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Following significant and protracted discussions in the House of Commons surrounding the implementation of the Loan Charge, on 6 April 2019 the legislation was brought into force with much controversy. 
Whether the legislation is fair or not, which is an entire discussion in itself, it still remains fact that this legislation is now in force. It will be interesting to see how aggressive HMRC are with regards to initiating insolvency processes particularly issuing Bankruptcy Petitions against debtors who can not/will not pay the liability that is stated as owing to HMRC. 
 
It is a worrying concept that the economic climate of the country could be further shaken should a string of bankruptcies ensue. Not only will this have a devastating immediate effect on thousands of individuals in the country, but it will also impact on the businesses infrastructure as directorships of companies can not be held by bankrupt individuals. 
 
Should this legislation effect you in any way and you wish to discuss further, then please contact Smith & Barnes Insolvency Practitioners Limited, the affordable liquidators, and we will be happy to assist. 
 
The below extracts are taken from the House Of Commons Chambers where the Loan Charge was discussed and debated 
04 April 2019 Volume 657 
12.34 pm 
Ross Thomson (Aberdeen South) (Con) 
I beg to move,That this House expresses its serious concern at the 2019 Loan Charge which applies from 5 April 2019; expresses deep concern and regret about the effect of the mental and emotional impact on people facing the Loan Charge; is further concerned about suicides of people facing the Loan Charge and the identified suicide risk, which was reported to HMRC; believes that the Loan Charge is fundamentally unfair and undermines the principle of the rule of law by overriding statutory taxpayer protections; expresses disappointment at the lack of notice served by HMRC and the delays in communication with those now facing the Loan Charge, which has further increased anxiety of individuals and families; is concerned about the nature and accuracy of the information circulated by HMRC with regard to the Loan Charge; further regrets the inadequate impact assessment originally conducted; understands that many individuals have received miscalculated settlement information; calls for an immediate suspension of the Loan Charge for a period of six months and for all related settlements to be put on hold; and further calls for an independent inquiry into the Loan Charge to be conducted by a party that is not connected with either the Government or HMRC. 
 
I want to thank the Backbench Business Committee for agreeing to bring forward this important debate. I also want to thank the members of the all-party parliamentary loan charge group for all their work and the many colleagues who have added their names to the motion before us today. The urgency of today’s debate cannot be understated. As of tomorrow, tens of thousands of people and their families will face the huge cost, both physical and emotional, of the loan charge. HMRC has yet to show any regard to the enormous pain that this legislation has already inflicted on thousands of people across the country. 
 
I represent Aberdeen South, which is Europe’s energy hub and the very heart of the UK’s oil and gas industry, and my surgeries have been inundated with people who are concerned about the damage that the loan charge will have on their financial security. Many of my constituents working in the oil and gas industry were actively encouraged by their companies and professional advisers to enter into these schemes, without a single peep from HMRC, and some did so for many years. The oil and gas industry is just one of many that has long relied on the hard work of contractors as a crucial element of its supply chains. These contractors provide a hugely valuable workforce, and concerns over the loan charge have driven away many of those who have worked in the industry and will deter people from contracting in the future. HMRC should be in no doubt this will be bad for business, bad for public finances and bad for the country. 
 
Damian Green (Ashford) (Con) 
I echo my hon. Friend’s praise for the good work of the all-party parliamentary group on this. I am sure that he will come on to talk about retrospection. When my constituents approach me about this, the strongest point they make is that HMRC allowed these schemes to run for very many years and then declared them retrospective, all the way back to the beginning, which is why the potential losses are so great. Does he agree that that is one of the worst aspects of what is happening? 
Ross Thomson 
I could not have worded it better myself. Having been part of the all-party parliamentary group’s inquiry, and having looked into the retrospective effect of the legislation, I am even more convinced that what is happening is wrong. People coming into my surgeries are quite happy that the Government legislate to change things if they believe them to be wrong, but they are concerned that the Government are going back in history in this way, as am I. 
Sir Roger Gale (North Thanet) (Con) 
I congratulate my hon. Friend on securing this debate. The Financial Secretary to the Treasury, my right hon. Friend the Member for Central Devon (Mel Stride), is always meticulously courteous in his replies, and the Treasury has consistently taken the view that this is technically not retrospective. However, our constituents do not live in a technical world; they live in the real world, and this is causing them real distress. 
Ross Thomson 
I endorse what my right hon. Friend says about our Minister and good friend on the Treasury Bench, but he is right to say that our constituents have real concerns about the way in which HMRC has behaved, and about its tone and attitude. I will say more about that in my speech. 
Sir Desmond Swayne (New Forest West) (Con) 
The Minister has today sent us some warm words about the lengths to which HMRC is going to accommodate those who have fallen foul of these arrangements, but today in The Times there is a report of tax inspectors putting pressure on people to pay up ahead of time, even beyond the arrangements that have been agreed. 
Ross Thomson 
My right hon. Friend is right. The all-party parliamentary group’s inquiry took a lot of evidence on the impact that the policy will have. The behaviour of some, particularly on the Government side, is making people feel like criminals, and this has driven them to a place where they feel broken, mentally and emotionally. I am glad that this is being reported, and we need to continue to highlight it. 
Mr Tanmanjeet Singh Dhesi (Slough) (Lab) 
I commend the hon. Gentleman for securing this important debate. Many of my constituents have got in touch and met me personally to express their distress and concern about the impact of the loan charge. Given that the inquiry by the APPG, of which he is a member, found that more than two thirds of those affected feared that their family relationships were breaking down, does he agree that the Minister must assure our constituents today that HMRC will support them with manageable repayments so that no one needs to be made bankrupt? Does he also agree that it is absolutely ridiculous that Her Majesty’s Treasury has downgraded the promised review of the loan charge to a report, as provisionally agreed by the House? 
 
Ross Thomson 
I thank the hon. Gentleman. I am sure that his constituents will be grateful to him for raising their concerns in the Chamber. I will refer to some of my constituents later on, because this matter is causing genuine concern, and I hope that those on the Treasury Bench will be listening to the various cases throughout the debate. 
Several hon. Members rose— 
Ross Thomson 
I will take one more intervention before I make a little more progress. 
Zac Goldsmith (Richmond Park) (Con) 
I congratulate my hon. Friend on securing this important debate. In normal times, I think it would be considered even more important and taken even more seriously than it is being taken today. Does he my concern that some of HMRC’s language seems totally tone deaf? Its factsheet says that it has 
“no desire to make things difficult for taxpayers, and will always take a fair and even-handed approach to those who genuinely want to settle their affairs.” 
That is the opposite of the experience of some of my constituents who, based on good faith and professional advice, are being punished retrospectively and face utter ruin. 
Ross Thomson 
I could not agree more. My hon. Friend sums the situation up well. This is not just about HMRC being tone deaf, because I have found through my interactions with constituents that it has also been tin eared. I must admit that I am deeply concerned by some of the tactics that have been employed and how some normal people have been made to feel. It is not right at all. 
Dr Matthew Offord (Hendon) (Con) 
Will my hon. Friend give way? 
Ross Thomson 
I will make a little more progress, but I am keen to take as many interventions as possible. 
Nobody should be in any doubt that the loan charge has left people living in genuine fear of losing their homes, being unable to care for their families, and seeing their life’s work reduced to less than nothing. As we debate this matter, it should not be lost on us that many of those affected and their families will be watching this Chamber today, and they will listen closely to the Government’s response. 
I want to put it on the record at this point that we live in a time when politics is heated and is becoming more personal than ever before, and we have seen some disturbing consequences for some colleagues in this House as a result. However, I must make it clear that I have found the Financial Secretary to the Treasury incredibly helpful, supportive, engaging, and willing to listen to my concerns. 
 
This debate has come about following the efforts of Members from across the House and the many campaigners fighting this injustice. The all-party parliamentary loan charge group recently launched a report following a long inquiry, and I commend it to Members because it contains truly worrying, emotional and harrowing responses. 
James Cartlidge (South Suffolk) (Con) 
My hon. Friend is making some good points, which I do have sympathy with having met people in this situation. However, we must remember that if anyone using one of these schemes had gone to hospital, they would have expected not to wait any longer or shorter than anybody else who pays their taxes. These schemes were taken up because people wanted to reduce the tax they were paying. We must remember all the other taxpayers who pay their taxes legitimately without this kind of professional advice. 
Ross Thomson 
I thank my hon. Friend for his point. He talks about the legitimate paying of taxes, and I will touch on that later in my speech. The people who entered into such schemes, whether they were in oil and gas, social care or healthcare, did so legitimately and because they were advised to do so. Some did so because their employers asked them to. 
Alex Burghart (Brentwood and Ongar) (Con) 
My hon. Friend is being generous with his time and is making some excellent points. Something that struck me from the correspondence that I have received from constituents is that they were often advised by accountants to enter into arrangements that would allow them to take home a large proportion of their income, and they were told that that was not illegal, that it was totally above board, and that any tax liabilities would lie with the employer, not the employee. Part of the problem is that we are dealing with people who were acting in good faith and yet feel that they are now being penalised. 
Ross Thomson 
I cannot add much more to that, because my hon. Friend is absolutely right. 
Alex Chalk (Cheltenham) (Con) 
Does my hon. Friend agree that one of the problems with the situation in which some people find themselves is that the advice was given so long ago that the opportunity to seek redress from advisers who gave negligent advice may have gone? Those advisers may now be out of business or otherwise unavailable for litigation. 
Ross Thomson 
I echo my hon. Friend’s point. He is right that many of those who gave advice seem to have disappeared. 
Mr Laurence Robertson (Tewkesbury) (Con) 
rose— 
Ross Thomson 
I will take an intervention from the other side of the Chamber first. 
 
Andy Slaughter (Hammersmith) (Lab) 
The hon. Gentleman is making an excellent speech and is capturing the mood on both sides of the House. Over 200 people in my constituency are affected by the loan charge, and the situation is unfair because the affairs were fully declared on their tax returns. HMRC was aware of what was happening. There was no attempt to hide. To characterise this as tax avoidance retrospectively seems wholly unjust. 
Ross Thomson 
The hon. Gentleman is right about HMRC being aware, because people even had to fill out disclosure of tax avoidance schemes, or DOTAS, forms. 
Several hon. Members rose— 
Ross Thomson 
I will take one more intervention and then make a little more progress. 
Mr Robertson 
Following on from the point made by my hon. Friend the Member for Cheltenham (Alex Chalk), not only may advisers have gone out of business, but there is a legal disjoint here. As I understand it, if someone were to seek redress, they can go back only six years, or maybe nine years if they have only just become aware of the problem, whereas HMRC is going back 20 years. There is a big difference between how they are being pursued and how they can obtain redress. 
Ross Thomson 
My hon. Friend is right. I do not know whether he has read today’s Financial Times, which has a good article about the effects of retrospection and how some of the legal safeguards for taxpayers that ensure continuity in tax affairs are being broken. 
Several hon. Members rose— 
Ross Thomson 
I will make a little more progress, but I will take some more interventions. 
 
I was talking about the APPG’s report. Of the 1,768 responses received by the APPG, nearly a third of people have received no information whatsoever from HMRC about the loan charge. That flies directly in the face of HMRC’s repeated claims that people were given three years’ notice of the impending changes to legislation. A similar number of respondents also believe that they have no possible means of settling their case with HMRC. The Government are leaving them to face bankruptcy—a fate facing more than half those affected. I receive new stories from constituents every day detailing the pain that they and their families are enduring with the threat of the loan charge hanging over them. 
 
Joseph Johnson (Orpington) (Con) 
 
Will my hon. Friend give way? 
 
Ross Thomson 
 
I will happily give way to my hon. Friend, and I will then take an intervention from my hon. Friend the Member for Hendon (Dr Offord). 
 
Joseph Johnson 
 
I echo my hon. Friend’s words about the Minister, who has always been assiduous and diligent in all his dealings with me on this matter. I congratulate my hon. Friend on his work in leading the APPG inquiry, but does he agree that the time has come for HMRC to acknowledge that we must now have an independent inquiry led by an experienced tax judge? 
 
Ross Thomson 
 
I wholeheartedly agree. That is what today’s motion calls for, because it is the best way of giving our constituents certainty. 
 
Dr Offord 
 
In Hendon, 170 of my constituents have been affected by the charge, but many of them entered into the scheme in good faith. Just two weeks ago, a constituent came to see me at one of my surgeries, and she had been sent a bill by HMRC for £91,000, but it was revised down to £41,000 when she challenged it. There seems to be some discrepancy between the bills and the discretion that HMRC is showing in withdrawing its request for moneys. 
 
Ross Thomson 
 
My hon. Friend makes a good point that forms part of the evidence that we have gathered from the inquiry. It is deeply concerning that many of the demands sent to constituents have been miscalculated by HMRC, and that must be addressed. 
 
Several hon. Members rose— 
 
Ross Thomson 
 
I will make some progress, but I will take some more interventions before I finish. 
I receive stories from constituents every day detailing the pain that they and their families are enduring with the threat of the loan charge hanging over them. That is why we are here today, because it is about real people and real lives, not just lines on a spreadsheet. 
 
One of my constituents recently wrote to me: 
 
“The Loan Charge has very likely cost me my marriage and I stand to lose everything. I cannot believe that this is happening.” 
 
That is far from an isolated case, and I am sure Members on both sides of the House have had similar stories from their constituents. The loan charge is breaking apart families before us, yet HMRC has remained both intransigent and tin-eared. 
 
I have a simple request today: the Government should place the loan charge on hold to investigate the true impact these changes will have on countless families across the country. I have heard from colleagues who believe that those involved in such schemes are somehow devious, mega-wealthy people, but one constituent, at the end of a career working in health and social care, recently attended my surgery and told me of his guilt because he feels he has let his family down. 
 
Jonathan Edwards (Carmarthen East and Dinefwr) (PC) 
 
I am deeply aware of this. The all-party group took evidence from a family whose father had committed suicide. If the House will indulge me, I received this email from a constituent: 
 
“I find all this massively worrying and stressful and I try not to discuss with my wife otherwise she would feel the same. At times I have considered suicide but realise that that will help no one and impact my family most.” 
 
The loan charge is having a terrible effect on people’s mental health, isn’t it? 
 
Madam Deputy Speaker (Dame Rosie Winterton) 
 
Order. A lot of people want to speak this afternoon, and I am sure the hon. Member for Aberdeen South (Ross Thomson) will bear that in mind. 
 
Ross Thomson 
 
I could not agree more with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). We have all heard harrowing testimony in our constituencies. My constituent talked about the stress and anxiety keeping him awake at night and his fear for his family’s future. He cannot escape the fear brought about by a crippling demand from HMRC that will leave him unable even to keep a roof over his family’s heads. He went on to say that the loan charge has removed all joy from his life, leaving him unable to concentrate on everyday tasks or even to enjoy time with his wife and young children. 
 
