PARLIAMENTARY DEBATE
Loan Charge - 18 January 2024 (Commons/Commons Chamber)

I beg to move,

That this House is deeply concerned that HMRC has confirmed the suicides of 10 people facing the Loan Charge and that, despite the Morse Review, thousands face unaffordable demands, with the risk of further suicides; notes that HMRC has also confirmed 24 cases of serious harm, including 13 suicide attempts; believes that many people who used schemes were victims of mis-selling, and that in other cases employers and agencies pushed people into using them, yet HMRC is demanding all disputed tax from scheme users, not from those who recommended, promoted and operated the schemes; further notes that section 44 of the Income Tax (Earnings and Pensions) Act 2003 deems agency workers to be taxable as employees of those agencies and that HMRC should have collected tax from agencies at the time; criticises HMRC transferring the liability to individuals despite its own failures; observes that HMRC is pursuing open enquiries for schemes before 2011 despite the Morse Review; also notes that HMRC is seeking additional payments from those who settled; further believes that the Morse Review was limited and not genuinely independent of HM Treasury and HMRC; highlights the resolution proposed by tax professionals; calls on the Government to work with all parties to find a fair resolution and for a full independent investigation, including into the conduct of HMRC; and believes that taxpayer rights must be enshrined in law and enquiries closed after four years if HMRC fails to act.

Before we start the debate, on behalf of my party, I pass on our condolences to the family of Tony Lloyd. He served for a short time as the shadow Minister for Northern Ireland. I always found him to be very courteous and well informed, and he wanted to be well informed. He asked the right questions and was always prepared to engage, even though he often did not agree with some of the stands we took. He was always happy to engage with all the parties in Northern Ireland, and we pass on our condolences to his family.

Order. I am slightly concerned that there is something wrong with the sound. Let us start again.

Thank you, Madam Deputy Speaker. I hope that the point I was making about Tony Lloyd was picked up. I want to pass on the condolences of our party to his family, and I pay tribute to the work he did as shadow Minister for Northern Ireland.

I thank the Backbench Business Committee for granting the debate. It is a timely debate and I know that the many thousands of people across the United Kingdom who have been affected by the loan charge in a very detrimental way will be glad that it is being considered in this House. Over the past two weeks, we have been looking at the dramatic fallout of the Horizon scandal at the Post Office and, quite rightly, we have been focusing on what belatedly can be done to repay and to deal with that great injustice. I say to the House—I do not think that I am being overdramatic when I say this—that we are looking at another Horizon scandal, and the parallels are frightening.

First, because of the actions of a Government Department, 10 people in the United Kingdom have committed suicide and many others have attempted to take their own lives because of the pressure they were put under by officials and by statute passed by this Parliament. We have heard time and again in evidence to the loan charge and taxpayer fairness all-party parliamentary group of the disruption and disaster this has caused in many families.

Secondly, despite the fact that alarm bells should be ringing in the Treasury, no action has been taken. Indeed, some Ministers have even refused to meet the group. Others have simply put out the party line and regurgitated the excuses of His Majesty’s Revenue and Customs for what is happening.

Does the right hon. Gentleman agree that it seems to be the case yet again that people acting in good faith are being prosecuted and pursued, whereas the people who absolutely knew what they were doing are getting away scot-free?

That is a point I want to come to.

We are seeing that once again Ministers are turning a blind eye, and these lessons should be learned. Apart from two examples of Ministers that I can think of, one of whom—a former Minister—is present, Ministers turned a blind eye for years. We then had the result, but it was not until an ITV programme brought this matter to the nation as a whole that action was taken.

We have had attempts by HMRC to justify what it has been doing. In the past, postmasters and postmistresses who had unblemished records for years were accused of being thieves. We are now being told that the people who HMRC is chasing today are—to use its words—“serial tax evaders”. Minister, I have to say that when I read the letter that you—

Order. The right hon. Gentleman knows that he does not address the Minister directly, but through the Chair.

