A group of sector professionals have published a proposal to resolve the loan charge and to provide a fair and final resolution to give closure both to taxpayers facing it and also to HMRC. 

The professionals, comprised of tax lawyers, tax advisers and accountants, led by Sarah Gabbai of McDermott, Will and Emery, have taken action due to the increasing concern about the impact on thousands of families if HMRC enforce the Loan Charge. The professionals have come together to offer a new voice to the debates on the issue and the possibility of resolving the impasse between HMRC and taxpayers facing the Loan Charge. 

The proposal has been presented to the Loan Charge and Taxpayer Fairness APPG (All Party Parliamentary Group) and it is hoped that the Treasury, including the new Financial Secretary to the Treasury, Lucy Frazer QC MP, who is herself a lawyer, will take this proposal seriously and that she and the Chancellor will accept that a resolution is needed that works for all sides and gives closure on the issue, practically and politically. 

The proposal is for HMRC to offer a settlement opportunity for those facing the Loan Charge and those who have had to settle to avoid it, with taxpayers paying an affordable proportion of the tax that HMRC believes is owed. The proportion would also reflect the fact that people were victims of mis-selling and also the fact that it is unfair for the taxpayer to be pursued for the whole sum when promoters and advisers who recommended schemes and in many cases agencies and umbrella companies were all involved and profited. There should also be an acknowledgement that HMRC failed to adequately warn taxpayers and failed to close down schemes at the time, so cannot reasonably demand all the disputed tax retrospectively.  The settlement opportunity must give finality to the taxpayer and must not require any admission of guilt, something that was necessary in previous settlement opportunities.  The proposal is below. 

The professionals supporting the initiative hope that other sector professionals will also back the idea, as well as supportive Parliamentarians. The professionals involved believe that a resolution to the Loan Charge issue is in the interests of all parties – for the tens of thousands of families facing the Loan Charge (and those who have settled to avoid it), but also in the interests of HMRC and the Government, for both of whom the Loan Charge has become a seriously problematic issue.

Commenting, specialist tax solicitor Sarah Gabbai, who has co-ordinated the proposal said:

“As a group of sector professionals, having seen the impact of the Loan Charge and the previous settlement process on many people, we have decided not only to speak out but also to try to offer an independent resolution, that is in the interests of everyone, including HMRC and the Treasury. 

“HMRC have a legal duty to enforce the Loan Charge, but they know that there will be people who simply cannot afford to pay the sums demanded and that for some people, bankruptcy will be inevitable. We also believe that it is unfair that taxpayers are being made to pay all the disputed tax, when the majority of people were victims of mis-selling and when several other parties were involved and must accept some responsibility for the situation those taxpayers are in.  

“We look forward to presenting the proposal to the Loan Charge and Taxpayer Fairness APPG and we hope that the Treasury and HMRC will take this proposal seriously and will work towards a fair resolution that gives closure to all and avoids the consequences if nothing is changed. We will work with HMRC, the Treasury, the APPG and others to find a way to resolve this issue and allow everyone to move on”. 

Commenting, tax barrister Keith Gordon, who is supporting the proposal said:

“We strongly believe that now is the time for all parties to work together to agree a commonsense, compassionate resolution for all those who have been affected by the Loan Charge.  This has been a very controversial issue and one that continues to be a source of anxiety for those affected, a huge administrative burden for HMRC and a difficult issue politically for the Government. 

“We sincerely hope that the new Financial Secretary to the Treasury, who of course is also a lawyer herself, will look afresh at the whole issue and realise that a fair resolution is in everybody’s interest. I remain committed to do what I can, working with other professionals, to assist finding a way forward and a way out for all concerned”.  

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