HM Revenue & Customs has referred four suicides related to the loan charge to a U.K. oversight body, prompting renewed calls for suspension of the controversial policy from lawmakers.
An HMRC spokesperson confirmed to Tax Notes October 2 that it had made the latest referral to the Independent Office for Police Conduct (IOPC) the previous day. “HMRC is aware that four customers, who we have been told used disguised remuneration schemes, have very sadly taken their own lives,” the spokesperson said. The IOPC investigates complaints and conduct issues related to staff at various government bodies, including HMRC.
The cases involved individuals who had used a disguised remuneration tax avoidance scheme and faced a loan charge as a result. The loan charge was introduced in Finance (No. 2) Act 2017 to curb the use of disguised remuneration schemes, which employers used to pay individuals through loans, usually paid out via offshore trusts, and to sidestep income tax and National Insurance contributions. The loans were structured so that they would never have to be repaid.
The loan charge applies to all such loans dating back to April 6, 1999, if they remained outstanding by April 5, 2019. Since its introduction, the loan charge has been harshly criticized because thousands of individuals now face massive liabilities, as well as potential bankruptcy and home property losses. In some cases, individuals are suffering from depression, have experienced family problems, or either have died by suicide or are contemplating it, according to members of Parliament and campaigners.
A spokesperson for the IOPC also confirmed October 2 that it is assessing HMRC’s fourth referral. The IOPC had advised that the first referral required further HMRC investigation “to determine if its contact with the individual as a vulnerable customer was appropriate,” the spokesperson said. “We returned two other referrals to HMRC to proceed with as they consider necessary.”
The loan charge has been a particularly contentious issue for some time, prompting the creation of the Loan Charge All-Party Parliamentary Group (APPG), an informal cross-party group of lawmakers that has no official status within Parliament. Most recently, Chancellor of the Exchequer Sajid Javid commissioned an independent review of the loan charge, appointing Amyas Morse, former head of the National Audit Office, to lead it. The call for evidence ended September 30. However, the loan charge will remain in effect while the review continues, the government said.
APPG Chair Ed Davey, along with vice chairs Ruth Cadbury and Ross Thomson, sent a letter to Morse October 2 confirming that the group is now aware of seven suicides of individuals facing the loan charge. “It has also now been reported that HMRC have referred themselves to the Independent Office for Police Conduct with regards to another suicide of someone facing the loan charge, which is the fourth such suicide HMRC have reported,” the letter says. “We do not know if these four are amongst the seven suicides confirmed to us.”
The letter urges Morse to ensure that the review investigates the catastrophic effects of the charge on individuals. “It also must look into why this was not predicted in the original impact assessment, which was clearly not only flawed, but also negligent,” it adds. Morse’s review must also investigate the way in which HMRC is treating those who face loan charges, why HMRC and HM Treasury appear to have ignored warnings about suicide risks, and why the government has not yet suspended the charge, the letter says.
Davey, Cadbury, and Thomson wrote that it is deeply troubling that Treasury has not suspended the loan charge while the review is pending, "but even more worrying than that is that HMRC continues to pursue people for related advanced payment notices.” These actions have put individuals at serious risk of suicide, they added.
The APPG called on Morse to use his role to ask HMRC to suspend all loan-charge-related activity, particularly on advanced payment notices. “We hope that this will now happen and happen immediately, to reduce the risk of further tragedies,” the letter says, adding that such a suspension would allow Morse to carry out the review properly.
Morse’s report is expected by mid-November.