My hon. Friends and I are proud of this Government’s record on mental health. However, we will jeopardise that hard work if we continue this cold approach to people in our communities who face this charge. 
 
Neil Parish (Tiverton and Honiton) (Con) 
 
Will my hon. Friend give way? 
 
Ross Thomson 
 
Sorry, but I will continue to make progress. 
 
This story is far from unique. More stories emerge every day from people who fear the break-up of their family and a future devoid of opportunities as they face lifelong payments to cover HMRC demands. 
Another constituent wrote to me recently about his long work in oil and gas and how he has experienced the highs and lows of the industry for decades, but he told me that HMRC is now demanding nearly £200,000, dating back two decades: 
 
“I am 59 in July this year, I have no assets, I will have 5 or 6 years of working life left, assuming that I get to work, even if I am lucky enough to secure a job for that period, trying to pay that amount of money really is mission impossible.” 
 
Richard Burden (Birmingham, Northfield) (Lab) 
 
Will the hon. Gentleman give way? 
 
Ross Thomson 
 
Apologies, but I will make progress so that others can speak in this debate. 
 
My constituent is facing financial ruin at the end of his long career in the oil and gas industry, which has seen him work hard during boom and bust. HMRC is turning a lifetime of work to nothing, delivering my constituent a bigger blow than the oil market ever could. It cannot be ignored that over half of those who responded to the APPG inquiry believe these changes will place their chosen career in danger. The loan charge is driving people away from industries in which they have long played an important part. This is intolerable. 
 
I fear there has been a complete breakdown in trust between the people and the authorities that are responsible for upholding the rule of law. It is a sad reality that this breakdown in trust will not end with those who have been directly affected by the loan charge scandal. There will instead be lasting damage to the trust that the people of this country have long had in the very institutions they expect to serve them fairly. The stories I have d today are but a drop in the ocean compared with the number affected. Each person acted in good faith, and each of them has been let down by HMRC. The fact that the Government continue to pursue the loan charge, without hesitation or thought for those who will be affected for the rest of their lives, greatly saddens me. 
 
Many of the people who now find themselves facing retrospective charges were simply acting on the professional advice of employers and advisers. The tax arrangements that these individuals entered into were presented as entirely legal, legitimate and HMRC-compliant financial planning. None of us objects to people paying a fair of tax. Indeed, we should be doing more to crack down on those complicit in tax evasion. However, that is not the case here. 
 
HMRC is seeking to claw back tax and is breaking legal safeguards that ensure fairness. Those safeguards include time limits, and the Treasury Committee heard evidence from the president of the Chartered Institute of Taxation, Ray McCann: 
 
“In reality, the retrospective effect actually displaces all the protections that taxpayers are given by Parliament in terms of getting certainty for their affairs”. 
 
The behaviour of HMRC to date has greatly concerned me, and I know other colleagues will elaborate further. 
 
Simply put, HMRC has demonstrated it is willing to pursue individuals for settlement, driving them into bankruptcy, breaking families apart and destroying hope for financial security in old age. HMRC has blatantly gone after the softest target—individuals who have the least to defend themselves—while largely ignoring those who are most culpable in proliferating these schemes. 
 
Members will be aware that a number of people have now taken their life as a direct consequence of being unfairly pursued by HMRC. As part of the APPG inquiry, we heard the most harrowing, powerful and emotive evidence I have ever heard. The Government have been made aware of the risk that we will only see more cases of this nature, yet they have continued to refuse to halt settlements. The Government have the power to do something about this, and they have the ability to ease the suffering, pain and distress felt by so many. However, they have yet to do so. I hope the Minister will say that the Government are willing to change course. Our request is not onerous. A six-month delay and a review is not the end of the world for the Treasury, but a failure to do this is the end of the world for thousands of people across the country. 
 
I am sure that Members on both sides of the House will join me in urging the Government, once again, to halt settlements and urgently to bring forward an independent review of the loan charge. Failure to do so would continue to put lives at risk, would break families apart and would fuel distrust in our institutions. Trust in the rule of law and our democratic system is at stake. 
 
Several hon. Members rose— 
 
Madam Deputy Speaker (Dame Rosie Winterton) 
 
Order. As colleagues can see, a number of people want to participate in this debate. I will start with an eight-minute time limit. 
 
12.57 pm 
 
Nic Dakin (Scunthorpe) (Lab) 
 
It is a real pleasure to follow the hon. Member for Aberdeen South (Ross Thomson), who has so comprehensively put the case today. I congratulate him, other hon. Members and the Backbench Business Committee on allowing us to have this debate, which has clearly captured the attention of Members because it is very heavily subscribed, as Madam Deputy Speaker has observed. 
 
As the hon. Gentleman said, this is about real people and real lives, not names on a spreadsheet. We should remain focused on that. I have serious concerns about the effect that the introduction of the loan charge is having on my constituents. Although my constituency cases are small in number, they are huge in impact. I am the first to say that people should pay their taxes and that tax avoidance is wrong and should be stopped, and I am grateful that HMRC and the Treasury are taking steps to address tax avoidance. 
 
Several hon. Members rose— 
 
Nic Dakin 
 
I will give way to a maximum of two Members. 
 
Neil Parish 
 
I thank the hon. Gentleman for giving way, and I very much agree with him. The biggest problem is the loan charge’s retrospective nature, because the tax situation, the way in which we pay tax and the attitude towards tax have changed so much over the years. Many people entered into these loan arrangements in good faith and, of course, they were brought on by the employer, not the employee. As my hon. Friend the Member for Orpington (Joseph Johnson) said, a tax judge needs to look at this because it is wrong to ask people to pay massive amounts of money retrospectively. 
 
Nic Dakin 
 
The hon. Gentleman makes the point clearly; the retrospective element is particularly disturbing. I am concerned that a small number of ordinary working people who are not millionaires with broad shoulders, but who are on average incomes and have acted in good faith, are being hit by significant tax penalties implemented in the most unfair manner. 
 
Teresa Pearce (Erith and Thamesmead) (Lab) 
 
Will my hon. Friend give way? 
 
Several hon. Members rose— 
 
Nic Dakin 
 
I will make a bit of progress. 
 
I have seen HMRC’s briefing pack on the loan charge, and I note the line in bold that says: 
 
“HMRC has never approved tax avoidance schemes.” 
 
I am glad to hear that, but I am not sure in this case whether I completely believe it, because when this law was passed in 2017, it applied a retrospective tax going all the way back to 1999. Notwithstanding the trouble with retrospective law in general, 18 years is a very long time to disapprove of something but not say that or act to fix it. The reality is that, by HMRC not speaking out or acting to prevent these loan schemes from being used for 18 years, while it did not give explicit approval, it certainly gave implicit acceptance. 
 
Richard Burden 
 
My hon. Friend makes a powerful point. At best, HMRC was woefully slow on this. Does he agree that, even at that late stage, the Treasury could have sorted this out when it accepted the amendment to the Finance Bill tabled by the right hon. Member for Kingston and Surbiton (Sir Edward Davey) in February by undertaking a proper review of this, so that it does not have the impact on individuals that my hon. Friend and the hon. Member for Aberdeen South (Ross Thomson) have talked about? It is woeful that HMRC and the Treasury did not conduct a thorough review, and that is why we need a proper, independent investigation. 
 
Nic Dakin 
 
I tend to agree with my hon. Friend, but fortunately the Financial Secretary to the Treasury is a good Minister, and I echo the comments made about him. I am sure he will respond in a positive way to the debate and that we can anticipate positive moves that will reassure people. 
 
It is easy to see why people such as tax accountants, employers and even my constituents who were employed under these schemes and told they could not be employed otherwise thought it was okay to use these schemes—they believed they were perfectly legal. 
 
Lee Ashcroft, who is one of my constituents impacted by the loan charge, is an engineer in the construction industry. He is a normal working man who happened to find himself, through no fault of his own, in a sector where businesses contracting workers obliged them to enter into these schemes if they wanted to work. To Mr Ashcroft, these schemes seemed unfair because there was no holiday pay or sick pay, but they seemed perfectly legal. He was told that they were perfectly legal by the company he worked for and by advisers with whom he checked it out. 
 
Mr Ashcroft needed to work and accepted that this was the deal. He tells me that, in relation to £6,500 in loan payments, HMRC expects him to agree to settle a bill of £25,500—money he clearly does not have. He strongly disputes the amount he has to pay, which is vastly in excess of what he earned, but the clock is ticking. If he does not enter into an arrangement to pay by the upcoming deadline, he will be expected to pay the full amount with fines added on top. He is being forced to make an impossible decision: accept paying a huge bill that he thinks has been miscalculated and is morally wrong, or try to get HMRC to re-evaluate what he owes, and if he is unsuccessful, he will have to pay the full amount with fines on top. Either way, it will have a life-changing impact on his prosperity. Given the amount of worry that this has caused him, I think it has already had a life-changing impact, and Members will have stories of other constituents whose lives have been turned upside down by this. 
 
It is unclear to me why HMRC is going after Mr Ashcroft in the first place. After all, it was his employer who forced people into these schemes. It is the employer who has benefited financially from this, yet it is the employees who are being left to pick up the tab, after HMRC waited 18 years to collect it and now wants it all in one dollop. These advanced payment notices are being relentlessly pursued by HMRC with no independent right of appeal. That does not seem to be playing fair. 
 
Matthew Pennycook (Greenwich and Woolwich) (Lab) 
 
My hon. Friend makes an important point. One of the most iniquitous aspects of this is the fact that the promoters of these schemes are not being pursued. Does he know of any who have been prosecuted to date? 
 
Nic Dakin 
 
I do not know the details, but I think the Financial Secretary will be able to update us on that when he responds, and I think that that is being looked at. The reality is that people who wanted work were pretty much forced to go into these schemes, which they believed, having checked them out, were perfectly reasonable and legal. Many years later, they are picking up a big tab that does not seem to equate to the money they got at the time, but seems much bigger. 
 
Teresa Pearce 
 
Will my hon. Friend give way? 
 
Nic Dakin 
 
No, I will complete my speech, because other Members need to speak. 
 
Another of my constituents, Jonathan Davidson, told me: 
 
“The loan charge continues to be a real worry to myself and my family. HMRC have only now”— 
 
this is a couple of weeks ago— 
 
“advised me of the actual settlement figures which are much higher than my expectations, as such I am being forced out of retirement even though my health is not great and I am now actively looking for employment.” 
 
That is an example of what is happening to real people’s lives. For all my constituents affected, this issue is causing severe emotional and financial distress, which HMRC is neglecting and not taking note of. It is behaving as though it does not understand that this is about real people’s lives. This is serious and should not be minimised. This is having a devastating impact on people’s lives, and the distress is very real. 
 
HMRC’s actions are also self-defeating, as they will undoubtedly push ordinary working people into bankruptcy, restricting HMRC’s ability to recover these tax liabilities. That does not seem very sensible, and it will create pressures on the public purse in other areas. We need some common sense—I see the Financial Secretary as the personification of common sense. It is time for the Government to pause the loan charge and think again about the best way forward, which should be fair to the Exchequer but also fair to honest working people who believed they were doing the right thing and have unfortunately—and, for many, unavoidably—been caught up in these schemes. 
 
1.07 pm 
 
Mr David Davis (Haltemprice and Howden) (Con) 
 
It is a pleasure to follow the hon. Member for Scunthorpe (Nic Dakin), who is a near neighbour of mine. He and I represent seats in the north of England that are not full of city slickers and billionaires avoiding taxes with expensive lawyers. I pay tribute to the APPG for the work it has done on this, representing constituents up and down the country who have suffered dreadfully under this arrangement. 
 
US Supreme Court Judge Marshall once said, 
 
“the power to tax involves the power to destroy”. 
 
This, I am afraid, is a good example of that—a tax policy that is destroying families, homes, mental health and even lives. 
 
Andrew Rosindell (Romford) (Con) 
 
My right hon. Friend is making a pivotal point. This is a deeply un-Conservative action by a Conservative Government. Surely the mood of the House is clear: nobody wants to see this loan charge implemented. It is devastating people’s lives, and the Government need to act immediately. 
 
Mr Davis 
 
My hon. Friend makes a powerful point. I am not going to make a political point out of this, but I will make a policy point. When I was the Public Accounts Committee Chairman 20 years ago, it would not be true to say that the Inland Revenue behaved like a charity. It was always pretty tough, but in the last 20 years it seems to me that the exercise of its judgment has become more and more oriented to cash and less to justice. That is what we are addressing today. Part of the reason for that is that successive Chancellors have blurred the distinction between tax avoidance and tax evasion, one of which is illegal and one of which is a matter of judgment. That has put a huge burden on HMRC’s judgment, so that we see it effectively making the law through its judgment and in ways that are deleterious to our constituents. 
 
Mr Sam Gyimah (East Surrey) (Con) 
 
My right hon. Friend is making a very powerful case about how the tax system is developing and about the issue of justice. Does he agree with me that there are a number of people in this situation whose employers came up with schemes and they had no choice but to sign up to them? In some cases, they left the employment of these companies decades ago and are being pursued for funds, but the employers can actually wash their hands of the whole thing. It is not just for them to be pursued retrospectively, and it was not fair for them to have no choice but to sign up to schemes if they wanted to be employed by such a company. 
 
Mr Davis 
 
My hon. Friend is absolutely right, and I will come back to that point in a second. 
 
This also rests on this point of judgment: how does an ordinary lay person forecast what HMRC will decide in 10 or 20 years’ time? We see this—unlike others, I am not going to butter up the Treasury Bench today—even in the responses of Ministers in previous debates and even in the letter we received from the Financial Secretary this morning. He talked about the reason for the definition of this scheme, and said it was for the 
 
“sole purpose of avoiding tax”. 
 
Well, I have news for the House: I have at least a couple of ISAs—individual savings accounts—which are there for the sole purpose of avoiding tax. Are they now illegal? Is that the criterion we should apply? Well, plainly not. 
 
There is a real issue about the approach of HMRC, and I am going to be rather harder than the all-party group in my recommendations. I think it is being just a little bit too reasonable, and I will come back to that in second. [Interruption.] I think a number of Conservative colleagues are threatening to sue me for calling the right hon. Member for Kingston and Surbiton (Sir Edward Davey) reasonable. 
 
Before I come to my main point, I want to go back to the report on this subject carried out by the House of Lords Economic Affairs Committee. We all have very emotional cases impacting on our judgment, but we cannot say that about the House of Lords. The House of Lords looked at this incredibly dispassionately. Its Members do not have constituents, so they can in a way be viewed as much more dispassionate than us. Let me remind the House of a few of the Committee’s findings. 
 
