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The British government has launched a review of “loan charges” in a bid to “put an end” to the dispute over the crackdown on tax evasion, which has since been linked to multiple suicides.
Treasury Minister James Murray told the Financial Times that the impetus behind the review, announcement Thursday, was to settle unpaid tax debts linked to tax evasion schemes.
But he added that the review, which will be led by former HM Revenue & Customs inspector Ray McCann, would also “maintain fairness (for) the public purse” and for other taxpayers who had not not indulged in tax evasion.
“Some of those affected by loan fees find it difficult to imagine a way out of the situation they find themselves in. . . For me, trying to resolve the issue and bring closure to this matter is a driving force for them to have this review,” Murray said in an interview before the announcement.
In 2019, then Conservative The government introduced ‘loan charges’ in a bid to crack down on ‘disguised remuneration’ schemes, which involved workers in various sectors being paid in loans via offshore trusts and which had proliferated over two decades previous ones.
HMRC has said previously It is estimated that around 50,000 people are affected by loan fees and users’ income is “on average twice that of the average UK taxpayer”.
The borrowing fees originally required those affected to pay taxes on up to 20 years of income in a single financial year, sparking public outcry and accusations that the government was making unreasonable demands.
The previous Conservative administration later relaxed this policy, cutting the 20-year deadline in half and making it easier to spread out repayments.
But six years after the policy was launched, tens of thousands of people still have not settled their affairs with HMRC. The tax authority reported that the policy has been linked to at least 10 suicides and 13 suicide attempts.
Labor has pledged to carry out a new independent review of borrowing charges before last year’s general election. A previous report by Lord Amyas Morse in 2019 was criticized by MPs and campaigners for implicating officials from the Treasury and HMRC.
Murray said the government had “made considerable effort” to ensure public confidence in the review, which will continue until the summer and be led by civil servants who have no links or experience working on the loan fee policy. They will work in a separate building from the Treasury.
McCann, former president of the Chartered Institute of Taxation, said he was “pleased to be asked to help find ways” to resolve the dispute.
McCann previously criticized the way HMRC sought to engage with loan fee campaigners, noting that “all the people (within the agency) who work on loan schemes could work on the service customer “.
In a statement, the government said the review would examine “the barriers that prevent people subject to loan charges from reaching a resolution with HMRC and recommend ways in which they could be encouraged to do so”.
Campaigners who called for a wide-ranging investigation – into the role of scheme promoters, umbrella companies, recruitment agencies, accountants and tax advisers who recommended the schemes, as well as HMRC – have denounced the announcement .
Steve Packham, of the Loan Charge Action Group, said the proposed review was “a betrayal” and would “not solve the problem”.
“We are deeply concerned about the impact on mental health that the announcement of this sham non-examination will have,” he added.
Murray said his meetings with borrowing fee campaigners last year had alerted him to the impact of the policy and that the government wanted the McCann review, which he will respond to by the Budget fall, “provides a means for affected taxpayers to reach a settlement.” .
Although some are calling for “a review with a different scope,” Murray added that his priority is “to help those who feel stuck.”