The Loan Charge: What is the Loan Charge and why it is like the Post Office Horizon scandal

This newsletter is inspired by two people and dedicated to one group of people: it is inspired by Alan Bates as his two-decades-long campaign for justice for victims of the Post Office Horizon scandal comes to fruition, and to, certainly, a lesser-known man, Greg Wright. Greg is the deputy business editor for The Yorkshire Post and has worked in journalism for more than three decades, picking up multiple industry awards along the way - so he knows a story when he sees one.

Now, journalists often have their own hobby horses. Pet projects that you sometimes, as their editor, have to humour them with and occasionally have to insist they leave well alone. As a senior member of our parent organisation, it is expected that I monitor activity, productivity and quality, of endeavour whilst the company puts money into people’s pockets in return for that work.

So when Greg suggested to me, many years ago, that he’d had his interests piqued by something he thought might be a story, and would I support his time and effort to try to get to the bottom of it, I was as intrigued as I was initially supportive. Perhaps he’s onto something, I thought, perhaps it’s a hobby horse that I’ll have to kick him off at some point.

The story? The Loan Charge.

For those unfamiliar with the Loan Charge, it is a retrospective tax recovery scheme run by HMRC. It targets people who previously, predominantly in good faith, entered into salary loan schemes which meant an effective umbrella agency - that had agreed to make people’s tax payments in the same way as any PAYE employee - would pay their dues, but didn’t. In the main, they still made those deductions, calling them ‘fees’, and kept them for themselves. Tens of thousands of people entered into these agreements, including teachers, nurses, cleaners and council workers. They were advised to pick up work like this by recruitment agencies, in the main. In many cases, people had no choice but to take this work. In other words, this was not in any way a deliberate tax avoidance scheme, these were - almost without exception - hard-working, honest people looking to put food on the table and warmth in their homes. Few people, particularly those earning modest incomes, set out to cheat the tax man. In my view, they are unwitting victims of a sophisticated scam. But HMRC doesn’t see it that way - at least not yet.

And nor do certain members of Government. Take one Mel Stride, for example. Mr Stride, MP for Central Devon, has previously defended the Loan Charge, notably when he was Financial Secretary to the Treasury in 2019. Sparing no thought for the individuals duped into financial ruin, Mr Stride is on record as having said that HMRC was simply collecting tax that was due. When I attempted to appeal to Mr Stride’s human (and sensible) side, if he has one, on Twitter, he did the equivalent of slamming his constituency door in my face - he blocked me. Greg, a more polite and less abrasive man than I for sure, was given the same treatment for also asking questions of Mr Stride about the Loan Charge and its victims - not least the 10 people who have taken their own lives as a direct result of the Loan Charge. TEN people, too, with the door slammed in their now deceased faces. No justice is possible for those poor souls, now. I wonder: just why did Mr Stride want to block us out, I wonder?

Believe it or not, this has now been going on since 2016, when the Government used its Budget to introduce new powers enabling HMRC to go after people it felt had not paid their taxes. I can barely muster words furious enough to convey my anger at quite how menacingly individuals have been pursued and persecuted since those powers were granted; the number of graves now occupied by victims of this pernicious policy is, though, evidence enough.

The reason I write about it, here and now, is, as aforementioned, firstly in the context of the Post Office fall out; the result of fearless, indefatigable campaigning by Alan Bates and those who stood alongside him; but also because of a back-bench debate held today in the House of Commons - at which the 'dogged journalism' of The Yorkshire Post was praised, Greg's work - to discuss the loan charge. It is a backbench debate that I viscerally believe would not have been on the agenda but for the work Greg has done in telling the Loan Charge victims he sees them, he hears them and he believes them. Victims otherwise terrified of an Establishment that has chased at least ten people to their deaths.

I tuned in. I wanted to see for myself how well this is understood by Parliamentarians. Step forwards Sammy Wilson the Democratic Unionist Party MP who represents East Antrim. His opening gambit? “Could I say to this House, I don’t think I am being over-dramatic when I say this; ‘we are looking at another Horizon scandal’”, he said.