The Committee found that the Public Bill Committee for the Finance (No. 2) Bill in 2017 
 
“did not adequately scrutinise the loan charge.” 
 
That is incredibly important for something that will be retrospective, but it did not properly scrutinise the loan charge. I think it was spoken about only by the Minister and the Opposition spokesman, and by nobody else. 
 
The Committee said that many witnesses told it that they had joined these schemes—this is the point made by my hon. Friend the Member for East Surrey (Mr Gyimah)—without being aware of HMRC’s attitude towards them. Many were assured by employers or promoters that these schemes were above board and, indeed, as he said, they could not have had the jobs if they had not accepted the terms. 
 
George Eustice (Camborne and Redruth) (Con) 
 
Will my right hon. Friend give way? 
 
Mr Davis 
 
No, I am afraid not. 
 
That is why we find not city slickers, bankers or finance specialists, but nurses, doctors, locums and careworkers caught up in this. All those people will never have the resources to pay back this money. It does not matter whether it is over two, five, seven or 10 years, they will just never have it. 
 
Many witnesses said they had declared the schemes to HMRC. This really is the criminal aspect of this: someone declares a scheme, and then 20 years later or 10 years later, HMRC comes back and says, “Sorry, we haven’t closed your year, and you can pay now”. They are being asked to pay not a small amount, but £20,000 or £30,000 in the case of some my constituents. 
 
What the Committee found is very important because, again, where does the blame lie? I think part of the blame lies with HMRC, but part of the blame lies with the employers. Many people have said that that is where HMRC should focus its effort, but the House of Lords Committee found 
 
“little evidence of action taken against those who promote disguised remuneration schemes.” 
 
It went on to say that 
 
“HMRC appears to be prioritising recovery of tax revenue over justice”. 
 
That point is central to today. 
 
The Committee noted that the people involved were unusual subjects of this sort of recovery, because of the nature of their employment and so on. It said that of course these disguised remuneration schemes are “unacceptable tax avoidance”, but it also said: 
 
“The loan charge is, however, retrospective in its effect.” 
 
This House was formed in order to challenge the King, in his day, on the justice of the taxes he was demanding, and to put their own concerns back to the King to get them corrected before we paid the taxes. We should not forget the fundamental reason for this House’s existence, which is to look after our constituents in the face of demands from the state. 
 
The Committee made a recommendation that HMRC should in future make clear public statements when it is looking at avoidance schemes. Because of the fact that so much of the burden of the decision falls on HMRC, it should make it clear to the public at large and anybody in those schemes when it is investigating them. 
 
Rushanara Ali (Bethnal Green and Bow) (Lab) 
 
Will the right hon. Gentleman give way? 
 
Mr Davis 
 
No, I am afraid not. I have a couple of minutes left and I am going to come to an end in a second. That is the House of Lords’ view, and it was very critical. For a House of Lords report, it was an incredibly critical report. 
 
Let me turn to the motion and the all-party group’s approach. As I say, it is incredibly reasonable: let us have a review—a judge-led review or whatever—and take some time to sort this out. I am afraid I think that that is altogether too reasonable in the light of the pressure that is being created by this policy. People who are under this policy now are suffering mental strain day in, day out. They are not people who are ever going to find £20,000, and to say to them that they have five years to pay if they are—as one of my constituents is—on a minimum pension, is meaningless. It just means his house or his car has to go, and his family is breaking up under the strain. 
 
My view is very simple: this should not be retrospective at all before 2017—at all—because there is no reason for it whatsoever, given the behaviour of HMRC. If we do not get something like that—I say this to the Treasury, and they can add this into their accounting—I, and I suspect many others in this House, will start to pursue a right in law for every citizen that limits the extent to which the state, and particularly HMRC, can take any retroactive action whatsoever against persons, not companies, such as the Vodafones, but against individuals, because it seems to me that we owe a duty to our constituents to have some certainty from the state in relation to the taxes they pay. 
 
Several hon. Members rose— 
 
Madam Deputy Speaker (Dame Rosie Winterton) 
 
Order. I will have to reduce the time limit to seven minutes. 
 
1.17 pm 
 
Sir Edward Davey (Kingston and Surbiton) (LD) 
 
I apologise to the right hon. Member for Haltemprice and Howden (Mr Davis) for being the chair of an all-party group that has produced such a reasonable report. We did it because we wanted to be constructive and to bring this House together. I want to draw attention to two points: first, the fact that this issue has brought the House together, and I will talk a little bit about that because it is in the power of this House to stop the Executive on this matter; and secondly, the nature of the retrospection, which is the issue that has caused me, as well as my constituents with such cases, to be so passionate about this issue. 
 
First, on cross-party unity, I pay tribute to the hon. Member for Aberdeen South (Ross Thomson), a vice-chair, who opened the debate, and the hon. Member for Brentford and Isleworth (Ruth Cadbury) and all the other members of the all-party group, which represents six parties in this House. I thank all Members who spoke on Report of the Finance (No. 3) Bill, when we passed the amendment—quite unusually—because we had cross-party support from every side and political persuasion both between and within parties. 
 
There is a reason why we got that support. It is because our constituents have come to us and we have seen the damage this is doing to their lives—real lives—but also because key principles of democracy are at stake: parliamentary sovereignty, if we can forget the Brexit debate for a minute, with respect to holding the Executive properly to account for the way they tax our constituents, and the rule of law. Those issues have brought this House together, and today we need to continue with that message and make it clear to the Minister and the Government that we are not going away until this is put right. 
 
Stephen Lloyd (Eastbourne) (Ind) 
 
When my right hon. Friend opened, he spoke about cross-party support. As he knows, since I started early-day motion 1239, whenever it was—nine or 10 months ago—the cross-party support has been astonishing: 148 MPs from all parties, including many Conservative Members, have now supported it because they really do have concerns about the retrospectiveness and the fairness. Does my right hon. Friend agree that Parliament is really coming together and saying, “There is a real problem and a real challenge here. Treasury, please look at it”? 
 
 
 
Sir Edward Davey 
 
I strongly agree with my hon. Friend and I thank him for the work he did in leading that EDM. The cross-party nature and depth of support should make the Minister think today. People have been looking at the way this House operates more closely than they usually do. They need to know that when this House comes together, the Government listen. It is our constitutional job to make the Government listen. When there is that level of support and they do not listen, that is an outrage to this House. 
 
Mr Jim Cunningham (Coventry South) (Lab) 
 
I agree with the right hon. Gentleman: it is about time that the Government listened. Regardless of the issue, retrospective legislation can be a dangerous thing. In some instances it might be justifiable, but by and large and in principle, it is a very dangerous thing. The other point that has emerged from this debate is that those who encouraged people in their employment to get involved in such schemes should be the ones to pay up, not the victim. Does he not agree? 
 
Madam Deputy Speaker (Dame Rosie Winterton) 
 
May I just point out that interventions must be short? Please remember that interventions mean that other people have less time to speak. 
 
Sir Edward Davey 
 
I agree with the hon. Gentleman. Let me take his point on retrospection into the substance of my speech. 
 
Everybody has paid tribute to the Minister and I join in that, but I urge him to look at the retrospection issue. The all-party group has spoken to tax professionals and has read a lot of material. There is a debate about whether aspects of this are retrospective or not, and about where the retrospection lies. One group has been hit by the loan charge where the retrospective nature has been proven beyond doubt: taxpayers who have had their tax returned to the Treasury with DOTAS added—sometimes even without DOTAS added—and who have come clean on everything they have been doing. HMRC has accepted that and has not opened an inquiry. Their cases have been closed and time has passed. Under section 9 of the Taxes Management Act 1970, we have been giving taxpayers in that situation total protection from HMRC coming back to them. That has been true for decades. Indeed, we have signed international conventions to say that that is the way individuals should be treated. Yet here we are, going back on that. To be clear to the Minister, all the tax professionals we talked to believe that for closed cases, that was a transgression. Indeed, I asked them if they could find any example on the statute book ever of a Government passing a law to override taxpayer protections and they could not. 
 
When the Government responded to that clause with a review, their argument against all the advice was that the charge was not retrospective because it was a charge on the loan as of now—the outstanding loan. That is interesting, because they had never before proven that loanable income. That was the whole point of this whole debacle. Moreover, the loans were taken out in the past. We might not call it retrospective and we might call it retroactive, but frankly it is the same thing for the ordinary person. The reply to the amendment to the Finance (No. 3) Bill was therefore simply not good enough; it was wrong. This is a breach in the rule of law, particularly for those people with closed tax years. At the very, very least, the Government should not apply the loan charge to those people; that is the recommendation of the all-party group. 
 
We then come to people with open tax years. Sometimes there has been an inquiry years before—15 or 20 years ago. For many taxpayers, it was not really clear what that was. There was a little form. They were not told what their rights were or what they should do in response. They just sat there, and some of them did not even know there was an open inquiry. Those open inquiries have lasted for years, with, as the hon. Member for Scunthorpe (Nic Dakin) said, HMRC doing nothing. Surely that is HMRC incompetence, not mistakes by taxpayers. They are now paying because HMRC could not administer the tax system over that period, and tried and failed to get the law right. I am sorry, but HMRC cannot penalise our constituents with tax bills of tens of thousands of pounds because it could not do its job properly. That is not acceptable. 
 
Rushanara Ali 
 
As the right hon. Gentleman rightly points out, HMRC has been looking at disguised remuneration since the late ’90s and opened hundreds of thousands of cases. Mary Aiston, at the Treasury Committee, said that 
 
“at that time our strategy meant that we weren’t telling taxpayers enough about what we were doing on their case—so they would have had an open inquiry or assessment…We recognise that at the time our strategy meant we weren’t communicating regularly enough to keep them in the picture.” 
 
Does the right hon. Gentleman agree that if that was done people could have dealt with those cases and paid up immediately, and not had tens of thousands—or, in cases in my constituency, hundreds of thousands—of pounds to pay back? 
 
Sir Edward Davey 
 
The hon. Lady is precisely right. That is what I think has offended people. Technically for people with open tax years it is not retrospection, but in practice—and, frankly, morally—it is. One thing that I will pursue after this experience is the use of open tax inquiries by HMRC. It goes against the whole spirit of the 1970 Act and of the way the rule of law should operate. I believe that in all parts of the House we stand to defend the rule of law. When we see an abuse of it we should get angry, we should get passionate and we should pledge to do something about it. I hope we will. 
 
How should the Government respond? I think they should call a halt and delay. That would send a clear message to people who are suffering mentally and socially with their families and their homes. Announcing that today from the Dispatch Box would give them some relief. We have been telling them that their tax bills are not due until 31 January 2020. Nevertheless, according to the guidelines, if they do not talk to HMRC by this Friday they could suffer severe penalties. A delay would therefore help. 
 
A judge-led inquiry is the only way we will bring people back together. Such an inquiry could look at all aspects. However—to speak to the right hon. Member for Haltemprice and Howden—I do not want to leave it there. The policy should change now for people with closed tax years. There should be no debate about that. That is retrospection and an abuse of the rule of law. For those with open tax years, as the all-party group’s report says, a number of measures should be taken to reduce the pain and to ensure that they can get their tax affairs in order. This House is against abuse of the tax system. That is wrong and it should be stopped. But this House is also in favour of parliamentary sovereignty—the Government listening, upholding the rule of law and upholding long-standing taxpayer protections. 
 
1.27 pm 
 
Royston Smith (Southampton, Itchen) (Con) 
 
I do not intend to take all of my time, because I am nowhere near as qualified as the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and my hon. Friend the Member for Aberdeen South (Ross Thomson), who have done a fantastic job in getting us here to this debate, so that we can make representations on our constituents’ behalf. I, too, pay tribute to the Minister. He has been very helpful in responding to all my queries and those of my constituents. Of course, not all responses have been to their liking, but he has always been available and I pay tribute to him for that. I hope he is as accommodating today as he has been so far. 
 
My hon. Friend the Member for South Suffolk (James Cartlidge), who is not in his place any more, argued that people who use public services should pay for them. If we are talking about evasion versus avoidance then of course he is absolutely right, but self-employed contractors have a different tax regime to people who work with PAYE; they have a different structure. They will look to see whether they can make the best use of their tax situation, because they do not get sick pay or holiday and nobody is paying their pension for them. They will therefore look for the most efficient way to deal with their tax. Some of these schemes have been shown to be that for them. They asked the questions and we all know they asked the questions. There are very few people caught up in this who we think went deliberately out of their way to avoid tax. 
 
Sir Henry Bellingham (North West Norfolk) (Con) 
 
I endorse what my hon. Friend said about the Minister, who has been extremely receptive, and we hope that he will take action. Is my hon. Friend aware that many of these people are well into their late 50s and many are over 60, and they have no chance of ever recovering their financial position? Some of my constituents specifically asked the Revenue whether everything was in order and correct and proper. They were told categorically that it was, and it allowed them to take out future schemes in future years. 
 
Royston Smith 
 
My hon. Friend makes a very good point. That is exactly what my constituents have been saying to me. Some of them are nearing retirement with absolutely no chance of paying back what they are told they owe. Furthermore, they tell me that these schemes still exist—I hope that the Minister will confirm whether they do—and that people are still promoting very similar schemes. If that is the case, it is incumbent on HMRC and the Government to be shutting them down and going after the people who did them. 
 
Robert Courts (Witney) (Con) 
 
My hon. Friend makes an excellent point. I have a great number of constituents who are very distressed about this. People cannot be treated and approached in a technical way, because this affects people’s real lives. The Treasury must bear some culpability, given that it has at least allowed these schemes to be used when everyone else has acted in good faith in investing in them. 
 
Royston Smith 
 
My hon. Friend is absolutely right. I think that we are finding a consensus across the House, in that we all agree with that. People did ask these questions. They were convinced by those who promoted the schemes that sometimes it was the only thing that they could do, but that the schemes were legal. Some of the people asked these questions of HMRC. 
 
The worst of it is that it looks very much like we sometimes just go after the low-hanging fruit. It is easy to chase such people rather than those who promoted the schemes and landed them in this trouble. Everyone has said—I will say it too—that these are real people. When people affected first came to see me in my constituency, I did not know very much about this, but when they told me about it and the figures that they might have to pay, it was devastating. I could not believe what they have been told might happen to them. I thought, “What if that was me? What if someone came to me and said, ‘You owe tens of thousands of pounds’?” Frankly, I would have no way of paying that amount without a significant change to my life. Fine—maybe if I deserved it I would have that coming, but if people did not know that, why should their life have to change so much, to the point where some have now felt that their life is no longer worth living? Driving people to bankruptcy is not the answer. We should be finding out how this happened and discovering who is culpable, including HMRC. 
 
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP) 
 
Does the hon. Gentleman agree that it would be a clear injustice if anybody innocently caught up in this, having sought advice for one of these schemes, were to lose their main home or indeed be made bankrupt as a result of this action? 
 
