HMRC slammed in Parliament for Loan Charge and its “frightening” parallels with Horizon scandal

The chief executive of Royal Mail has been accused of “incompetence or cluelessness” by MPs calling on the regulator Ofcom to investigate whether the company broke legal service requirements.

A cross-party group of MPs have slammed HMRC over its tactics and approach to enforcing the Loan Charge and said it drew “frightening” parallels with the Post Office Horizon scandal.

The Loan Charge was introduced to recover taxes from workers who operated arrangements that paid income often in the form of loans, which advertised themselves as compliant, claiming very little or no tax was due on them. These arrangements have since been deemed tax avoidance schemes, and HMRC has aggressively pursued tens of thousands of contractors who operated this way for taxes on income earned – dating back as far as 1999.

With ten suicides linked to the policy, calls for justice over the Loan Charge have swiftly followed the government’s promises to exonerate victims of the Post Office Horizon scandal. During the debate, MPs from across the board called for greater transparency at HMRC, greater regulation to protect workers, and an end to the charge.

Commenting on the debate, Seb Maley, CEO of Qdos – a tax insurance provider and IR35 specialist – said: “MPs from across the board are right to draw comparisons between the Horizon and Loan Charge scandals. There’s a gross injustice here, and there are questions over the way HMRC has conducted itself – acting, as others have highlighted, as judge, jury and executioner.

“And of course, there’s the irony that IR35 and IR35 reform have been major catalysts for these sorts of arrangements. Many contractors were only caught up in the Loan Charge because they were advised at the time that these arrangements were compliant. But rather than holding the promoters of these schemes to account, HMRC has pursued the victims.

“The retrospective nature of the Loan Charge and HMRC’s conduct has rightly attracted criticism across the political spectrum. But until the government gets serious about tackling the promoters of tax avoidance, it’s unlikely that the victims of the Loan Charge will see justice.”