A group of all-party MPs garnered unanimous support across the House of Commons for their continued efforts to remove all retrospective aspects of the government’s controversial loan fee policy.
The policy has seen thousands of IT contractors end up with life-changing tax bills relating to the work they did between April 6, 1999 and April 5, 2019, for which they were paid. in the form of loans, rather than a conventional salary.
In the opinion of HM Revenue & Customs (HMRC), these loans were never intended for repayment and therefore should have been classified as taxable income.
An amendment was therefore added to the finance law in 2017 that allowed HMRC to require contractors to pay the tax that the agency claims to have avoided during this 20-year window thanks to the introduction of the loan fee policy in November 2017.
The policy has been linked to at least seven suicides to date, and many of those that fall within its scope (which also include NHS workers and social care professionals) have no way of reimbursing them. huge sums of money that HMRC claims it owes.
At the end of 2019, an independent inquiry into the policy – chaired by the former controller of the National Audit Office (NAO) Amyas Morse – concluded that its look-back period should be shortened by approximately 11 years, so that only people who participated in loan compensation plans as of December 9, 2010 would be covered.
The report’s rationale for this decision is that, according to it, the law on the use of credit-based remuneration systems became clear from that date, which coincides with the publication of the 2011 budget bill.
Arbitrary start date
However, as detailed previously by Computer Weekly, the revised start date of the borrowing fee policy was characterized as “arbitrary” on the grounds that the 2011 budget bill only entered into force for several months. after.
This point was recently raised during a debate in the House of Commons, put forward by the All-Party Parliamentary Group (APPG) of all-party MPs, which called for the removal of all retrospective elements of the policy.
This would mean that the policy would only apply from the year it came into effect, 2017, and that tens of thousands of people would be excluded from its scope.
Mike Penning, Conservative MP and APPG co-chair on loan fees, explained the rationale for the policy change in a statement.
“Colleagues across the House of Commons have always expressed their opposition to retrospective legislation, but the now discredited Morse journal recommends that the retrospection to 2010 be maintained, which is not acceptable,” he said. declared.
“The only fair thing to do is to make the loan fees apply from the time they were introduced, not in retrospect. We therefore hope that the ministers will now consider our report and finally agree that any retrospection of the loan burden is wrong and will amend the budget bill to this effect. “
Support from MPs
More than 20 MPs voted in favor of this idea during the debate, and more than 40 MPs from all parties gave their support in advance by signing a motion before the debate to this effect.
As a result of the debate, the motion to remove all retrospective elements of the policy was passed unanimously and said: “This House believes that borrowing costs are an unfair and retrospective tax; Notes that the law on borrowing fees was only adopted in 2017; and calls on the HMRC to cease all action on loans paid before 2017.“
Although the motion expresses the will of the House of Commons on this issue, it cannot force the government to act, the APPG loan official admitted in a statement.
However, given the level of opposition from MPs to retaining the policy’s December 9, 2010 effective date, it would be in the government’s interest to consider making further adjustments before the draft of the 2020 finance law does not reach royal assent.
“With such strong all-party opposition to the retrospective nature of borrowing fees, pressure is mounting on the government to go further than it is currently considering when changing borrowing fees. in the next finance bill, “the APPG statement said.
Ruth Cadbury, Labor MP and Loan Charge APPG co-chair, said changing the policy now would help ease the pressure on those under it, who now find their ability to work under pressure due to the coronavirus covid-pandemic. 19.
“This is a time of incredible concern for most of the people in this country for their loved ones, their neighbors and themselves, and many of our constituents – perhaps most of them – are facing a catastrophic and even absolute loss of income, ”she said.
“Although this debate has no connection with the Covid-19 virus, for victims of the loan fee scandal, who are already worried about their financial future, the coronavirus epidemic only adds to the agony. The suggested new deadline of December 9, 2010 is based on the clarity of the law, but we now know that was not the case. If the law was clear, then why did we need the loan fees and another change in the law in 2016.
“I urge the government to listen to the strong opposition to this retrospective, unfair and unfair tax and, quite simply, to do the right thing,” Cadbury said.