My God, I thought. They get it. They finally get it. Mr Wilson went on: “And the parallels are frightening. First of all, because of the actions of a Government department, we have had 10 people in the United Kingdom who have committed suicide and many others who, because of the pressure they have been put under by officials…have attempted to take their own lives.”

“Despite the fact that these alarm bells should be ringing in the Treasury - no action has been taken and some Ministers have even refused to meet the group. Others have simply put out the party line, and regurgitated HMRC’s excuses.”

Hallelujah! The elation I felt at hearing those words in Parliament was significant. I cannot for a second imagine what the victims of this racket are feeling right now, as the covers are lifted on their pain for those who can do something to make it stop to see.

Mr Wilson went on, asking why HMRC had opted to pursue the individual victims of the Loan Charge, as opposed to the unscrupulous promoters of these snake oil schemes, stating that it was his belief that it was because the humble working person was an ‘easy target’ with little means or wherewithal to fight the Establishment.

Urging the Financial Secretary to the Treasury, MP Nigel Huddleston, to act, Mr Wilson summed up: “There are a number of issues that the Minister must consider:

1) that HMRC officials, just as Post Office officials were, are on commission for the money that they bring in through the Loan Charge. The Minister must establish, is that the case?

2) I trust that the Minister, in his new position, will challenge the departments’ lines on this - we need far greater challenge on this;

3) I believe that the Loan Charge needs to be repealed because it is not fit-for-purpose, and indeed it is having a detrimental effect;

4) the employers and the promoters must be pursued.

I will add one more: it is high-time HMRC was brought to heel. It is a wild west government department that is laughing in the face of Ministers, its arrogant incompetence wreaking havoc across the country, whilst enjoying absolute impunity. Enough is enough.

Mr Wilson added: “There are people suffering today, battered by the HMRC cosh that officials are using to extract money from them that they neither have nor believe they owe to HMRC, and I would ask the Minister to grasp this nettle and ensure that we do not end up with another Horizon scandal.”

Hear, hear, was my first thought. This newspaper has been saying as much for almost all of my tenure as editor - led nobly and thoughtfully by Greg. My goodness, was my second thought. Perhaps. Perhaps, justice is possible for the victims of the Loan Charge.

Then stood another Greg, Greg Smith, Conservative MP for Buckingham. He said: “I am profoundly troubled by what I can only describe as one of the most significant crises faced by British taxpayers, certainly in my living memory. 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 on HMRC and indeed all of us in this House.”

Reflecting on the the 10 people who have taken their own lives because of HMRC’s relentless, voracious appetite for money they simply didn’t have, Mr Smith added: “Those are not mere numbers on a page. They are human tragedies, each one a poignant reminder of the injustices felt by individuals still grappling with the consequences of the Loan Charge.”

Without any semblance of hyperbole nor hysteria I ask you this: what kind of country are we? What kind of society is this one we call our own? Because to the ordinary working person these past few days, through the lens of the Post Office and the Loan Charge, ours is very clearly a country where the Establishment accepts that coffins will be filled with the bodies of innocent people so long as its coffers are protected. A country that is prepared to bully, harass and intimidate tens of thousands of people, en masse, to the point where their confidence and dignity are so ravaged by the Establishment, so terrorised by a monstrous Government department, that they choose to end their own lives. A country where the powerful can pursue vindictive vendettas, torturing - in plain sight - innocent people. A country where moral barbarism and ethical bankruptcy in the corridors of power are threatening to rot our democracy from the inside out. Is that who we have become?

And so, if you have read this far, I beg of you. Make a noise about this. Write to your MP about it. Write to the Prime Minister about it. Tell your friends about the poor souls who don’t have an Alan Bates or an ITV drama. But, as the Shadow Chief Secretary to the Treasury during the debate so graciously acknowledged in the Commons yesterday - to whom I am grateful - they do have The Yorkshire Post and they do have Greg Wright.

Be in no doubt: this is no hobby horse. This is a campaign that has people's lives on the line. Up, we will not give.

James Mitchinson

Editor | The Yorkshire Post

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