Royston Smith 
 
It would be an absolute tragedy. That is why I am very grateful to my hon. Friend the Member for Aberdeen South for securing this debate, enabling us to air this issue publicly. If anybody is made bankrupt from something that is not of their deliberate doing, it would be a travesty. 
 
I do not propose to take much more time; I know that lot of people are waiting to speak. It is not a great ask to the Minister to pause this, to review it independently and to give my constituents and everyone else in this House a bit of respite, so that they know that what has happened to them is right. 
 
1.33 pm 
 
Ruth Cadbury (Brentford and Isleworth) (Lab) 
 
As one of the vice-chairs of the all-party loan charge group, I add my thanks to members of the Loan Charge Action Group for all their work in submitting evidence to us, and particularly to those few people who have worked their socks off in recent weeks to pull together the APPG report, which was released yesterday and is available online for anybody who wants to see it. I will focus on HMRC’s communications with taxpayers that have led to many of the appalling stories that Members across this House have been relating and will relate today. 
 
Jim Shannon (Strangford) (DUP) 
 
I sought the hon. Lady’s permission to intervene beforehand. Many of my constituents have the same problems that everybody, including the hon. Lady, has referred to. They are asking for a six-month delay for a review of the loan charge. Does she my real concerns about those who are purported to have committed suicide? There have been deaths, and people facing bankruptcy have had to sell their homes. The effect on people’s health is enormous. 
 
Ruth Cadbury 
 
Examples such as that—tragically, we heard from the family of somebody who committed suicide—have been mentioned today. The stress has been well related by Members today on behalf of their constituents. 
 
I knew very little about this issue until I met a group of my constituents. They are normal people, if anybody is normal. They are specialists in their field and they are middle-aged, but they have had to put their lives on hold. One couple cannot get married and get a mortgage. Another are making plans for their children’s university education, and that is causing them real stress. Those who are still working are treading water. They are not investing, not employing people and not generating wealth for this country. All are profoundly anxious and depressed, and it is affecting everything about their lives. 
 
What I have learned from the work that we have been doing in recent months is that there are, very roughly, two groups of people. The first group is professional freelancers who went into the scheme, starting up to 20 years ago. Generally, they are middle to high earners and took professional accounting advice about the options available in the post-IR35 world. This group, mainly professionals, went into loan schemes because for them, pay-as-you-earn employment was not an option and their accountants advised them that due to the regulatory complexity and disproportionate cost burden of IR35, it would be best to enter into a loan-based enumeration scheme. There was no uncertainty about the legality of the scheme back then. They made arrangements with umbrella companies to prevent them from inadvertently breaking the IR35 rules. Everyone I heard from who went into these schemes said that they did so not to save tax, but to save the administrative burden. 
 
There is another group—an unknown number—of more recent joiners since the rules changed in 2016. They are working in public services, as nurses, doctors and social workers. The word “loan” was never mentioned to them by the scheme providers. They generally did not take separate professional accountancy advice, as they were signed up by a recruitment company that had links with the umbrella company. There appeared to be no choice, and 
 
“everyone we worked with was doing it”. 
 
It is possible that many of these people do not know that they are caught up in this. 
 
 
 
Mrs Kemi Badenoch (Saffron Walden) (Con) 
 
Will the hon. Lady give way? 
 
Ruth Cadbury 
 
I will if I have time. 
 
Evidence to our inquiry shows that HMRC was aware of these promoters, yet none has been investigated and prosecuted. Why not, and why have they not been chased? 
 
There is a 45% non-refundable charge on all loans advanced during the period unless the individual agrees to pay up front a figure calculated by HMRC—completely opaquely—and regardless of whether any such tax was legally due at the time. It is going to have to be paid and is effective from tomorrow. Anyone who has ever been employed through such a structure could face a retrospective charge in the 2018-19 tax year, which is about to close, payable by January 2020. All potential liability—it could be for many years—will all be rolled up into this tax year, whether or not someone knows what their liability is, or indeed whether or not they are even aware that they have a liability. That cannot be within the spirit of natural justice. 
 
How do the people who know about it know? Many of our inquiry respondents were notified of the loan charge in late 2018—some as late as this year. That is wholly inadequate given the life consequences of these demands. Standard letters are going out indiscriminately to any individual who might have been employed by a company that might have undertaken a disclosed tax avoidance arrangement. Letters refer to closed tax years, as the right hon. Member for Kingston and Surbiton (Sir Edward Davey) mentioned, even when the tax has been agreed and paid. Evidence shows that there is no standard format in letters and no evidence provided, even of the dates in the years being queried. By withholding this information, HMRC has failed in its duty of care to taxpayers who are unaware of their right to request disclosure. They face a greater retrospective penalty in a single year—this year—than might have otherwise been the case. 
 
People’s belief that they were doing the right thing was partly based on a belief that the loan charge arrangements were not taxable. HMRC correspondence of 2006 stated that plans 
 
“made by an…EBT…are not taxable under Sections 173 &174” 
 
of the 
 
“Income Tax (Earnings and Pensions) 2003”. 
 
Furthermore, there is the Rangers Supreme Court case, which remains the position in law. Individuals are not liable—their employers are—yet HMRC is misinterpreting the outcome of that case. We understand that HMRC has used behaviour change specialists in pursuing the loan charge, which may explain the aggressive and opaque nature of its communications. The regular use by HMRC of a phrase asking people to “put their tax affairs right” is clearly part of this strategy of forcing people to feel, and accept, guilt for wrongdoing. That is despite the fact that the arrangements they used were entirely legal at the time. There have also been a disturbing number of reports of individual HMRC officers telling taxpayers that they should apply for mortgages or loans, but not telling the lender that the money will be used to pay a tax bill. Why? Because that is contrary to tax law, of course. 
Many of the taxpayers who submitted evidence to our inquiry highlighted the stress and anxiety that they have experienced as the direct result of the language and tone of HMRC communication. Individuals who believed that they were acting within the law told us that they have been made to feel like criminals. The all-party parliamentary group on the loan charge agrees: it is wholly inappropriate for a Government department to intimidate individuals into settlements through threats and labelling. 
 
The issue has had two consequences. One is the feeling of criminality. We heard about the family who read out the father’s suicide notes; he had kept the information from them as he was too embarrassed. He was too embarrassed even to see a tax consultant or his accountant; he could not admit that he might have done wrong. He thought he was going to prison. In that example, his liability was well within his means; he could have afforded to pay. But he was made to feel like a criminal—a man who had never done anything against the law in his life. 
 
The other consequence is the threat to the homes and businesses of those who are likely to be made insolvent. This issue will affect their and their family’s lives now and in the future. We are talking about amounts that are often unjustified, unquantified and unexplained. 
 
Dominic Raab (Esher and Walton) (Con) 
 
I thank the hon. Lady, who is making an excellent speech. Does she agree that there are three fundamental elements of the injustice? There is the retrospectivity, which undermines basic principles of justice; the devastating impact on ordinary people’s lives, which she has described; and the contrast between the arbitrary approach taken to those people and the sweetheart deals for the likes of Goldman Sachs. Does she agree that the retrospectivity must be ended and that the scheme must be reviewed? 
 
Ruth Cadbury 
 
I absolutely agree. The scheme needs to be paused for at least six months and should be reviewed by a qualified tax judge completely independent of the Government. I am also concerned that HMRC may have been acting without direct steerage from the Treasury and Treasury Ministers. Ministers have said things to the loan charge APPG that contradict what we have been told by credible witnesses. This debate raises a number of questions for Treasury Front Benchers, and we look forward to their responses. 
 
1.42 pm 
 
Dame Cheryl Gillan (Chesham and Amersham) (Con) 
 
It is a pleasure to follow the hon. Member for Brentford and Isleworth (Ruth Cadbury). I join others in congratulating my hon. Friend the Member for Aberdeen South (Ross Thomson) and the other Members who secured this debate today. 
 
I do not want to repeat the eloquent speeches that have already been made, but it is worth putting on the record that this is not happening to a group of high net worth individuals but to some ordinary, hard-working people such as social workers or IT consultants—people in the everyday run of their lives. Frankly, if I were to be cynical, I would say that the indictment of HMRC, which the hon. Lady was laying out for the Chamber, is absolutely right. I feel that these collection officials are cutting their teeth on a whole group of individuals who feel that they cannot fight back. This debate shows how they can fight back, particularly when the voices of those who are not often heard are represented so well across the House. The right hon. Member for Kingston and Surbiton (Sir Edward Davey), who chairs the APPG, was right in saying that the issue brings the House together. 
 
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con) 
 
Will my right hon. Friend give way? 
 
Dame Cheryl Gillan 
 
I am sorry, but I will not give way. A lot of people want to speak, and the more I give way, the more their time gets reduced. 
 
What is striking for me is that all these individuals made reasonable inquiries about their tax liabilities. They consulted professionals and were offered advice. Indeed, the actions of HMRC almost reinforce the fact that what they were doing was a legal way of pursuing their employment. 
 
If as a result of this issue our constituents who work in the banking industry are declared bankrupt, they will not even be able to continue legitimately pursuing their career and means of earning a living, because they are specialists in that area. They will be prohibited from working in the banking sector. That is absolutely appalling. 
 
I turn to what some of my constituents have said, to reinforce some of the points that have been made. One of my constituents used an umbrella company, which assured him that he was doing nothing wrong and that the scheme was HMRC approved. When, finally, the bill landed on his desk, the umbrella company asked him to appeal, which he did. He received letters for tax years other than the one in question, but always at least three years after he had sent in a tax return. In each case, HMRC not only requested the tax it said he owed, but three years’ interest as well. 
 
Another constituent said: 
 
“I am not a tax expert and the policy left me extremely confused…I didn’t know which way to turn. I was advised that I could use an arrangement that would ensure I was compliant with IR35. My primary motive was to abide by the law. I was told that the tax arrangement was HMRC and QC approved. 
 
HMRC are now saying that these arrangements do not work, yet at the time they did nothing to curb them. They allowed me to build up years’ worth of debt, signing off my tax returns and on some occasions sending me a tax rebate! 
 
I simply do not have the sums of money involved. I am not a wealthy person, I have worked hard and I have paid taxes. Over the 18 months, this situation has led to anxiety and stress.” 
 
Sometimes, he has had suicidal thoughts. This person is a freelancer, so he has had no holiday pay, sickness pay, maternity pay, paternity pay, compassionate leave, pension contributions, career development, training or bonuses, and certainly no job security. He is suffering from sleep deprivation and has been thinking he could take out some sort of insurance so that if he ended his life it could secure his wife and children’s future. That is a terrible thing to have to say. 
 
Another constituent said: 
 
“I began receiving loans in late 2011 and they were always very clearly disclosed to HMRC within my annual Self-Assessment Returns. In mid-2012, HMRC reviewed the payroll arrangement and the loans provided to me and formally confirmed they did NOT constitute ‘tax avoidance.’” 
When HMRC gives that sort of reassurance to the taxpayers of the United Kingdom, they should expect to be able to believe it. Much praise is heaped on Front Benchers and the Financial Secretary to the Treasury; I concur with it—my right hon. Friend is always polite, always replies and is assiduous in dealing with my constituency correspondence, for which I am very grateful. However, I am afraid that I agree with my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), who is not in his place, who said that we cannot pursue anything before 2017. I hope that the Minister will listen carefully. 
 
I feel that HMRC has been trying to collect taxes aggressively but using what I consider to be a very tame audience. It should direct its attentions to the fraudsters and the mega-companies—not just the J.P. Morgan schemes, but the Googles and the Amazons. In some instances, our constituents are being asked to pay sums greater than what a company such as Amazon or Google has paid in a whole tax year. 
 
I consider that this issue has been used as a loss leader by HMRC; it has put so much into administration costs that it is almost caught—it feels that it cannot go back and abandon its pursuit of these individuals. But I think it should. Treasury Benchers certainly now need to pay attention to the will of the House. The anarchy of what has happened to our Standing Orders has resulted in the House being taken over by people other than the Government. There is a strength of feeling across the House and across parties. If some mechanism has to be sought to try to get relief for our constituents, that is not now beyond imagination. 
 
1.49 pm 
 
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op) 
 
I congratulate the hon. Member for Aberdeen South (Ross Thomson) and his colleagues in the all-party group on the way they have taken up and pursued this issue, and on the incredibly well informed report they have delivered. Many of the points I wanted to make have already been made, but I think one or two are well worth underlining and reaffirming. 
 
The first point is on the retrospective approach taken. The people caught by the charge are, by and large, on ordinary, or perhaps slightly better than ordinary, incomes and are law-abiding; they were advised, perhaps beguiled, and in some cases even coerced into being part of the schemes; and they filled in their tax returns and declared everything. There was no attempt to hide their tax status in returns to HMRC. Although it may be true that HMRC did not approve the schemes, it is self-evident that HMRC ignored the evidence in front of them that may have justified taking action, so to take action now, after 20 years, is totally unfair and defies all laws of natural justice. 
 
Seema Malhotra (Feltham and Heston) (Lab/Co-op) 
 
Will my hon. Friend give way? 
 
Mr Bailey 
 
Sorry, but I will not take interventions. 
 
The Government need to do something about this problem. Astonishingly, it appears that, during those years, the Government had adequate legal redress available to them, had they wanted to take action. The loan charge legislation they introduced was designed to recoup the money simply, in a way that avoided the time and hassle involved in taking action under previous legislation. It smacks of trying to maximise income from the softest targets with the minimum of cost. The high volume of complaints that I have had about the process used to achieve that aim underlines that point. 
 
It has been mentioned that the deadline is Friday for people to give evidence of how they will settle their outstanding bills. I have people in my constituency who are scared witless because they are not in a position to do that. It is not that they ignored HMRC; they provided it with the evidence, but they have not had the figures necessary to make the decision on how to settle their affairs. They are being threatened by HMRC that if they do not do that, penalties will be invoked, but HMRC has not provided them with the figures they need to do it. It is absolutely incredible, and it underlines the impression that HMRC is trying to maximise the amount of income that it can get from individuals who are trapped in this situation. 
 
I looked at the HMRC document on the subject, particularly the “Supporting people” section. Unbelievably, it says that people must realise their assets, if necessary. I suppose that with a multimillionaire, that is a reasonable approach, but for ordinary people—especially retired people on low incomes, whose home may be their main asset—it is a totally inappropriate way to “support” people. One person who came into my surgery told me they think—they have not had the figures—that, after 5 April, they will have to sell their house. It is all right for HMRC to say people will not have to sell their house, but if that is their only asset and they have to realise their assets, they have no alternative. 
 
