There are 'frightening parallels' between loan charge and Post Office Horizon IT scandal, MPs warn Government

Mr Wilson and other MPs tabled a parliamentary motion on the loan charge that warned many people are facing “unaffordable demands”, there is the “risk of further suicides” and that a review conducted by Lord Morse was “limited and not genuinely independent” of the Treasury and HMRC.

The Loan Charge, announced by Government in 2016, was designed to tackle tax avoidance schemes where individuals receive income in the form of loans that are not repaid to avoid income tax. Critics claim the policy is punitive because it has left honest people who acted on professional advice with life-changing tax bills. A Government spokesman has previously stressed that “significant changes” were made to the loan charge following Lord Morse's review in 2019 which reduced its impact, but members of the Loan Charge & Taxpayer Fairness All Party Parliamentary Group (APPG) still believe the policy is flawed.

During a House of Commons debate, MPs called on the Government to work with all parties to find a “fair resolution and for a full independent investigation, including into the conduct of HMRC”. MPs supported the non-binding motion, but Treasury minister Nigel Huddleston said he did not believe the case had been made for another review.

Mr Wilson, co-chairman of the APPG , told the Commons: “Over the last two weeks we have been looking at the dramatic fallout of the Horizon scandal in the Post Office, and quite rightly we have been focusing on what belatedly can be done to repay and deal with that great injustice.

“I don’t think I’m being overly dramatic when I say that we are looking at another Horizon scandal.”

Conservative MP Greg Smith (Buckingham), another co-chairman of the APPG, said “The loan charge has and is still haunting thousands of our constituents across the whole country, bringing with it a train of despair and destruction that should weigh heavily upon HMRC and indeed all of us in this House.”

Mr Smith said a “fair settlement” is needed for the victims of the loan charge, adding it must take into account “reality” and understands that people acted in good faith and took professional advice.

For Labour, shadow Treasury minister Darren Jones praised The Yorkshire Post’s dogged coverage of the loan charge scandal, adding: “I urge the Government to learn the lessons of other scandals, stop burying their heads in the sand, for the minister to be brave and to do the right thing.”

Conservative former minister Sir Desmond Swayne claimed HRMC had pursued a “vendetta” against the victims and said MPs were “culpable” for not having spotted and examined the consequences of measures approved in 2017.

Conservative former cabinet minister Sir Jacob Rees-Mogg added it was “right to say that those of us who were here in 2017 should be appalled that this was able to get through without being noticed, without being stopped”.

He said: “We are here to seek redress of grievance from an overmighty executive which abuses its power.”

Tory former cabinet minister Sir David Davis, on HMRC previously referring itself to a watchdog over suicides, said: “That is as close as you get when dealing with Government departments to a confession. They know they have done wrong. And they have known it for some time.”

SNP Cabinet Office spokeswoman Kirsty Blackman said: “It is a Sword of Damocles hanging over people, they cannot ever get to the stage of resolution because even if they settle HMRC can come back and say ‘sorry we miscalculated, we’re going to chase you for another year’."

Mr Huddleston said the schemes were “never legitimate, they were always tax avoidance”, but noted there are “some people who are being deceived and forced into errors that are completely inappropriate”.

Mr Huddleston said HMRC does seek, where possible, to collect revenue from employers and later told MPs: “I don’t believe the case has been made for another review, I stand ready always to listen but that review (by Lord Morse) stood up well … it was thorough, significant and 19 of the changes were implemented, so a hugely impactful review.”

Mr Huddleston said HMRC has made 10 referrals to the Independent Office for Police Conduct where a person has taken their life, adding HMRC has conducted internal investigations. He added: “Nine of the 10 investigations have concluded and although no misconduct was found, HMRC is taking forward organisational learning from these matters to further strengthen the support provided in identifying individuals who need extra help.”

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