Packham on loan charge scandal: “Treasury will do all they can to avoid the truth coming out”
SPECIAL REPORT
MPs, campaigners, contractors and small business owners across the country are outraged about the government denying them their call for a legitimate independent review of the Loan Charge Scandal as promised by Rachel Reeves, the Chancellor of the Exchequer.
The Loan Charge and Taxpayer Fairness All-Party Parliamentary Group (APPG) speaks out and warns about what they see as a “betrayal” to those affected.
The Loan Charge and Taxpayer Fairness All-Party Parliamentary Group (APPG) is jointly chaired by MPs Sammy Wilson, Greg Smith, Emily Darlington, and Karl Turner. The group’s members believe Chancellor Rachel Reeves has not fulfilled her promise to conduct a proper independent review of the loan charge and as a result, the mental health of those who have already attempted suicide will be at greater risk.
Who is policing the Loan Charge Scandal?
The APPG said in a statement about the latest review, “It deliberately excludes looking at HMRC, who conceived the Loan Charge to give themselves carte blanche to pursue victims of mis-selling. It deliberately avoids scrutinising HMRC’s inaction in policing this at the time, its failure to collect PAYE from agencies and its aggressive and incompetent approach towards those affected, which includes many now vulnerable people.”
Concerns about intransparent practices were also expressed, “Public officials responsible for the Loan Charge and its impact (including 10 suicides) will not be required to give evidence in public, instead both HMRC and the Treasury will be providing ‘information and analysis’ during the review”.
The latest review will be led Ray McCann, former HMRC inspector and former President of the Chartered Institute of Taxation. He has been appointed by James Murrey, Exchequer Secretary to the Treasury. The APPG suggests that McCann could pose a conflict of interest given he was a former employee of HMRC.
“Farcically, as well as being staffed by officials from HMRC and Treasury (again), the two Government bodies responsible for the whole Loan Charge fiasco, it is also being Chaired by a former senior HMRC official who worked for HMRC/the Inland Revenue for 31 years,” said the APPG in a statement.
This is a telling point, considering McCann’s statement when appointed for the role:
I was pleased to be asked to help find ways whereby those involved can reach an agreement with HMRC that balances their right to be treated fairly with the expectation of the vast majority of taxpayers who have paid all of the tax and NIC due on their earnings. My review will be entirely directed to that end.
The controversy surrounding the Loan Charge has for too long acted as a barrier to bringing matters to a close for both the individuals involved and for HMRC.
Dave Chaplin, a former IT contractor turned founder of IR35 Shield, said of the latest Loan Charge review:
Whilst I initially welcomed the launch of the Government titled ‘Independent Loan Charge Review’, it turns out when you look at the Terms of Reference you discover that it bears no resemblance to the title. It should be renamed ‘White Wash Review’. The Government is engaging in misinformation and cover-up, a clear abuse of power, firmly in the same sort of Post Office Scandal territory.
Living nightmare to continue
This scandal has left thousands of freelancers, contract workers, and small company directors facing financial ruin. They used loan schemes that they were advised were legal and compliant. These schemes were often recommended by accountants, and in some cases, even by recruiters and clients. Now, these individuals are facing severe consequences and are seeing no light at the end of the tunnel.
The APPG stated, “People caught up in the Loan Charge Scandal have been living with this nightmare for years now and had hoped that the promise would lead to a proper review of the whole Loan Charge, the conduct of HMRC and the role of those who recommended, promoted and operated the schemes. Yet instead, people are calling this a broken promise and a betrayal.”
Steve Packham, contractor and founder member and spokesperson for Loan Charge Action Group (LCAG) said, “What the Government has announced today is not a review at all, as it actually astonishingly excludes reviewing the Loan Charge. It is a complete sham and a betrayal of the promise made by Rachel Reeves last year.”
Packham explained, “The terms of reference start by justifying the Loan Charge and the whole approach taken and instead of being any review of the issue and scandal, is just about how people can be persuaded to give in and pay the unfair and disputed demands. This will not only not get to the truth, it will not resolve the matter and cases will unfortunately drag on and on.”
He continued, “The review also fails, of course, to include looking at HMRC, who conceived the Loan Charge to give themselves carte blanche to pursue victims of mis-selling. It also deliberately avoids looking at the role of scheme promoters who made millions from mis-spelling these arrangements, instead, the Government has chosen to let these people off scot-free.”
Seb Maley, CEO of contractor insurer Qdos, says the efforts of HMRC are directed at the wrong people. “While a review, on the face of it, is a step in the right direction, this shouldn’t be about contractors settling up with HMRC,” Maley told The Freelance Informer.
Maley continued, “In many cases, these workers were targeted by illegal operators and have been left with devastating tax bills. Rather than focusing on contractors, the government needs to divert its attention on those who promoted these immoral schemes.”
Suicide watch
The true call for help is for the workers who were misled, many of which are low-paid workers, including nurses, social workers and other council staff. Packham said on behalf of the APPG,
We are deeply worried about the impact on mental health that the announcement of this sham non-review will have and with ten suicides already. It is clear that the HMRC and the Treasury will do all they can to avoid the truth coming out and having a genuine review, but the Loan Charge Action Group will continue to expose the reality of the Loan Charge Scandal.
Collectively, these victims should not be put in the same camp as the MPs who reportedly were using tax avoidance schemes. These victims were introduced and advised to join these payment terms by multiple trusted sources in the contractor supply chain, such as accountants, umbrella companies and recruiters.