When I read the letter that the Minister sent to the joint chairs of the all-party group, he started by once again reminding us that

“As you are aware, disguised remuneration schemes are contrived tax avoidance arrangements that seek to avoid Income Tax and National Insurance contributions”.

It is almost like a warning: “Don’t be taking up these cases, because these are bad people that you are talking about.” That is exactly parallel to what we found with the Horizon scandal.

I agree with how the right hon. Gentleman has introduced the debate. He mentioned the scale of how HMRC is going after people caught up with the loan charge. Is that not in stark contrast with how multinational companies are entering into sweetheart deals with HMRC, such as Google and Vodafone?

Indeed, it is, and I will come to the issue of HMRC chasing the individuals, rather than the promoters.

Will the right hon. Member give way?

Let me just make this point: it seems that HMRC is going after those whom it regards as easy targets. The promoters of the scheme have not paid one penny, despite the fact that they have made hundreds of millions of pounds from the schemes, have mis-sold them and have disappeared when there is any attempt to get at them. The promoters are not being pursued and, indeed, HMRC has admitted that it does not intend to chase after the promoters, and yet individuals are being harassed to the point where many of them have taken their own lives.

I congratulate the right hon. Member on having secured today’s debate, especially given that at least 10 people have sadly committed suicide. It is of course essential that disguised remuneration schemes are dealt with fairly and effectively, but why does he think the Government and HMRC have not actively pursued the architects and promoters of the scheme, rather than the victims who have been led into the schemes?

The answer is easy: the victims are easy targets. They are the ones who are easy to chase. The promoters of the schemes have all kinds of means of defence. Many disappeared when they realised that they may well be pursued. This is the baffling thing, and maybe the Minister can explain it: if these schemes are designed as contrived ways of avoiding tax, why is HMRC not pursuing even some of the new promoters who are establishing themselves today and who will have disappeared by tomorrow, once it is seen that their schemes are being challenged?

I am grateful to the right hon. Gentleman for his courtesy on this occasion. I share his comments about Sir Tony Lloyd, who was a member of the Northern Ireland Affairs Committee, which I chair.

The right hon. Gentleman makes an important point about the regulation of promoters. Where is the regulation of those individuals? This is an ungoverned space. Surely, as they are trying to sell financial service products, they should at least come under the control of the Financial Conduct Authority. We have to not just focus on what has happened in the past, but look at what is happening now, where innocent people are being exploited.

I intend to come on to that point.

The parallels, as I say, are frightening. I ask myself this question and the Minister should be asking it of himself, too. In one, two, four, five or 10 years’ time, will we see the same embarrassment and see Ministers who parroted the Department’s line being asked the question, “Why did you not raise the alarm at the time? Why were the explanations not challenged, and why were the calls for help not heeded?” That should be a salutary warning to Ministers.

It is very unusual that I agree with every word the right hon. Gentleman says—[Interruption.] I am being generous. The simple truth is that HMRC failed to police this issue. Many people made HMRC aware of their involvement in the schemes and it took HMRC years to get back to them or even to look into the issue. That is one of the real crimes here.

I am glad the hon. Gentleman agrees with everything I have said today. I think he has even dressed to show that agreement, with his red, white and blue outfit, and I appreciate that very much. Maybe he has become a Unionist as well—even for a day, that would be something of a miracle.

Let us look at the role of HMRC and the approach it has taken. It has been rightly pointed out that there should have been much more supervision within HMRC of what was going on. HMRC is now saying that it believes that many of the people who used payroll loan schemes should have been paying pay-as-you-earn, but at the time HMRC was not challenging the schemes, and the promoters were able to say they were legitimate. For years, people were acting in the belief that they were legitimate and were no risk. And here is the ultimate irony: HMRC employed people on contracts to do work for it, knowing that those people were being paid in that way, and never challenged it. That being the case, we have to ask what the level of supervision was, or whether HMRC changed its mind and then, having done so, decided to go after the individuals who had undertaken those schemes.

