Friday, December 20, 2019

Taxman blasted for handing workers bills backdated over 20 years

Taxman is blasted for handing workers six-figure bills backdated over 20 years that ‘led to suicides’ 

  • Government sent tax demands for large sums to self-employed workers 
  • The workers once legally cut tax bills using ‘disguised remuneration’ schemes
  • Campaigners say that the pursuit of the unpaid tax is linked to seven suicides 
  • An independent review has criticised the policy used to claw back unpaid taxes 

The taxman caused ‘serious distress’ by handing workers huge bills backdated over 20 years, a damning report has found.

The Government’s Loan Charge policy resulted in more than 50,000 freelancers receiving tax bills as high as six figures and has been linked to suicides and bankruptcy.

But yesterday an independent review criticised the policy used to claw back unpaid taxes as far back as 1999. 

Under the Loan Charge, the Government sent demands for large sums to self-employed workers – including nurses and teachers – who once legally cut their tax bills using ‘disguised remuneration’ schemes [File photo]

And last night HM Revenue and Customs said 11,000 people would be spared from having to pay as a result of planned changes to the law.

Steve Packham, of the Loan Charge Action Group, said: ‘This is a big step forward, with a clear commitment that this dreadful law will be changed, a law that has tragically cost lives.’

Under the Loan Charge, the Government sent demands for large sums to self-employed workers – including nurses and teachers – who once legally cut their tax bills using ‘disguised remuneration’ schemes.

They were paid with tax-free loans from offshore trusts that did not need to be paid back, meaning employers did not need to pay income tax and National Insurance contributions.

Campaigners say the pursuit of the unpaid tax is linked to seven suicides. In one case, a consultant engineer in his late 60s took his own life after telling his family he feared he would go to prison [File photo]

The Loan Charge, announced in the 2016 Budget, made any outstanding loans taxable income as of April this year.

But the Government commissioned the review, led by former head of the National Audit Office Sir Amyas Morse, after growing concerns that the tax bills were causing widespread distress and should not have been allowed to be sent retrospectively.

Sir Amyas said yesterday: ‘The design and delivery of the Loan Charge didn’t get the balance right between tackling tax avoidance and protecting the rights of taxpayers and, in some cases, has caused serious distress to the individuals affected.’

The taxman caused ‘serious distress’ by handing workers huge bills backdated over 20 years, a damning report has found

HMRC said yesterday the charge would now only apply to loans taken out from December 2010, rather than 1999. 

It added the move would cut bills for more than 30,000 people.

HMRC has also agreed to allow those earning less than £50,000 and without disposable assets to pay over a minimum of five years. Those earning less than £30,000 will get at least seven years.

The Government is expected to introduce legislation to implement the changes early next year.

Campaigners say the pursuit of the unpaid tax is linked to seven suicides. 

In one case, a consultant engineer in his late 60s took his own life after telling his family he feared he would go to prison.

His daughter Gayle, who did not want their family name published, told the BBC: ‘I don’t think he could see any light at the end of the tunnel at all.’

Mr Packham said: ‘We welcome that it’s now been accepted that it is unacceptable for this retrospective law to apply as far back as 1999 and that closed years prior to 2016 will no longer be subject to the Loan Charge.

‘However, we continue to believe the Loan Charge should not apply retrospectively at all.’

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