The HMRC document goes on to say that people can remortgage. A retired person on a low income who goes to a financial institution and says, “I need to remortgage my property so I can pay off my tax debts” is unlikely to get a sympathetic response. Frankly, that document contains a lot of honeyed words that actually give no help or succour to those who are confronted with this potentially devastating and life-changing financial experience. 
 
HMRC holds surgeries in the House of Commons that we can go along to. That is praiseworthy, but I went along with a couple of cases on loan charges and, unbelievably, there was no one there in a position to give me an answer. Given that this is the pre-eminent taxation issue that Members face at the moment, and HMRC is presumably trying to improve communication between constituents, MPs and itself, that is an amazing omission, which only underlines again the fact that the HMRC appears to be totally indifferent to the plight generated by its processes and the culture that surrounds them. 
 
I say to the Minister that there will be thousands of people watching us today, knowing that their future welfare, their livelihood and their happiness depend on the words of advice he gives at the conclusion of the debate. I just hope that his response will be favourable. Treasury Ministers do not often have a chance to make people happy, but here is an opportunity to do. 
1.56 pm 
 
Sir Mike Penning (Hemel Hempstead) (Con) 
 
I should not be here today. I should be at the funeral of my constituent Graham Smart. He was the chairman of Leverstock Green football club, and as his constituency MP and president of Hemel Hempstead football club—another community club—I desperately wanted to be there and had promised to attend. However, my place is here in this debate, making sure that I stand up for, initially, one of my constituents, who came to see me many months ago, which is when I joined the all-party group. I was informed this morning that I now have 100 constituents who are affected by the loan charge. 
 
I sat in on some of the all-party group’s evidence sessions. There is a really important point to make here. We have Select Committees in this House and other Committees. All-party parliamentary groups can be a complete waste of time, or they can really make a difference. I jointly chair one of these groups—the all-party group on medical cannabis under prescription—and we managed to change the law. I truly hope that the all-party loan charge group, with the backing of the House, will be able to sway Ministers and the Treasury’s view on this, which I think is one of the great disasters that we are bringing on our communities. 
 
More than 900 years ago, this House was formed to represent the people who paid tax. Admittedly, it was completely unelected in those days, but that remains our job. Unlike some of my colleagues, I have clearly upset the Financial Secretary to the Treasury. I was over-zealous defending my constituents. I have apologised to him privately and I apologise to him publicly now. I think that he is fundamentally wrong in what he said to me, but at the end of the day that is his opinion and, I am sure, the Treasury’s. In my opinion, what is happening here is that some of my constituents took advice from the companies—if they had not, they would not have got the job—and from some very large taxation accountants; they submitted completely openly that they were in one of these schemes; they had a registration number from Her Majesty’s Treasury; and now they are getting bills for hundreds of thousands of pounds, which, as we have heard, is completely and utterly destroying their lives. 
 
Like lots of colleagues, I have had constituents come to me. I am not making it up, but I am not going to name these people, because—it is part of the problem we face—they are too ashamed to tell their loved ones that these bills are coming down the line. They are petrified of their employers knowing. Many of the people in my constituency who have come to see me and written to me are employed in the financial sector in the City. There is absolutely no doubt that they will lose their jobs and their livelihoods. 
 
Sir Henry Bellingham 
 
rose— 
 
Sir Mike Penning 
 
I will give way twice: once to my hon. Friend and then to another colleague. 
 
Sir Henry Bellingham 
 
I am grateful to my right hon. Friend for putting forward a strong and moving case. Is he aware that some early-retirement benefit schemes—so-called EFRBS, or employer-financed retirement benefits schemes—are also being unpicked retrospectively, causing an equal amount of pain and suffering to constituents, including one in my constituency who is having to pay back £175,000? 
 
Sir Mike Penning 
 
I do not agree with the way the Treasury has started to unpick people’s personal taxation schemes. This is not the big companies that frankly get away with murder because they can employ the right sort of lawyers, but the small people. They are the people who are getting messed about. 
 
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con) 
 
rose— 
 
Sir Mike Penning 
 
I will give way once more; then I will make some progress. 
 
Sir Geoffrey Clifton-Brown 
 
I am grateful to my right hon. Friend for giving way; I know he is short of time. He and the House might be interested in the reply given to me in the Public Accounts Committee by Jim Harra, the second permanent secretary at HMRC. He said: 
 
“Among the disguised remuneration users, there are undoubtedly people who have liabilities for years, where under the normal rules we do not now have assessing rights. In our settlement opportunity, we have asked those people to settle for all years, including the years for which we do not have those assessing rights. If they choose not to do that—I can’t make them settle voluntarily for those years”. 
 
Does my right hon. Friend not think that the Financial Secretary should formalise that tax advice? 
 
Mr Deputy Speaker (Sir Lindsay Hoyle) 
 
May I just warn Members that because of the interventions the time limit will need to go down to five minutes to get everyone in? 
 
Sir Mike Penning 
 
On that basis, Mr Deputy Speaker, I will not give way anymore. It would be right and proper to let colleagues speak, no matter how short their contributions. 
 
My hon. Friend makes a good point. Is there is one rule on taxation in this country for one person—a small business—and another for others, or am I missing something here? For instance, a constituent came to see me who worked alongside a colleague who was in the same kind of scheme. Constituent A had had his scheme agreed and closed. He had disclosed everything, including the registration number and the DOTAS number, and it was closed—finished. He came to me because he sat next-door to a colleague who was doing exactly the same job under exactly the same contract and exactly the same kind of scheme, with exactly the same declarations, but for nearly 15 years this scheme had been left open. There is something fundamentally wrong in that. 
 
The Lords Committee’s conclusions are eminently sensible. I agree with my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) that perhaps they could have been a bit stronger, but that might have lost some people on each side. We can work with them. I am slightly concerned about the reference to tax judges. Ray McCann, the president of the Chartered Institute of Taxation, has said that technically the charge is not retrospective—so that is the position the taxation people are going to come from—but he went on to say that it has an effect of being retrospective. That sounds like semantics to everybody else out there, but that is what a specialist judge involved in taxation will look at when we argue the point. The point is that it is clearly retrospective, and that is where the Minister and I completely disagree. 
 
The Minister has an absolutely golden opportunity to say, “Stop. Let’s see what the effect is here.” Why are we picking on these people who in many cases cannot pay—not will not pay but cannot pay. As we heard earlier, they are being advised to get loans. How are they going to do that? Where is the equity? Are they going to use their house? Many of them are of a similar age to myself. They have absolutely no chance. They can pay through the nose on interest rates and borrow money from anybody, but do we really want to encourage that? Or, would we like to say, “We think something has gone wrong here.”? 
 
The House has come together—I think the chairman of the all-party group, the right hon. Member for Kingston and Surbiton (Sir Edward Davey), said the group represents six parties—because there is something seriously wrong. These people are petrified. My constituent said to me, “If my wife finds out about this—she has suicidal tendencies, and we already have major problems.” Other constituents say they need to come out of retirement—“I’ve been out of the IT industry for about five or six years now. I have no chance of coming back into the industry.” Others work in the finance world and if their employers find out that action is being taken in this sort of way, they have had it. What are we doing driving people into this sort of debt when they thought they were doing the right thing? 
 
I say to the Minister in all candour: take a look around the House today, a Thursday on a one-line Whip. Even the Whips could not have got this many people in here from both sides of the House, given what is going on at the moment. [Laughter.] I am really serious: I do not think the Whips could have got this many people in here on a Thursday, on a one-line Whip. What has driven us here is our constituents. It is our job. It is what this Parliament was set up to do—to defend the little guy against the big guy. The big guy is the Government, and we will defend the little guy. 
 
Several hon. Members rose— 
 
Mr Deputy Speaker (Sir Lindsay Hoyle) 
 
Order. I call Jim Fitzpatrick on a five-minute limit. 
 
2.05 pm 
 
Jim Fitzpatrick (Poplar and Limehouse) (Lab) 
 
I am grateful to be able to contribute to this debate on an issue that affects many of my constituents. I am pleased to follow the right hon. Member for Hemel Hempstead (Sir Mike Penning). I congratulate the hon. Member for Aberdeen South (Ross Thomson) and other colleagues who bid for this debate, and I thank the Backbench Business Committee for affording the time for it. I commend the leadership of the all-party group and thank the hon. Gentleman for his excellent opening speech. I wish to concentrate on relaying a few constituents’ comments to those on the Treasury Bench, to show the strength and depth of feeling on this issue. They speak much more effectively for themselves than I could do on their behalf. 
Marc and his partner John wrote to me to express their concerns. For them, the main issue is the retrospective aspect of the legislation, which stretches back over 10 years, yet the schemes were allowed to operate with no notification to members at the time. They fear the knock-on effect of bankruptcy to contractors, which means Marc will fail credit checks and is unlikely to work in financial sector ever again. 
 
Another constituent, Vladimir, says his loan provider d his DOTAS number with HMRC every year and disclosed the promoter name and the benefit in kind that the loan was providing him. Similarly, Daniel says that the loans he received were all disclosed on his tax returns. 
 
Rony wrote: 
 
“As I moved from permanent to contracting I used an agency ‘Aston Mae’ who advised me about the benefits of using a limited company or using an LLP. I also used a UK Chartered Accountant who was fully aware of the LLP I was working for.” 
 
Amjad got in touch to say that 
 
“this issue has taken over my life since I received the letter from HMRC last August”, 
 
and makes the same point about fully declaring. 
 
Another constituent who is facing serious trouble, Rehan, wrote, 
 
“on a personal level, the threat of the Loan Charge has made me incredibly stressed and physically unwell”. 
 
Like many in his position, Todd contends that 
 
“there was nothing ‘disguised’ nor ‘contrived’ about the arrangements. Taxpayers described in detail exactly what their tax arrangements were under DOTAS.” 
 
Another constituent, Abdul, said that 
 
“if the schemes have always been defective, why did HMRC not write directly to affected individuals and advise them of this?” 
 
Richard got in touch and what he said echoes the previous point. He said: 
 
“HMRC and the Treasury say these arrangements are ‘defective’ and have ‘never worked’. Yet, not once did HMRC communicate that they believed the scheme was ‘defective’ or ‘never worked’”, 
 
and that means he is now liable for more than £200,000. 
 
Marie wrote: 
 
“It makes my blood boil when I hear ‘you should have known better’. No one told me! I am not an expert on tax and am risk averse, I would not have entered into the arrangement if I even had a sniff that it was not legal. I have already had to sell my house to pay the first lot of APNs which came through and don’t have any savings or a home.” 
 
The solid theme of frustration, confusion and bleak despair runs through every e-mail, letter and meeting I have had on this issue. HMRC and the Minister keep saying that this change is not retrospective, that the average amount is £13,000 and that everyone knew what they were doing. Clearly, that is not the case, and it has been empathically contradicted by my constituents. 
 
In conclusion, I thank the Loan Charge Action Group and its secretary, our former colleague Greg Mulholland, for their work on this issue. Three recommendations from the group’s report stand out for me, and they are certainly reasonable recommendations, as several colleagues have already said: first, the request for a six-month delay to the loan charge; secondly, a 24-hour HMRC-funded mental health helpline, to help to prevent more suicides; and finally, a full and proper review led by an expert tax judge. I look forward to the Minister’s response. Given the unanimity of the opinion in the Chamber so far and the number of compliments that the Minister has been paid by so many colleagues from all parties, my hopes have been raised. 
 
2.09 pm 
 
Sir Paul Beresford (Mole Valley) (Con) 
 
I feel a little cautious in this debate as I do not have the full knowledge or experience of many Members here and I do not have many cases in my constituency. 
 
I have had a considerable number of cases over the years in which I have had to deal with HMRC. Contrary to what many people have said, I have found that individual approaches to individual taxation experts in HMRC have been extremely positive: cases have been listened to, and we have secured some dramatic changes. 
 
I have six cases of loan charges in my constituency, and one other case which, while not a loan charge, is slightly relevant. I was approached by an individual some years ago. He was divorced and his wife had moved, some years before, to New Zealand of all places. He paid a large monthly payment to her and support for the child, and she remained single—or so he thought. After a considerable number of years, he discovered that, in fact, she had got married and that all that maintenance he had paid over those years—vast sums—he should not have paid, so he stopped paying. HMRC came along and asked him why he was no longer making those payments, because they were tax deductible, and he explained. An HMRC official said, “Well, the money that you have paid that you should not have paid is now counted as profits and we would like tax on that plus interest.” This man was not suicidal, but he came close to considering murder. The ex-wife was still alive. We went to HMRC and got an agreement on this retrospective—or retroactive—payment. It was spread over time. The collector was eminently reasonable and the payments were managed. When the circumstances of this individual changed—he went to university—again we went back, and again they changed the terms. 
 
What I am saying to my six loan charge cases, or to those who want help—only two of them do—is that I am prepared to take up their cases and work with them. Everyone in this Chamber will know that when we have that portcullis on our letters and we ask for a meeting, it happens. That has to be the best way through it. What I have discovered in two cases is that some of the information that the Inland Revenue and HMRC have been given does not match the real information. When we hear Members say, as we all have done, that communications have broken down and that the information that has been used has given rise to incorrect decisions, some of that is because officials are not being given—probably deliberately—every bit of information that they need to come to a fair and clear decision. 
 
I could not believe that two of them, who were bright, independent professionals, had actually taken up their loans. I asked one of them to explain to me—I am fairly simple and can only count to 32—how it had happened. They said that they had been told that it was all right. I asked by whom. They said by the promoters. I asked them to describe the situation. They said that they had worked for whoever it was and that they had been given money, but it was not payment; it was a loan. I said, “Fine, what was the interest on it.” “Oh, there was no interest,” they said. I asked, “When will you pay it back?” “Oh, we’re not going to pay it back,” they said, “and we are not paying any tax on it.” I said that that was just too good to be true. 
 
Julia Lopez (Hornchurch and Upminster) (Con) 
 
rose— 
 
Sir Paul Beresford 
 
I will give way just the once and very quickly. 
 
Julia Lopez 
 
I must confess that I some of my hon. Friend’s mixed feelings about this issue, particularly as there is a disparity between what my constituents say to me and what the Minister says to me. Where there does seem to be culpability from HMRC from my perspective is that it knew full well about some of these loan schemes for a very long time and subsequently a political decision was made to call them in, and that political decision could have been taken much earlier so that we would not have seen some of this damage. That creates a lot of uncertainty within the wider tax system, which is very corrosive. 
 
Sir Paul Beresford 
 
I thank my hon. Friend for her intervention if for no other reason than she has given me a minute more. I will leave that for the Minister to answer. I can only go by the six cases that I have seen and what she says does not apply in any of them. 
 