Some people will argue, “Well, it’s their own fault. After all, they knew that when they went into one of these schemes their tax liability may have been reduced. If people did that, they took that risk.” The fact is that many people did not volunteer to go into those schemes. Many people were forced into them. Some people were put into those schemes and did not even know they were in them. As far as they were concerned, they were employed by a contractor and their tax was being deducted, and they only found out later on that that was not the case.

By the way, this was not rich people employing fancy accountants to tell them how to avoid their tax. Many of the people caught up in the schemes were ordinary workers—nurses, teachers, cleaners—and some were people who wanted to set up a company and, because of the flaws in IR35, this was the only way of dealing with their tax affairs. People did not always volunteer to go into the schemes. One of the ways we discovered that HMRC was involved in this was that one lady came to us and said, “I was employed by an IT consultancy, the contractor was working for HMRC and the only way I could get the job was to be paid through one of these schemes. I did not particularly want to, but I wanted the work, so I had to enter into the scheme.”

HMRC, apparently, was quite happy for that contractor to pay its workers in that manner. In many cases, if people wanted to work, they were forced into these kinds of schemes. For years, although it was quite clear that there was an employer-employee relationship and they were under the direction and supervision of a company, they were treated as if they were separate stand-alone employees or individual self-employed people who could pay tax in that way.

The result was, of course, that when it was decided that the schemes were not tax compliant and there were years and years of back tax, Ministers were persuaded to introduce the loan charge in the Finance Act 2017. It was very convenient for HMRC to have that arrangement in place, because using the loan charge enabled it to decide what tax an individual was liable for and people could not challenge it in the normal way tax disputes can be dealt with, through either tribunals or courts. That was ruled out for them. In many instances, HMRC did not even have to explain how the tax bill was reached. If people do not have any redress to a court or tribunal, they really have no chance of negotiating whether or not the tax they have been deemed liable for is a liability and a correct liability.

Added to that was the fact that many employers saw the schemes as an advantage, because they could employ people without paying employment taxes or having to deal with pensions or holiday pay. That is why many employers forced individuals to be paid in that way. Those who argue, “Look, these people tried to avoid paying tax, so slap it up them now, they have reaped the consequences and they should just grin and bear it.”. should bear in mind that thousands of people are affected by this because they were impotent to stop that method of payment being used and were told by the promoters that it was all compliant and that there was no risk. In fact, 93% of those in the schemes were assured there was no risk and that they were compliant.

Indeed, they probably were compliant until, in later years, HMRC decided they were not compliant. People were left with tax investigations going back to 2010, which have resulted in many of them finding it impossible to pay. I want to mention a couple of case studies, because the confusion in HMRC made it very difficult for people to settle. HMRC did not seem to have the capacity to tell people. In one particular case, an individual was told after six years, “You owe £91,000.” He wanted to settle rather than be put in the loan charge. He was told, despite the fact that that was not in the criteria, “We don’t believe you can afford to pay £91,000 on the terms you have given.” So no settlement was granted and he was put in the loan charge, and the man who could not afford to pay £91,000 was then hit with a bill of £124,000. He could not afford to pay £91,000 in a settlement, but he was pushed into a loan charge where he had to pay £124,000.

We have the back charges, tax years that people thought were closed have been reopened, the confusion and some people now have to pay more in tax than they actually earned. HMRC does estimates; I think one person was told, when an explanation was sought of why they owed so much, that it was because everybody else paid that amount—and of course there is no redress.

That brings me to the very last point— I promise it is my last, Madam Deputy Speaker. I will simply list the points and other people can take them up and expand them later on. There are a number of issues the Minister must consider. First, while I have no evidence of this, we have been told that HMRC officials, just as Post Office officials were, are on commission for the money that they bring in through the loan charge. The Minister must confirm whether that is the case, because if so, it would act as a huge incentive for them to pursue individuals relentlessly.

Secondly, I trust that the Minister, in his new position, will challenge the Department’s lines on this matter. We need a greater challenge than we have had so far. Thirdly, I believe that the loan charge needs to be repealed because it is not fit for purpose and is having a detrimental effect. Fourthly, the employers and promoters must be pursued. Under the law, they were responsible for collecting tax from the employees. That is the basis on which tax demands are now being made of people—that they were employees, not self-employed.

