChecker
07th Feb 2024 11:49

Many (most?) didn't just 'believe', they were given little option.

When I wanted to re-mortgage (in 1979 I think), I needed to use a 'mortgage broker' (identified via small ad in the back of P Eye of all places) to maximise what I could get despite my paltry salary. They were prepared to deliver but ONLY if I agreed to an Endowment Mortgage (which presumably gave then twice the commission from B Soc and Ins company).
So I agreed ... but as soon as the money was safely banked, I contacted the B Soc direct and converted it to a Repayment Mortgage. The brokers were NOT pleased!

FWIW the B Socs were wholly complicit generally (and often set up their own Ins company so as to keep it all nicely 'in-house') ... with each Annual Statement showing fantastical projections of how you'd end up banking more than you'd borrowed (with zero mortgage to repay)!
And yes, until they discover a way to remove the greed inherent in most, you can indeed fool most of the people all the time.

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Replying to FactChecker:
By Nick Graves
07th Feb 2024 12:17

The most egregious though is still when the B/Soc forced you to pay an insurance premium, so that when you defaulted due to the engineered property collapse, they collected the dough after they repo'd your gaff.

The Ins co then often bankrupted the premium payer for their 'loss'.

The financial industry has long been a bed of fraud and corruption.

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By vietnamdulich
07th Feb 2024 10:58

Regardless of the cause of HMRC's scandal, whether subjective or objective, we hope that financial and tax policies will promptly overcome them in a better direction

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By [email protected]
07th Feb 2024 13:48

Whichever way the Loan charge is looked at, the problem arises because those entering into the schemes were content to not pay tax on (usually) high incomes, regardless of whether the scheme entered into was illegal or not. Tax is payable under the economic schemes of all countries in part to create a more equitable society to pay for services required, often by those who earn only tiny fraction of these people wanting to avoid tax. In the climate of such disparity of earnings it is right that high earners pay a much higher share of the tax burden.

In short all should pay their fare share and any scheme that seeks to avoid equitable taxation deserves to be hit very hard indeed.

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Replying to [email protected]:
By cfield
07th Feb 2024 14:59

Yes but you've ignored the fact that thousands of ordinary workers, like the NHS locums I mentioned earlier, who were not especially high earners, were literally duped into these schemes or had no option but to go along with them if they wanted the work. They even received "payslips" pretending that the deductions were tax.

You have to make a distinction between these people and the types you mention who just wanted to avoid paying their fair share of tax and and were only too willing to swallow all the guff about the schemes being legitimate or HMRC approved. Like you, I have no sympathy for the latter.

When you talk about a more equitable society, do you mean equitable in the sense that everyone has access to decent healthcare, education and pensions, and that tax must be levied fairly to achieve that outcome, or more equitable in the sense that everyone should end up with much the same income after tax, simply because it is unfair for some to earn vastly more money than others?

It worries me that you speak of a "climate of such disparity of earnings" as if there is something inherently wrong with it. Of course there isn't. If an employer deems you "worthy" in an economic sense of being paid a huge amount more than other staff, due to the benefits you bring them and/or the scarcity of your skill-set, then who am I or anyone else to stick my oar in and object? It's nobody else's business how much any of us earn.

I don't blame you for feeling that way in some cases. For example, I don't like seeing footballers earning £300k a week, especially when they don't even play well, but if their club thinks they're worth it, then so be it. It's our fault for being prepared to pay such high sums for sports channel subscriptions and personalised shirts. If society as a whole is happy to flood the Premier League with so much cash, how can we object when the players get their fair share? After all, they're the ones we want to watch and pretend to be when we wear their shirts, advertising their brands and paying through the nose to do so.

Same goes for bankers and their high bonuses. If the banks feel that they're worth it because they rake in more money, maybe they're right. It us up to us to regulate their activities if they are so risky they harm society as a whole. So long as the jobs market is not rigged in favour of people with the right background/contacts, or unions use unfair methods to hold society to ransom and earn their members far more than the market dictates, there is no case for sticking our oar in.

Tax is a different matter. Raising revenue for services we all need is fine, but using it as a social engineering tool for a more "equitable" society is wrong. So is all this income re-distribution we get now. Preventing poverty (real poverty I mean) is one thing. Trying to get everyone on the same standard of living via the tax and benefits systems is another. If money ceases to be a motivator, our society will eventually become sclerotic and self-entitled and we will be overtaken by our international competitors. I fear that's already happening.

We must also bear in mind that raising tax to eye-watering levels is unsustainable in the long run because it deters economic activity and you end up with even less revenue. Somewhere there is a sweet spot where tax revenues are maximised without destroying the incentive to work hard and strive for a better life, but I've a strong suspicion we've gone past it without even noticing.