If I can say anything to Members it is this: please, put these cases together and consult an individual senior tax inspector. I have found the inspector and the collector to be really co-operative, which makes such a difference to these people’s lives. There is a look of relief on their faces when we come out of the meeting with those officials. There is also an acceptance that they will have to pay the loan. Some may call it retrospective, but I call it retroactive. I do remember the case of the divorced man who did not commit murder—his bill was way up over £100,000. 
 
2.16 pm 
 
Sammy Wilson (East Antrim) (DUP) 
 
It is a joy to follow the hon. Member for Mole Valley (Sir Paul Beresford), although I disagree with much of what he said. This is not an issue of just getting people to sit down with the right tax inspector and sort things out. Today’s debate has shown that there is a deep-rooted problem right at the heart of this issue—people who were fully aware of the kind of scheme that they had entered into, and who had an understanding that it was fully legal, suddenly finding that they were faced with huge tax bills. Many people find themselves hitting their head against the brick wall of officialdom with frustration, anger and fear. As we have discussed today, this needs to be sorted out, not at some official level, but at Government level. A ministerial decision is needed. 
 
The economist Adam Smith, who wrote the first economics textbook, laid down what were called the canons, or principles, of taxation. In answer to the question, “What should the basis of any tax system be?” he mentioned three things: first, that there should be certainty; secondly, that there should be fairness; and thirdly, that there should be convenience. If we look at what is happening with this loan charge, we can see that all those principles of taxation—the rules of good application of tax—have been broken. 
Many of the people who entered into these schemes did so because they wanted to reduce their tax bills. That is perfectly legitimate. There is a difference between tax avoidance and tax evasion. I do not think that anyone here has advocated that if people have been evading their taxes they should not be pursued. But some people were forced to enter these schemes; they could not have secured employment otherwise. In fact, at the all-party group, we received evidence that even HMRC was taking on contractors, who in turn then took on employees and insisted that they were paid by these remuneration schemes. It seems that HMRC was quite happy to employ contractors on that basis, because the scheme was deemed to be legal. 
 
Members have covered a number of issues. Let me reiterate just some of them. First, I do not believe that this scheme and the loan charge meet the criteria of ensuring that there is certainty for taxpayers. It is retrospective. No matter how the Minister tries to wriggle on this, the case is that if tax is imposed on a loan balance today, and that loan balance has been built up over a number of years, because people thought that it was okay to repay in that way, then the tax that is being demanded is retrospective. 
 
Luke Graham (Ochil and South Perthshire) (Con) 
 
The hon. Gentleman makes a point about the loan charge being a current liability, which is the Government’s argument. Does he agree that our constituents need clarity about what recourse they have to those advisers who told them to go for these schemes, as well as clarity from HMRC about the options for refinancing, and what protections they have as citizens? 
 
Sammy Wilson 
 
The other point about the retrospective nature of this is that many people thought they had put in their tax returns and given the information. They were not told that there would be an inquiry into their tax affairs, and they believed that what they were doing was perfectly legal, and that their payments would not be subject to additional tax. 
 
My second point is about certainty. Many of those who gave evidence said that for years they were given tax bills that did not even work. They were given bills for sums that did not coincide with what they had earned, and in some cases they were told that the figure was just an estimate. One person said that when she queried the bill, HMRC said, “That is what most other people are paying.” That is how the tax bills were worked out in some cases. There was no degree of certainty, and often the bills were not related to the years that people had worked, or to their income. 
 
Is it fair that none of those who promoted these tax schemes have been pursued? The people being pursued are the recipients of the schemes, who in some cases were forced into them, as they would not have got employment otherwise. Their employer said, “This is the way you will get paid, and that is what you have to do.” The promoters of those schemes—many of whom are based offshore or are no longer in business—are not being pursued, and those who needed to join these schemes in order to find employment are now faced with a tax liability. 
Some evidence that we received suggested that if people did not settle, they might be taxed not just on the money they received, but on the fees taken by those who have now disappeared. Is that fair? My third point was about convenience. That is why we use pay-as-you-earn, and we pay tax on a monthly basis or whatever, rather than being hit with a huge sum of money all at once. 
 
Neil O’Brien (Harborough) (Con) 
 
The point about people being asked for a huge sum of money all at once gets to the nub of the issue. Regardless of the rights or wrongs of the case, does the hon. Gentleman agree that these people need huge amounts of time to pay, or in some cases debt forgiveness because they simply cannot afford to pay? 
 
Sammy Wilson 
 
I was just coming to debt forgiveness. When it comes to large companies, HMRC is prepared to negotiate and cut tax bills significantly. In these cases, however, it is a case of, “This is the sum owed. Enter into a discussion and settlement with us, or you will be hit by the loan charge.” For all those reasons, as the hon. Member for Mole Valley (Sir Paul Beresford) said, this problem does not simply require us to sit down with our constituents and a tax inspector; this requires action by the Minister. We have asked for reasonable action from a reasonable Minister, and I trust that is what we will get today. 
 
2.23 pm 
 
Crispin Blunt (Reigate) (Con) 
 
I apologise to the Minister if I am not here to listen to his response to the debate. I am flying to Rome to go to the Vatican for an engagement on behalf of the all-party group on global lesbian, gay, bisexual, and transgender rights. That goes to show how important those all-party groups can be, and I hope there will be a significant policy development in that area. 
 
I congratulate my hon. Friend the Member for Aberdeen South (Ross Thomson) on his excellent speech and I thank the all-party loan charge group, which has done so much work in representing our constituents’ interests. None of us wants our tax system to be abused. We should all pay our fair of taxes, and we must ensure a level playing field for the sake of the integrity of our economic model. 
 
The interests of those who do not have the means to opt for or set up complex tax schemes should be as protected as the interests of those who can afford such advice. It is therefore right that in the Finance (No. 2) Act 2017 the Government sought to close the disguised remuneration loophole, but today we are questioning the way that the Treasury handled that closure. My right hon. Friend the Member for Haltemprice and Howden (Mr Davis) chaired the Public Accounts Committee during my first Parliament, and he was completely right in what he said about the change in culture inside the Inland Revenue and Treasury towards such issues over the past two decades. 
 
Current Treasury policy is having an unfair retrospective effect, which is recklessly throwing the lives of thousands across the country into sheer chaos. Sadly, that also highlights some of HMRC’s own performance issues, as it appears to have failed adequately to inquire into notifications by honest taxpayers about their use of a scheme under DOTAS when it had the chance. I do not understand why HMRC now thinks it is fair to go back over records that are up to 20 years old, and unexpectedly ask for sums in the tens and hundreds of thousands of pounds from ordinary, hardworking people. It completely baffles me. More to the point, who are these people? By and large, they are the most flexible and entrepreneurial workers in our system, and as we have heard, they were employed flexibly and did not receive holiday pay or allowances because of their employment conditions. 
 
Our constituents are seriously distressed by the vast amounts of money that the Treasury is trying to claw back from them in a totally unexpected way. They have also experienced repeated delays in the handling of their cases, resulting in even more uncertainty and pressure. They have experienced consistently poor communication from HMRC. One constituent told me that an adviser on the dedicated helpline told him not to quote her under any circumstances. I am grateful for the letter, dated yesterday, that the outstanding Parliamentary Private Secretary to the Treasury made available to us. It states: 
 
“I strongly encourage any of your constituents affected by this issue to contact HMRC as soon as possible before 5 April. I have enclosed a factsheet on disguised remunerations, and further information on the support available from HMRC”. 
 
It seems a bit of a stretch to get that information to constituents by tomorrow, although I appreciate the Treasury’s putting out that message. 
 
HMRC’s website states that it is estimated that 75% of income from this policy will come from employers and 25% from individuals, and that so far, 85% of that money has been raised by employers. That is not entirely surprising, because employers are not in the same position as individuals, and it is much easier for them to come up with funds if they are presented with a bill by HMRC. It is the little people who are on the receiving end of this policy. 
 
One of my constituents who is facing bankruptcy articulates the issue clearly: 
 
“In short, HMRC got tired of going for the scheme providers because they knew how to deal with them and were always one step ahead of them…Due to their inability to get any perceived tax they feel they are owed out of them, they have now shifted the focus further down the chain to people like me.” 
 
The Minister has received plaudits from across the House, and I hope that the steel in his position— 
 
Mr Deputy Speaker (Sir Lindsay Hoyle) 
 
Order. 
 
2.28 pm 
 
Mohammad Yasin (Bedford) (Lab) 
 
It is an honour to speak in this important debate. In January last year, Labour’s shadow Treasury Minister said of the impending deadline for people to pay the loan charge by April next year: 
 
“We cannot let vulnerable people who have been exploited end up with massive tax debts hanging over their heads for many years to come. If we see bankruptcies, failing businesses, repossessions and even suicide, that will be because this Government have not done the outreach needed and not invested in adequate training.”—[Official Report, 20 November 2018; Vol. 649, c. 291WH.] 
 
I am sorry to say that on 1 April we heard that HMRC had reported itself to the police over the death of an individual who had been notified of a loan charge bill. It was the first time that HMRC had felt it had been given sufficient evidence to link a death to the loan charge. I do not know any details about the case and I do not want to speculate, but it was a tragic loss of life and a reminder to all of us of what is at stake. 
 
Bambos Charalambous (Enfield, Southgate) (Lab) 
 
Some constituents have told me that they will be severely affected by the retrospective loan charge if it is rolled out tomorrow. It will have a devastating effect on them and their families. Does my hon. Friend agree that the charge should be halted and that a review should be set up to investigate HMRC’s actions? 
 
Mohammad Yasin 
 
I thank my hon. Friend for making that very important point. I entirely agree with him. It is very important that we make sure that people do not suffer because of this very unfair loan charge. 
 
I have a number of constituents whose lives have been turned upside down by changes made three years ago to tax legislation for disguised remuneration schemes. On the face of it, I support the Government’s move to clamp down on tax avoidance schemes, but the way in which the loan charge has been handled is confusing and cruel, and seems less guided by principle than by rushing through a badly designed process to reclaim tax. 
 
The director general for customer strategy and tax design at HMRC told the House of Lords Economic Affairs Finance Bill Sub-Committee in October 2018 that 
 
“the loan legislation was put in place because it was just too much time and trouble for HMRC to exercise its pre-existing powers conferred by Parliament”. 
 
Seema Malhotra 
 
My hon. Friend is making a powerful speech. Some 100 people have been affected in my constituency. I am grateful to Mr Salotra and Mr Jhaj from Hounslow West who came to the rally yesterday. They highlighted the fact that families are under great strain and stress and that the situation is one of policy failure. Does my hon. Friend agree that inadequate research on and an inadequate impact analysis of the policy have also contributed to the pain and strain on people who thought they were doing—and who want to do—the right thing, and that a delay and review are not just the right thing to do, but the human thing to do 
 
Mohammad Yasin 
 
I agree with my hon. Friend, who makes a very important point. 
 
One of my constituents recently wrote to me: 
 
“Essentially, we have legislation being enacted because HMRC find it too difficult or troublesome to follow the rules and yet they expect taxpayers to follow the rules.” 
 
No one disputes that HMRC has a right to challenge companies and individuals who have participated in tax avoidance arrangements. However, Parliament gave HMRC powers to do so long before the loan charge legislation was proposed. Those powers have not been exercised, making a mockery of the existing legislation and denying taxpayers their legitimate right to have their dispute resolved by the courts. 
 
Many have no idea whether the schemes their employers were getting them into were effective or defective. It is completely unfair to penalise those people, who are innocent, and not those who designed and enabled these complicated and vague structures. We must differentiate between those who entered into these arrangements with their eyes open and those who were entered into them by their employers. The legislation has resulted in thousands of people accruing a tax debt that had not been invented when employers invested in good faith. If nothing changes, thousands of people will be made bankrupt, families will be destroyed and innocent people will have their lives ruined. 
 
2.34 pm 
 
Justine Greening (Putney) (Con) 
 
Like many other Members, I have a number of affected constituents. When one of them first came to see me in my MP’s surgery, I listened. It was a complex tax case and it soon became clear that the way in which it was being handled was genuinely not how I had been used to seeing things dealt with during my time as a Treasury Minister. I and many of my colleagues, including my next-door neighbour, the Minister for Health, my hon. Friend the Member for Wimbledon (Stephen Hammond), are right to raise our concerns, not least because of the very personal impact the issue is having on thousands of people around the country who have this hanging over them without anything being done to resolve the situation, other than those who represent them setting out how much of an impact it is having on their lives. 
 
I have young constituents who are contractors and have been unwittingly caught up in this. They did all the right things, including asking their accountant and checking whether a QC had approved a scheme. An older gentleman who is caught up in it is looking at having to sell his home. He is in his 70s and clearly has no ability to go back into the workplace to even begin to recoup some of the money that HMRC is now claiming he should pay. 
 
There are a number of issues, but in the end it comes down to how we in this House, and HMRC, look at the concept of fairness in taxation. I think that HMRC has simply got it wrong and is striking the wrong balance. I agree that the Financial Secretary is a talented Minister, but in the end it is these more challenging areas of policy that make or break a reputation, rather than the ability to do a brilliant job from day to day on turning around constituency casework where, as others have said, he is almost unparalleled in his assiduousness. I hope that he will use his talent to find a way through and to come up with a compromise to achieve a quick resolution. 
 
The approach being taken circumvents taxpayer protections on time limits on HMRC inquiries, as many have said. The bottom line is that, overwhelmingly, people declared these arrangements transparently. They sent in their tax returns and, as has been said, some were given tax rebates. They were given no indication that HMRC was ever going to come back to those years. 
 
Greg Hands (Chelsea and Fulham) (Con) 
 
I am also an ex-Treasury Minister and my hon. Friend’s neighbour. Could she comment on the unusual nature of the situation? One of my constituents has had £300,000 assessed, so the average of £13,000 can mask some of the very large numbers involved. 
 
 
 
Justine Greening 
 
My right hon. Friend is absolutely right. One of my constituents has done their own estimate and they believe that this could cost them £230,000. They say: 
 
“I was first contacted by HMRC in 2013/14 about income from just the 2008-2010 tax years and having accepted my appeal letter to their enquiries I haven’t heard anything from them since. So 5 years on, I still have no clear idea what HMRC believes I owe them and the real justification for it.” 
 
As they say: 
 
“Communication from HMRC has been inconsistent and sporadic at best. In addition”— 
 
I will come on to this issue— 
 
“HMRC does not appear to be targeting the companies who were (and in some cases still are) providing these tax planning schemes, but rather the individuals who used them. Sadly, there are still people joining these schemes today, unware of the impact it is likely to have on them.” 
 
HMRC’s approach to the loan charge has been punitive rather than proportionate. For some constituents it has essentially grouped up to 20 years of charges and lumped them into one big sum that they are now being asked to pay. [Interruption.] 
 