If you or someone you know is affected by the loan charge, please share these useful links and contacts below shared by the APPG so they can get emotional support:
| Website | Phone Number | |
| NHS – help for suicidal thoughts | – | – |
| Samaritans | 116 123 | jo@samaritans.org |
| Breathing Space | 0800 83 85 87 | – |
| The Silver Line | 0800 4 70 80 90 | – |
| Campaign Against Living Miserably (CALM) | 0800 58 58 58 | – |
| OK Rehab – Drug & Alcohol Rehabilitation | 0800 326 5559 | info[at]okrehab[dot]org |
| Rehab 4 Addiction | 0800 140 4690 / 0345 222 3508 (Mobile) | info@rehab4addiction.co.uk |
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Broken promises
MPs are reminding Chancellor Rachel Reeves that she made a clear promise in January 2024 to conduct a fresh, independent review of the Loan Charge. Rachel Reeves said in an interview “Who are the real culprits here? It’s people who mis-sold products”.
Despite this, the APPG said there is no mention at all of “even scrutinising the role of promoters, never mind taking action against them. Instead, the Government has already decided to continue to persecute those who were advised to use them, including by Chartered Accountants, with the only offer being looking at the ‘fairness’ of settlements, not the issue and law itself.”
Yet according to the APPG the Terms of Reference are “very restrictive and have been set by the Treasury”.
“Instead, the Treasury has announced a cynical exercise that will look only at settlements and how to ‘encourage’ those affected to pay, without looking into the fairness of the controversial retrospective legislation and HMRC’s aggressive treatment of people at all, which has been linked to the ten confirmed suicides and thirteen attempted suicides of people facing the Loan Charge,” said the APPG in a statement.
Packham said the APPG wrote a comprehensive letter in December laying out what a review (or ideally a proper inquiry) should look like, what it should look at and how it needed to be structured to be both transparent and independent.
The statement said, there is outrage that the ‘review’ has been designed, “just like the sham Morse Review, to avoid looking at promoters of the schemes who mis-sold the schemes on an industrial scale and in some cases made millions from promoting and operating them.”
APPG pinpoints their concerns on Treasury announcement: “The so-called independent review of the Loan Charge actually excludes reviewing the Loan Charge. It excludes looking at the legislation, how and why HMRC conceived of the Loan Charge and the flawed impact assessment. It excludes looking at the history of the issue and scandal at all. Instead, it justifies the Loan Charge and maintains the current position for all affected. It is merely a review of the settlement terms and how more people can be made or “encouraged” to settle what are unfair and disputed demands.
“HMRC and the Treasury will be shown the report before publication and allowed to suggest corrections”.
Here are APPG’s key concerns over how the Loan Charge is being handled by the government:
- “It deliberately avoids looking at what a profound policy failure the Loan Charge has been, with thousands of people still facing the Loan Charge over five years since it came into force and with similar schemes still being openly advertised and promoted, with more people being caught up in them.
- It deliberately avoids looking at the role of scheme promoters who made millions from mis-selling these arrangements, instead the Government has chosen to let these people off scot-free.
- It deliberately avoids looking at umbrella companies, accountants and recruiters, who were incentivised financially to push people into using these arrangements.
- It deliberately avoids looking at the end clients, that benefited from avoiding employers’ taxes and the need for employee rights and benefits, which includes HMRC, Government departments and councils, as well as many large corporations.
- It excludes those being unfairly chased for pre-2010 cases, taken out of the scope of the Loan Charge by the previous Morse Review but still being hounded by HMRC.
- It deliberately excludes reviewing the ten suicides and thirteen suicide attempts that HMRC has confirmed of people facing the Loan Charge.
- It deliberately excludes those who have been mis-sold schemes after the Loan Charge came into force and are being pursued for un-payable demands, which includes many low paid workers, including nurses, social workers and other council staff.
- It deliberately avoids looking at how Government and HMRC can actually stop these kinds of schemes and promoters and how Government and HMRC can protect freelance and contract workers.
- It deliberately excludes learning any lessons about how the scandal happened or how such a mess can be avoided in future.”
Greg Smith MP, Co-Chair of the Loan Charge and Taxpayer Fairness APPG said, “What has been announced today is not only a farce, but it is not actually a review of the Loan Charge, which is what the Chancellor promised. The supposed review starts by justifying the Loan Charge and it also makes clear that it will not change the position people are in, nor review the legislation and whether it was fair and justified.”
The APPG made clear that the review must be led by someone independent and not staffed by HMRC and Treasury officials. Instead, the Government has appointed a former senior HMRC official to lead it and staffing it from the two Government bodies responsible for the whole Loan Charge fiasco.
“This is not the review that was promised nor the review that is so desperately needed and the APPG will continue to push for a genuine inquiry into this Scandal.
Greg Smith MP, Co-Chair of the Loan Charge and Taxpayer Fairness APPG
Why are promoters still getting away with it?
The contractor service sector is also shocked by the latest developments and what they see as a clear avoidance by HMRC to do the right thing, which is to go after the promoters of these schemes and not their victims.
Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance, said, “I am incredulous that the Treasury and government are ducking their responsibility to solve the glaring problem which is to pursue the promoters of the schemes.
Temple continued,
HMRC has all the information it needs to stamp out non-compliance. It doesn’t take a review to tell them that. Take the latest Ducas case where HMRC has frozen £171 million of assets. That should have never got to that level. HMRC has had the details about Ducas for years but didn’t identify the case. HMRC’s inaction is fuelling non-compliance, and this review is one-sided, seeking to recover money from the loan charge victims when it should be focusing on the architects of the schemes.
This was a good opportunity to conduct a proper review into the scandal and it falls way short. The brief to Ray McCann is skewed.
The government is avoiding chasing down the promoters of these corrupt schemes and appears to be building arguments to persist with, in my opinion, the flawed strategy of seeking recovery from the workers. And the criminals will escape punishment and be allowed to thrive and continue to run their illegal practices, duping unwitting contractors into signing up for their illegal schemes.