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By BryanS1958
07th Feb 2024 16:13

Surely it is the government's responsibility to change the legislation? HMRC only acts on the legislation that governments introduce, so it is up to MPs to change it.

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Replying to BryanS1958:
the sea otter
By memyself-eye
07th Feb 2024 17:42

No. The legislation is laid down in law and is there to be interpreted (and challenged) by the courts, which they did and found in HMRC's favour - often.
HMRC interprets that legislation in a way unfavourable to practitioners of these schemes and the judges agreed with HMRC.
It's like Canute claiming the tide should not rise and fall twice in 24 hours!

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Replying to BryanS1958:
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By Mallock
07th Feb 2024 19:16

Part of the problem with a lot of the more recent tax legislation we have is that it is written (effectively) by HMRC for HMRC. Huge mistakes like making tax legislation retrospective has impacted lots of ordinary taxpayers caught up in the loan scheme arrangements. Was this done to cover up HMRC's slow response to the abuse? I don't know but it impacts ordinary people hugely and is very similar to the Horizon scandal. Where are we now with the loan scheme suicides? Is it 12 or 13? No legislation should result in such things. HMRC also wrote the rules on the implementation of the minimum wage. Such things as having to meet NMW per pay period meant companies who paid monthly were automatically guilty and named and shamed in the press because they paid their staff exactly the same as someone who was paid NMW weekly - it was a technical breach because HMRC would not allow the employer to review the pay over a year or up to the date someone left. I am told that is because per pay period makes it easier for HMRC staff to check NMW compliance rather than considering the impact on business. The vast majority of our clients won't employ apprentices/trainees or anyone on NMW now so young people lose out on the opportunity of learning a trade.

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Replying to Mallock:
By cfield
07th Feb 2024 20:22

But it wasn't retrospective, was it? A common misconception that. It was the loan that was being taxed and the loan was still current, so they were hoist by their own petard. They were given the choice of either paying it off like a real loan and paying tax on the BIK or accepting it was non-repayable, in which case they were taxed on the resultant windfall gain. Should they really have been allowed to get away with it just because they earned/received the money years ago and had since spent it all?

Don't forget, this was actually tax evasion, not avoidance. That old adage about avoidance being legal and evasion being illegal still holds true today. If avoidance turns out to be illegal it is evasion and always was evasion. Can I get away with tax evasion just because it happened years ago? Should we forgive it just because no one could prove it was evasion at the time?

The best solution would have been to employ the 6 year rule we already have. If tax is unpaid due to a careless error more than 6 years ago, it is written off. If you have a reasonable excuse, they can only go back 4 years. The duped locums had a reasonable excuse. They should have been allowed to offset the fees deducted from their wages that masqueraded as tax but pay all the rest, going back up to 4 years, on easy terms. The people who suspected it was dodgy but had good reason to think it was legal made a careless error. Their tax bills should have been capped at 6 years. The loan charge only applies from 9/12/2010 and not many people were in them that long anyway, so those limits wouldn't have diminished the protected tax revenue by much but would still have tempered justice with mercy.

Something like that would have been much fairer to everyone, both the willing participants, the duped participants and the rest of us who paid our taxes in full and on time. Yes, there would have been howls of outrage from the former cohort, but hey, what did they expect, a medal? If they were in dire financial straits, they could have been offered the option of signing a share of their properties over to HMRC but allowed to carry on living there in return for a market rent, a bit like a shared ownership scheme, and only be able to sell if the proceeds paid off the tax debt and interest. Alternatively, they could have re-mortgaged if that gave them better terms.

Harsh? Maybe, but it would have been a fitting lesson to the whole of society not to get involved in dodgy tax schemes. Letting them off the hook? That would have had the opposite effect.

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Replying to cfield:
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By Mallock
08th Feb 2024 15:27

Thank you for that and I completely agree.

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Dave Chaplin
By Dave Chaplin
08th Feb 2024 13:05

I agree with Ray.

Just to clarify, the Taxpayer Bill of Rights I'm campaigning for, is about making sure people are treated fairly, whether they owe tax or not. We do not want to take away the ability of HMRC to enforce tax law and collect tax. We want to make sure tapayers are treated fairly - which isn't what happened to Kaye Adams. There are many other examples.

All we are doing with the Taxpayer Bill of Rights is enshrining some principles amd codes in law, many of which will be in the LSS. The TBoR provides independent oversight, and someone to go to if bad apples at HMRC don't do what they are supposed to.

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