With the sound of a leaky roof in the background—this has been an interesting week for other events happening while Members have been giving speeches—I will conclude by asking a really important question. What on earth is being done to tackle those promoting the schemes? They are the people who have, effectively—and, I believe, knowingly in many cases—mis-sold schemes, got rich off the back of them and left the people who took part in them to pick up the pieces. 
 
Sir Peter Bottomley (Worthing West) (Con) 
 
Over 10 years ago, Roy Faichney and David Perrin—non-accountants in an accountants tax firm—were arrested and later convicted, but their clients were not told that HMRC might come after them 10 years later. That strikes me as grossly unfair and out of time. 
 
Justine Greening 
 
I think that is right, and it would be good if the Minister was clearer about how many schemes HMRC is aware of, how many are currently being tackled by HMRC, how many remain unaddressed, what penalties have been issued in relation to closing down such schemes, how much that has totted up to, and what action has been taken against the directors who pursued and promoted those schemes, often in the knowledge that they were not compliant with HMRC. Will they ever be barred from being directors in future? They are clearly reckless and, I think, not fit to be company directors. We need to send out a message across the industry that such behaviour is not acceptable, that lost revenue will be sought to be recouped from the businesses and companies promoting the schemes first—that they are the ones at risk—and that then, perhaps secondly, there will be more clear-cut rules for people to understand when they are putting themselves and their assets at risk by participating in such schemes. 
 
It really is time that HMRC did all the people caught up unwittingly in this loan charge issue a favour, set out a sensible compromise that draws a line in the sand and does not go back so far, treated them with dignity and enabled them either, where they still owe money, to settle or, where not, to move on with their lives and get clarity as soon as possible. 
2.41 pm 
 
Justin Madders (Ellesmere Port and Neston) (Lab) 
 
I hope that I can complete my speech before rain stops play—I think it is probably some kind of symbol of how many people view Parliament as broken, but let us return to the matter in hand. 
 
I congratulate the hon. Member for Aberdeen South (Ross Thomson) on securing the debate. Clearly this issue has caused much distress, and brutally so at times. Of course, if tax is due, it should be collected. Without the ability to raise funds from taxation, our public services will obviously grind to a halt, but my concern, and that of many other hon. Members, is about how the loan charge and the recovery of it has been handled to date. It raises many questions about how HMRC can say in all honesty that each individual case is being looked at properly before the menacing letters are sent out. Let me make it clear that if, following due process, it is determined that money is owed, it should be recovered in a fair, consistent and reasonable manner. However, what I have heard raises questions about HMRC’s capacity to deal with these issues properly. 
 
I previously raised the issue of my constituent Mr Crook when we debated the matter in Westminster Hall back in November. I recounted the six times that he had contacted HMRC about his potential liability without any response. I explained the immense anxiety that he was feeling, because he was not getting any answers and feared bankruptcy. Since my involvement, there have been responses from HMRC. I am sure that it was entirely coincidental that they came the week after the Westminster Hall debate. 
 
I wish that I could say that we had somehow managed to reach a happy ending, but we have had tales about spam boxes and deleted emails and about how, in that wonderful phrase, my constituent’s request will be “progressed within the normal timescales”. Yet here we are, 360 days after my constituent registered his interest with HMRC, and still no agreement has been reached. My constituent is not the only one in this position, so I repeat the question that I raised back in November: does the Department consider itself to have sufficient resources to deal with this issue? 
 
Mike Amesbury (Weaver Vale) (Lab) 
 
I have a constituent called Jeff, who has lived by the rules and played by the rules, and who submitted tax returns year in, year out, yet he is also suffering this retrospective injustice. 
 
Justin Madders 
 
My hon. Friend is absolutely right. It is the retrospectivity of this that is really difficult for people to reconcile with what they consider to be a fair and transparent process. 
 
I have had constituents raise concerns that if they manage to reach agreement with HMRC, they will be required to sign a settlement document that stops them reclaiming money from HMRC if they are later judged against in a judicial review. The retrospectivity of this sits uncomfortably with me, but the idea that the Government will not be bound by future court decisions goes very much against the rule of law that we are used to in this country. 
 
That is the wholly unsatisfactory situation that we face, but I want to return to where we all started on this. My constituent tells me that, having submitted his tax returns each year when he was working, they have never been queried—[Interruption.] 
 
 
 
Sir William Cash (Stone) (Con) 
 
On a point of order, Mr Deputy Speaker. I just wondered what was going on. Is it hot air that is escaping from in here? 
 
Mr Deputy Speaker (Sir Lindsay Hoyle) 
 
Some might say that there is a leaky Parliament at the moment, so we will take it from there. 
 
Justin Madders 
 
I am sure that many Cabinet meetings have similar difficulties. 
 
My constituent tells me that, having submitted his tax returns each year when he was working, they have never been queried. He states that, by doing that, HMRC has at the very least implicitly, if not explicitly, accepted that any moneys that he received in the form of a loan were just that. However, it is the retrospective nature and long reach of the loan charge that is so hard for him to accept. I understand that it has been claimed that HMRC has always said that these arrangements were unacceptable, but I have not seen anything prior to 2016 to suggest that that was the case. 
 
When the Minister responds, can he say whether in future I should advise my constituents that they should no longer consider HMRC responses to tax returns to be final, that they can be reopened at any point and that any schemes registered with HMRC can be overturned decades in future? Can he also advise me whether any companies that made loans will be pursued for employer national insurance contributions? What if the company is no longer trading? Will the employees’ national insurance records be updated? 
 
I also want to say a few words about the human cost of all this. HMRC has admitted in response to freedom of information requests that no assessment was made of the likely number of taxpayer bankruptcies that will result from this charge, yet the official HMRC statement—[Interruption.] 
 
Mr Deputy Speaker 
 
Order. No photographs. 
 
Teresa Pearce 
 
I wasn’t. 
 
Mr Deputy Speaker 
 
You were holding your phone up. 
 
Justin Madders 
 
I will carry on. 
 
The HMRC statement says: 
 
“The government anticipates that some of these individuals will become insolvent as a result.” 
 
It also says that the measure 
 
“is not expected to have a material impact on family formation, stability or breakdown.” 
 
I find that statement unbelievable on two counts. First, it is unbelievable how little understanding or empathy there is for those facing bankruptcy. Anyone who has spent more than five minutes in the real world will know that individual insolvency has a massive impact on families. My other huge reservation about that statement is that it appears to say that no assessment has been made of the number of bankruptcies, yet it claims that there will be “some” insolvencies. If people have to be made bankrupt, I think we are all clear that something has gone terribly wrong. 
 
Finally—and before we get the paddles out—I would like to ask the Government to think about what kind of message this whole mess is sending out to entrepreneurs, the people the Conservative party used to consider the bedrock of its support. Under this Government, those people are being left with the distinct impression that HMRC is prioritising the recovery of tax revenue over justice by targeting individuals rather than the promoters of the schemes, many of whom still enjoy generous contracts with Government. They knew what they were doing but appear to have accepted no responsibility for their actions and faced no consequences. The suggestion that some public sector employers were insisting that the people paying the price now would only be employed if they agreed to accept the kind of contract that HMRC is now declaring unlawful is an outrage. 
 
Several hon. Members rose— 
 
 
 
Mr Deputy Speaker 
 
Order. I am going to suspend the sitting, and the bells will ring two minutes before we restart. [Interruption.] No photographs, please. 
 
2.48 pm 
 
Sitting suspended. 
 
 
Question (4 April 2019) again proposed, 
 
That this House expresses its serious concern at the 2019 Loan Charge which applies from 5 April 2019; expresses deep concern and regret about the effect of the mental and emotional impact on people facing the Loan Charge; is further concerned about suicides of people facing the Loan Charge and the identified suicide risk, which was reported to HMRC; believes that the Loan Charge is fundamentally unfair and undermines the principle of the rule of law by overriding statutory taxpayer protections; expresses disappointment at the lack of notice served by HMRC and the delays in communication with those now facing the Loan Charge, which has further increased anxiety of individuals and families; is concerned about the nature and accuracy of the information circulated by HMRC with regard to the Loan Charge; further regrets the inadequate impact assessment originally conducted; understands that many individuals have received miscalculated settlement information; calls for an immediate suspension of the Loan Charge for a period of six months and for all related settlements to be put on hold; and further calls for an independent inquiry into the Loan Charge to be conducted by a party that is not connected with either the Government or HMRC. 
 
Mr Speaker 
We now come to the resumed debate, which was sadly interrupted by the rather well-publicised leak last week, on the motion on the introduction of the 2019 loan charge. Justin Madders had just concluded his oration when the debate was suspended last Thursday—something I am sure all colleagues recall very keenly—therefore I think I am right in saying that the next person to speak in this debate is Mr Stephen Metcalfe. 
 
4.01 pm 
 
Stephen Metcalfe (South Basildon and East Thurrock) (Con) 
 
Thank you for calling me so early in this resumed debate, Mr Speaker. I have to say that I had never imagined that I was going to speak in it, seeing as rain stopped play at about this time last week. I am by no means an expert on the 2019 loan charge, but I, like many others who expressed an opinion last week, have been contacted by numerous constituents who have set out in clear terms how they believe it would impact on them. They are being asked to pay back thousands, tens of thousands, and in some cases even hundreds of thousands of pounds that they never believed would be due. 
 
Do not get me wrong: I believe that everyone should pay their fair of tax. We know that that is what funds our public services, and we should clamp down on tax evasion at every possible opportunity. However, minimising tax exposure has always been a legitimate part of our tax system. 
When looking at this issue, I have been on a journey. Initially I was in two minds about the validity of the arguments presented. Obviously, I had great sympathy for my constituents on both a personal and an individual level, but I felt that the old adage, “If something looks too good to be true, it is too good to be true,” applied. I have now, however, come to a different conclusion. I have looked at the individual cases presented and at the wider issues. To demonstrate why I have come to that conclusion, I want to use the words and sentiments that one particular constituent has sent me. He wants me to do this anonymously, as he does not want to prejudice himself or his case. As an aside, I am not sure that it is a healthy state of affairs when constituents are scared to speak out against a Government agency. 
 
My constituent is a freelance IT professional who was advised to enter one of these schemes. When he entered the scheme, to give himself confidence that it was legally compliant and that what he was being told by his professional adviser was true, he contacted Her Majesty’s Revenue and Customs. The correspondence my constituent has from HMRC shows that in 2012, when he was checking for compliance under disclosure of tax avoidance schemes legislation, he asked HMRC to review the particular arrangements he had joined. I am informed that the HMRC anti-avoidance group concluded that no hallmarks of tax avoidance were in evidence and so HMRC did not assign a DOTAS number to that arrangement. 
 
If that is true, which I obviously believe it is, I think it is fair to say that, under HMRC’s duty of care and due diligence, it had plenty of opportunity to inform my constituent that things had changed and that the particular arrangement that he had entered into would be liable to taxation. HMRC completely failed to notify my constituent that anything was amiss, so for years he relied on the initial HMRC advice he had received and continued as a customer of the arrangement. 
 
Mr Charles Walker (Broxbourne) (Con) 
 
That retrospective and disproportionate approach being taken by HMRC are what concern a number of my constituents. The people I represent are very reasonable, and they would be happy to come to an arrangement with HMRC, but HMRC seems to want to bankrupt its debtors, as opposed to getting some return from them. 
 
Stephen Metcalfe 
 
My hon. Friend makes an excellent point. All the correspondence I have had has been phrased in very reasonable terms. People want to do the right thing, but they feel under a huge amount of pressure. 
 
Bob Stewart (Beckenham) (Con) 
 
I am sure that, every year, my hon. Friend’s constituent sent in a tax return, which HMRC ticked, approved and sent back. Only recently has HMRC suddenly seen the way things are going and said, “Right, this is some kind of tax avoidance. Let’s get it all back, and in one year.” 
 
Stephen Metcalfe 
 
I do not know what the rules are on my hon. Friend reading the next line of my speech over my shoulder, because it says here that my constituent continued with these arrangements and, each and every year, dutifully declared on his tax return the amount he had received in loans and the amounts he had returned thereof. It came as a surprise that, years later, HMRC intends to use its newly granted powers—in what my constituent describes as “winding back the clock”—to retrospectively claim that the arrangements my constituent and others had used were not legal, had never worked and that the tax on the loans was always due. 
 
Dr Sarah Wollaston (Totnes) (Ind) 
 
I thank the hon. Gentleman for making these excellent points. Like me, does he find that he has several constituents who had no option but to be self-employed and were required to enter such vehicles? 
 
Stephen Metcalfe 
 
The hon. Lady makes an excellent point. For many there was no option. In many cases, as in the case of my constituent, people had to enter these schemes. My constituent even checked whether there were alternative options and checked the legitimacy of it, never thinking it would come back to haunt him. 
 
I have to say that I do not like it. It feels wrong. I would like to think that I am a fairly reasonable chap, and when I feel that something is wrong or off and does not feel like natural justice, it tends to be true. Eventually, the Government will come round to my way of thinking, or I very much hope so. 
 
As I said, I am not an expert on tax in general, but the charge is retrospective and HMRC failed to notify scheme users of the tax liability. Users sought professional advice or were advised to enter these schemes and, as in my constituent’s case, annually declared what they were doing. 
 
Bill Grant (Ayr, Carrick and Cumnock) (Con) 
 
Does my hon. Friend agree that, for some caught up in the loan charge, their circumstances may be the result of unfortunate omissions in, for example, professional advice or, indeed, HMRC advice, rather than a deliberate act on their part. For that reason, clemency and reasonableness should be applied by HMRC. 
 
Stephen Metcalfe 
 
My hon. Friend makes an excellent point that stands entirely on its own right, and I hope it has been heard. 
 
Sir Oliver Heald (North East Hertfordshire) (Con) 
 
On giving latitude, does my hon. Friend agree that these cases vary quite considerably? In some cases, it may be about allowing more time for people to pay; in others, it may be about looking at the detail of the debt and whether there is other evidence to suggest it should be less; and in some cases, it is a question of giving latitude on how many years HMRC goes back. 
 
Stephen Metcalfe 
 
My right hon. and learned Friend makes some good points, and I am aware that the Government have set out some of the mitigating measures they want to put in place. I am sure we all welcome those measures, but there is a need for both a pause and a full and proper review of what is being proposed to see whether we are acting in a way that would be considered to be natural justice. 
 
Sir Michael Fallon (Sevenoaks) (Con) 
 
rose— 
 
 
 
Stephen Metcalfe 
 
I want to continue. In failing to act back in 2012, when it had the opportunity—and surely the duty—to do so, HMRC denied my constituent the opportunity to depart the arrangements and seek an alternative solution for his payroll needs. 
 
