Loan Charge Review
Thank you to everyone who has recently contacted me about the 2019 loan charge.
Disguised remuneration schemes are tax avoidance arrangements that cost the Exchequer hundreds of millions of pounds each year.
In 2016, the Government announced that it would introduce legislation to counter the use of disguised remuneration schemes, including a new charge on loans paid through schemes which have not been taxed and are still outstanding on 5th April 2019.
As abuse of disguised remuneration schemes has clearly taken place, I want to see change in this area – within the overall framework of Labour’s commitment to close down tax loopholes.
However, Labour has continued to raise concerns that the Government should not impose austerity on taxpayers, whilst doing little or nothing about the enablers of tax avoidance. For example, Labour tabled Amendment 38 during the parliamentary debates at the time the new measures were introduced arguing for a review of the profile of those affected, and in particular the impact on lower paid taxpayers.
I am concerned as to whether the Government has done enough to mitigate the effects of their actions on people who did not have specific knowledge of their involvement in tax avoidance schemes.
This is why I supported New Clause 26 (Finance Bill, January 2019) which commits the Government to review the impact of the loan charge and am very glad that it was successful.
My colleague, Anneliese Dodds Labour’s Shadow Financial Secretary to the Treasury, has written to the Government asking if the Treasury could publish a timetable for the Review it has agreed to undertake. In particular, Labour has requested that the Review incorporates:
- Differentiation between those who entered into these arrangements arguably with their eyes open, and those who were entered into them by their employers, or whose participation was a condition of their engagement rather than a free choice.
- An assessment of the profile of those affected, and in particular the impact on lower paid taxpayers.
- An examination of how the enablers of tax avoidance have been tackled by HMRC (i.e. promoters of disguised remuneration schemes) or otherwise.