Peter Aldous speaks out against the retrospective nature of the 2019 loan charge which was announced in the 2016 Budget and highlights the devastating impact on constituents, who had acted legally and in good faith and followed advice.
It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Wycombe (Mr Baker) on securing this debate, which gives us the opportunity to highlight the devastating impact that the 2019 loan charge is having on many individuals.
My constituent who has been affected by the loan charge is at his wits’ end. His family life has been turned upside down and, as he sees it, he has no alternative but to declare himself bankrupt. He is not a wealthy man. He is not a professional footballer, he is an IT contractor. When he and others were made redundant by BT, they were introduced to financial advisers who set up these schemes for them. He and they acted in good faith, only following the advice given so as to be IR35 compliant.
I want to highlight two issues. My first concern is that HMRC is pursuing the easy targets—individuals who have acted in good faith, are not well off and do not have their own bespoke financial advisers and accountants. My understanding is that the Glasgow Rangers Football Club case, on which the 2019 loan charge is based, concluded that the tax liability fell on the employers. That raises the question why HMRC is not pursuing the client organisations, agencies and umbrella groups that have benefited significantly from setting up these arrangements.
I agree with my hon. Friend’s focus on the individuals involved. Does he agree that the retrospective nature of the measure is not just a matter for the rule of law in the abstract, but that it undermines the trust of those people and their families and communities in our Government and our legal system, and will do so for generations to come?
I thank my hon. Friend for his intervention—he has a crystal ball, because he has foretold the next item in my speech.
The people affected have become a target. They are vulnerable people. They are not well paid and do not receive many of the benefits and protections that payroll employees do: sick pay, holiday pay and maternity and paternity leave. I would be grateful if my hon. Friend the Minister could advise us when he sums up the debate of whether the impact assessment has looked at the personal circumstances of the individuals who are being pursued, whether they are able to pay and what the impact will be on their lives.
My second point, which my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) foretold, is that the basis on which the 2019 loan charge has been introduced and many individuals are now being pursued is that it is retrospective. It undermines the cornerstone of taxation, which is that a Government should not seek to impose or increase a tax charge on income earned, gains realised or transactions concluded at a time before the legislation was announced.
Will my hon. Friend give way?
I sense that I should plough on, Mr Walker, so as to give others an opportunity to make a speech.
It is vital that any taxation system is equitable and progressive and that those with the broadest shoulders pay their fair share.
Order. I will not hold it against the hon. Gentleman if he would like to be generous to Mr Goldsmith.
Then I will allow my hon. Friend the Member for Richmond Park (Zac Goldsmith) to intervene before I continue.
I thank my hon. Friend for giving way and you, Mr Walker, for intervening in such a magnanimous way.
It is not just right hon. and hon. Members in this Chamber who take the view that my hon. Friend has just expressed in relation to retrospective taxation. The current Chancellor of the Exchequer said in 2005:
“A taxpayer…is entitled to be protected from retrospective or retroactive legislation.”—[Official Report, 7 June 2005; Vol. 434, c. 1139.]
And of course he was right. The measure that we are seeing and debating today is retrospective taxation, and it is abhorrent.
I thank my hon. Friend for that intervention: he reinforces what is the fundamental, fatal flaw of this injustice. What I and, I believe, all hon. Members in the Chamber are concerned about is that a group of people—often vulnerable people—who have acted in good faith are now being asked to bear an excessive burden, which will have a devastating impact on their lives and their families’ lives. For that reason, it is very important that we air these concerns to the Minister.
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