An attempt by a cross-party group of MPs to amend the forthcoming Finance Bill so that thousands of people will fall out of scope of the government’s controversial loan charge policy has failed.
Several members of the 223-strong Loan Charge All Party Parliamentary Group (APPG) sought to table an amendment for inclusion in the Finance Bill 2019-2021, which is currently in the throes of passing through the House of Commons.
MPs were set to vote on the amendment on Wednesday 1 July 2020, which was geared towards tightening up the government’s loan charge policy so that it applies only to individuals who knowingly sought to evade tax by being remunerated for work they did through loans, prior to the-2015-16 tax year.
“The his new clause provides that, in respect of loans made prior to 2015/16, the loan charge applies only if the taxpayer submitted their tax return and deliberately did not declare the loan to be income. The clause also extends this protection to taxpayers who were not required by HMRC [HM Revenue & Customs] to submit tax returns,” the amendment text read.
However, despite the amendment having the support of 50 named MPs, it was not put before the House of Commons for a vote, meaning the amendment cannot be acted upon at this stage.
In a series of Tweets, Liberal Democrat and Loan Charge APPG co-chair Ed Davey suggested the failure to secure a vote on the amendment may have been down to Labour MPs abstaining from voting on the topic, as well as Conservative MPs “doing what they were told to by government whips”.
In a follow-up Tweet, the Loan Charge APPG account expressed its disappointment at the turn of events. “Thousands of people will feel badly let down by the House of Commons tonight. We hope that the House of Lords will raise the loan charge now.”
As previously reported by Computer Weekly, the loan charge policy has seen thousands of IT contractors saddled with life-changing tax bills pertaining to work done previously for which they were remunerated in the form of non-taxable loans, rather than a conventional salary.
The loan charge policy was introduced in November 2017 to clamp down on individuals, working across a number of sectors beyond IT, who enrolled in loan-based remuneration schemes, to ensure they repay the employment tax that HMRC claims they avoided by participating in the schemes.
Initially, the policy sought to recoup unpaid taxes from individuals who took part in such schemes between 6 April 1999 and 5 April 2019, but the start date has since been revised to only include participants who joined schemes after 9 December 2010.
However, those opposing the policy –including the members of the Loan Charge APPG – feel the retrospective nature of the policy is unjust and all retrospective elements of it should be removed, which this abortive amendment was geared towards addressing.
Computer Weekly contacted the press representatives for the Loan Charge APPG for clarification on what its next steps will be, but was still awaiting a response at the time of publication.