Sir Michael Fallon 
 
My hon. Friend has been so generous in giving way that I hesitate to intervene once again. When he says that something feels wrong, he is on to something, because what feels wrong to some of us is that the equivalent effort does not seem to be put into pursuing the promoters of the schemes, or indeed the employers, and that the entire weight of recovering the so-called tax gap is falling only on the employees. That does not feel right. 
 
Stephen Metcalfe 
 
rose— 
 
Madam Deputy Speaker (Dame Eleanor Laing) 
 
Order. Before the hon. Gentleman answers that point, I should explain to the House that we have less than 50 minutes left for this debate, for obvious reasons. He finds himself in the difficult position of being the opening speaker, as it were, and therefore he has been required to take a lot of interventions because people have short points that they want to make, but of course this debate had the bulk of its time last week, and I know from what people have told me that what they actually want to hear is the Minister’s reply to the many questions that were asked last week, and will be asked this week. There will therefore be a very short time limit on speeches—probably two minutes. The hon. Gentleman has been very generous in taking interventions, and I am sure he wants to finish the points that he would like to make. I have no objection to his taking further interventions, as long as the House realises that that will be the bulk of the debate. 
 
Stephen Metcalfe 
 
Madam Deputy Speaker, I hear what you say loud and clear, but I did want to allow Members to intervene because I think it allows them to get their points on the record. 
 
The point that my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) raised is completely valid. We need to be throwing the net wider to recover some of this money. 
 
I reiterate that my constituent acted only under advice from a chartered accountant, with tax counsel’s opinion, so although everyone has a duty to pay the tax they owe, this feels off. It feels like a retrospective tax grab. We know that it is causing great stress, anxiety and depression. We know that there have been three suicides associated with it. It cannot be right and surely we must have a duty to look at it again. 
 
If I may, I shall quote my constituent, who says: 
 
“Very simply, if the loan charge is not delayed, and comes in as it is, it will destroy my quality of life and that of my family. It may well prevent me from working and lead me into bankruptcy. It has already caused me to suffer extreme stress, and is causing huge anxiety for my family. If the Government ploughs on with this retrospective legislation, it will be responsible for devastating the lives of families across generations.” 
 
I will leave it there. 
 
Will the Minister seriously consider a delay in implementation and a removal of the retrospective nature of the charge, so that it certainly does not go back further than 2017, when the charges were first announced? I hope that he will build on the assurances that he has given Members who have written to him—I am very grateful for those reassurances—by finding other mitigating measures, so that we can demonstrate, as a House, that we can respond positively and that we are capable not only of listening to, but of hearing and acting upon, the words of the people who come to us, asking for our representation. 
 
Several hon. Members rose— 
 
Madam Deputy Speaker (Dame Eleanor Laing) 
 
There will be an immediate time limit on speeches of three minutes. 
 
4.14 pm 
 
Ruth George (High Peak) (Lab) 
 
Constituents who have come to me are overwhelmingly people with their own businesses who took out a scheme in order to free up more money to invest in those businesses, to employ people and to make sure that that business had a sustainable future. They do not object to the fact that it has, since 2012, been found that those schemes are wrong, but they do object to the fact that they are being sought for payments from before that time. The advice they are getting from the Inland Revenue on settlement figures is extremely late. One of my constituents was informed on Tuesday 2 April that he needed to make a settlement agreement by that Friday, when he was working abroad and had no access to his accounts. That sort of behaviour is simply unreasonable, and no taxpayer should have to accept it. 
 
The Inland Revenue has stated that it does not expect anybody to have to sell their main residence, yet it is requiring taxpayers to seek to take out a large loan or mortgage on their only or main residence. These people are often in their late 40s or 50s, coming to the end of their working life, so they cannot take out such large loans on their property, and if they do they are in danger of defaulting, in which case they will lose the property anyway. I therefore ask the Minister to look at what the Inland Revenue is requiring by way of loans on main properties. Does he stand by the Inland Revenue’s advice that main properties are not to be put at risk? 
 
I also ask the Minister, and those who are supporting people with the loan charge, to look at the case of professional indemnity insurance for the chartered accountants or tax advisers who often gave this advice, and at whether the scheme promoters were covered by the Financial Services Compensation Scheme, because if it was pensions or any other area of financial services, we would be going straight to professional indemnity and to the Financial Ombudsman Service to seek compensation. 
 
The Minister needs to look at the advice that is being given. The Inland Revenue told the Public Accounts Committee two weeks ago, “Among the disguised remuneration users, there are undoubtedly people who have liabilities for years, where under the normal rules we do not now have assessing rights…we have asked those people to settle voluntarily for those years, which they may choose to do so.” Those figures are not divided out and people are not given the opportunity to pay back the loans to the companies that made them. Will he look at that? 
 
Several hon. Members rose— 
 
 
 
Madam Deputy Speaker (Dame Eleanor Laing) 
 
Order. After the next speaker, the time limit will be reduced to two minutes. 
 
4.17 pm 
 
Adam Holloway (Gravesham) (Con) 
 
I pay tribute to the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and the Loan Charge Action Group for all that they have done, and indeed to the Minister, who for a long time has been given a hard time on the subject. 
 
I am speaking today on behalf of about 100 constituents whose lives have been blighted by this and who have lived with awful uncertainty for about three years. After last week’s debate, I met a number of them at the City Praise Centre in my constituency. I have to say that when I first met constituents about this, my heart did not exactly bleed for them; it is not fair for one particular group of people to pay income tax at a lower rate than the rest of the workforce, and lots of my constituents are in real need, living in substandard accommodation and waiting months for hospital appointments, so I cannot condone the systematic loss of revenue to the Treasury. 
 
Bob Stewart 
 
The people who are coming to my hon. Friend are normal people, such as nurses—some of them actually work for HMRC. 
 
Adam Holloway 
 
I thank my hon. Friend and absolutely agree. 
 
My view has since shifted, however, as I have come to understand more about their circumstances. These people are not pocket Al Capones out to defraud the system; they are self-employed professionals who are contracting to different entities, paying their own pensions, without the protection of regular employment, and trying to avoid the complexities of IR35. I guess any of us would wish to minimise the tax we pay, and HMRC knew about those arrangements for decades and was slow in taking legal action, and inept in shutting it down. 
 
Sir Henry Bellingham (North West Norfolk) (Con) 
 
Does my hon. Friend agree that one of the great iniquities here is that HMRC knew what was going on but did not actually do anything about it with expedition and decisiveness at the time? 
 
Adam Holloway 
 
Absolutely, and now of course it is pursuing an aggressive policy that, on any analysis, is retrospective on my constituents. These constituents may have been naive and over-optimistic, but most of us are in no doubt that, for many years, they all believed that these schemes were lawful and an effective means of mitigating their tax. I therefore support a delay to the implementation of the loan charge to allow an independent tribunal to assess the issue of retrospectivity, and, in light of that, to consider whether the loan charge is fair and proportionate after taking into account, first, the failure of HMRC to take effective action for all those years, and, secondly, the fundamental protections that every taxpayer should expect. 
 
Finally, I fear that this policy is another example of how those at the very highest echelons of our Government seem to have a tin ear when it comes to the good people whom they represent. 
 
 
 
Several hon. Members rose— 
 
Madam Deputy Speaker (Dame Eleanor Laing) 
 
A two-minute time limit. 
 
4.19 pm 
 
Marsha De Cordova (Battersea) (Lab) 
 
I begin by thanking the Backbench Business Committee for this debate, the loan charge all-party group for its fantastic work, and the campaigners for bringing this situation into the public eye. 
 
Many employees signed up to these disguised remuneration schemes and arrangements in good faith, and many of them declared them to HMRC. The problem is that many of them are now being unfairly caught up in the Government’s loan charge. Their retrospective implementation has left many people who were unaware of these schemes with eye-watering bills. That is the case for many of my constituents who have been to see me to explain that they have been unfairly burdened with this charge. They did not know that these schemes were a form of tax avoidance, and now they are being asked to pay back tens of thousands of pounds—money that they can ill afford. The burden of paying it back is causing them great distress, including mental ill health. 
 
One constituent told me that she fears that she will have to sell her home. Another constituent risks going bankrupt, while another just broke down in tears when they visited my recent surgery, fearing the consequences that the charge will have on both them and their family. We know that these are not isolated incidents. All these facts were also revealed in the excellent inquiry into the loan charge by the all-party group. 
 
What is most disappointing about the Government’s response is that this scheme is targeting individuals rather than the companies. It is unfair that many of my constituents are being asked to pay back tens of thousands of pounds. I urge the Minister, when he responds, to commit to suspending the scheme for six months and, more importantly, to calling for a judge-led independent inquiry. 
 
4.22 pm 
 
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con) 
 
I rise to support my constituent, Kieran Smythe, who bought schemes extending back to 2014. He believed that the schemes that he was sold were approved by HMRC and a QC. 
 
As many Members of this House have said, the problem is that HMRC has been very slow to react to this whole matter. As far back as 2004, Dawn Primarolo, when she was Paymaster General, said that the Government would legislate to stop these schemes. The Government legislated again in 2011, but it was not until the Finance Act in 2017 that the loophole was closed. 
 
Let me say in the very short time that I have left that the excellent Library briefing that we have been given says that the Government estimate that 50,000 individuals will be affected by the charge on these disguised remuneration loans, of whom only 24,000 so far have contacted HMRC. It is my understanding that if they have not contacted HMRC and agreed a repayment scheme by 5 April this year, they will be liable to a full range of payments and penalties. 
In closing, I simply say to my right hon. Friend the Minister that if this debate is to have meant anything, can there please be a little flexibility in how those payments and charges are investigated, so that at least everyone paying them can be fully satisfied that they are properly due? 
 
4.23 pm 
 
Wes Streeting (Ilford North) (Lab) 
 
Tax is the price that we all pay for a civilised society. I certainly come from the “pay your bloody taxes” school of thought when it comes to disguised remuneration schemes. 
 
With the short time that is left, may I explain to the Minister, from what I have seen both on the Treasury Committee and from my own casework, the weaknesses in his and HMRC’s argument? First, HMRC knew about these schemes for many years. Year after year, in successive tax returns, in individual cases and collectively, it signed off those returns, and failed to take action against promoters. 
 
Secondly, people took advice and acted in good faith year after year on the basis of that advice. That is certainly what happened in my constituency cases. The Government should be taking far sterner action against promoters than individuals who were misled. 
 
Thirdly, in the way it has conducted itself, HMRC has fallen woefully short of the standards we should expect, both in its lack of timely communication with taxpayers and in the way it has misled legislators in calling for them to legislate for the loan charge. 
 
Taking all those things into account, even now, there are people in my constituency and across the country who face demands for six-figure sums. No one—at least no one from an ordinary background, which my constituents are—can afford to pay them back. People are being compelled to settle now, while the situation is under active consideration by parliamentarians. When we look at how many MPs have signed the early-day motion and the letter to the Minister, it is clear that this policy no longer commands the support of the majority in this House. 
 
4.25 pm 
 
Robert Neill (Bromley and Chislehurst) (Con) 
 
I have met constituents and seen copious documentation that they have brought me that reinforces everything that has been said by every other hon. Member in the Chamber, in particular about the good faith in which people entered into these schemes, the lassitude with which Her Majesty’s Revenue and Customs originally pursued the matter, and the arbitrary way in which it acted thereafter. I endorse the calls for a pause to the scheme, for an independent inquiry and for the retrospective element to be removed. It simply is not just. 
 
There is an old legal saying—perhaps you recall it, Madam Deputy Speaker—that he who comes to equity must have clean hands. The person who seeks the redress of the courts must have acted in good faith. I fear the Revenue has not acted in good faith in this matter, with my constituents or with taxpayers generally. There is an aggressive attitude towards tax collection that has gone beyond the bounds of fairness. 
 
The other legal observation I make is that of Mrs Justice Whipple, who said in a Revenue case in 2015 that HMRC’s primary duty—to collect tax—is not 
 
“a trump card which prevails over all other considerations.” 
Instead, she said, it is 
 
“a broad duty, exercised by means of a wide managerial discretion, within which is embedded the obligation to treat taxpayers fairly”. 
 
My constituents, as taxpayers, saw years go by in which the Revenue had the opportunity to raise its concerns about these schemes with them but did nothing. Their bills therefore ran up, and then, suddenly, they were hit with arbitrary figures. They have not been treated fairly by the Revenue in this case, and we look to the Minister to put that right. 
 
4.27 pm 
 
Peter Aldous (Waveney) (Con) 
 
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. 
 
I shall make three brief observations. First, in my constituency, it appears that those working in particular sectors have been hit hard by the loan charge. That is particularly true of those working in IT and in the North sea oil and gas sectors, both of which used to be considerably more attractive, with better pay available than is the case today. 
 
Secondly, it strikes me as both wrong and inherently unjust that HMRC is seeking tax payments from a group of people, many of whom are not well off and are really struggling to get by, yet it is not pursuing those client organisations, agencies and umbrella groups that benefited from setting up these arrangements and actually encouraged and coerced people to enter them in the first place. 
 
Thirdly, a great deal has been said about the retrospective nature of these charges, which change the tax position for past years right back to 1999. In the two sectors I mentioned—IT and oil and gas—job prospects were considerably better at the start of the millennium than they are now. I know the Minister well, and he is someone for whom I have great regard and respect, but I urge him to pause, listen and review. 
 
4.28 pm 
 
Mary Robinson (Cheadle) (Con) 
 
Before the sitting was suspended last week, I listened with interest to over two hours of debate on this, so I know that the arguments have been well made and we will review them again. 
 
One thing that those arguments have in common is that they concern people who genuinely entered into these schemes under the impression that everything was above board, based on what they believed to be good and sound advice from accountants, advisers and banks. These people were, in many cases, entrepreneurial, self-employed individuals. It is important to stress that, as far as they were concerned, they were not employees and so did not gain from the security of the benefits that come with most forms of employment such as sick pay or holiday pay. To all intents and purposes, they were simply self-employed. 
I urge the Minister to consider putting the loan charge on hold and to consider an independent inquiry. It is important that before we do so, we reflect on the way that things have been changed. I recognise the changes that have been made by HMRC, which now targets the promoters of tax avoidance schemes rather than the individuals who entered into them under the impression that they were legitimate. I would argue that there is a better case for pursuing those who promote these schemes. This approach is successful. Only two weeks ago, HMRC won a legal case against a tax avoidance scheme provider, Hyrax Resourcing Ltd, collecting £40 million in unpaid tax. As I understand it, Hyrax users were paid just enough to comply with the minimum wage, with the rest of their income made up of loans that were transferred to an offshore trust in Jersey. 
 
This is an important development, because it now contrasts with the way in which we were approaching the matter previously. We are now approaching it through the promoters and closing things down in the legitimate way that we should expect. That is the right way to do it. That is important for the people who have  
Tagged as: HMRC Legislation
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