Fifthly, of course we recognise that the Government have to collect tax when it is due, but the current method of pursuing this will not bring in tax revenue because people are going bankrupt. A group of professionals has proposed that the Government could claim back an affordable proportion of the tax that is owed. They would get at least some tax revenue out of it while stopping this relentless pursuit of individuals. In the longer run, I think we need a Bill of rights for taxpayers, and for tax fairness to be built into legislation, but that is a matter for a longer debate.

There are people who are suffering today because they are being battered by the cosh that HMRC officials are using on them to extract money that they do not have and which many of them do not believe they owe. I ask the Minister to grasp this nettle and ensure that we do not have another Horizon scandal.

As colleagues can see, this is a very well-subscribed debate, with another debate to follow. In order to give equal time to Back Benchers throughout the afternoon, my advice—I would rather not put a time limit on—is that colleagues stick to about seven minutes. I am sure that Greg Smith will lead the way.

I will do my best, Madam Deputy Speaker. I congratulate the right hon. Member for East Antrim (Sammy Wilson) not only on securing the debate but on the incredibly powerful and eloquent way in which he opened it—I entirely endorse his speech.

Indeed, alongside the right hon. Gentleman and the noble Baroness Kramer, I serve as co-chair of the all-party parliamentary group on the loan charge and taxpayer fairness. It is through that lens, and given the many constituents of mine who are victims of the loan charge, that I have become profoundly troubled by what I can only describe as one of the most significant crises faced by British taxpayers, certainly in my living memory.

The loan charge has haunted, and is still haunting, thousands of our constituents throughout the country, bringing with it a train of despair and destruction that should weigh heavily on HMRC and all of us in this House. To date, an estimated 60,000 people have been affected by the loan charge. Tragically, as has already been said, 10 of those people have come to the tragic conclusion of ending their own lives. I invite the House to reflect on a retrospective HMRC tax policy that has led to 10 people—I pray no more—ending their lives.

Those are not numbers on a page; they are human tragedies. Each one is a poignant reminder of the injustices felt by individuals who are still grappling with the devastating consequences of the amount of money asked of them—in some cases, more than they earned in the first place—as the right hon. Gentleman mentioned. The profound impact of the loan charge extends its reach far beyond mere statistics and financial repercussions. It is a devastating narrative that encompasses contractors, freelancers and agency workers from all walks of life. Those professionals, seeking compliance under IR35 legislation, took and followed professional guidance in good faith.

On the point about taking advice and being led by agencies and promoters, does the hon. Member agree that it is simply scandalous that none of those agencies has been pursued by HMRC for their part in this, and that that further heightens the injustice felt by those who are being pursued?

That is a point on which we have consensus. It is outrageous that promoters have not been pursued. The all-party parliamentary group has considered and taken evidence on that, and I will certainly continue to push that point in this debate and for the weeks, months and years ahead, in trying to get justice for all the victims of the loan charge and holding to account those who gave that advice, who, I suggest, knew what they were doing.

I thank my hon. Friend for giving way and the right hon. Member for East Antrim (Sammy Wilson) for securing the debate. Does my hon. Friend agree that protecting the coffers of the state should never take precedence over protecting the lives of our constituents?

My hon. Friend makes an incredibly powerful point with which I entirely agree. Part of the ask of this debate and of the all-party parliamentary group on the loan charge and taxpayer fairness is a fair settlement that people can actually afford to pay; that takes into account—dare I say it—reality; and that understands what people actually earn and that they acted in good faith and took the professional advice that I mentioned a few moments ago.

Will the hon. Gentleman give way?

One more time.

The hon. Gentleman is being generous. Is it not the case that what we need is proper transparency in how Government bodies operate? When so many people see these problems again and again, that really undermines trust in Government.

I agree with the hon. Lady. Of course we need transparency across all walks of life—Government or otherwise. The right hon. Member for East Antrim referred to the Horizon scandal and the Post Office. There is a clear similarity, and there needs to be an inquiry and serious action. How can a body of the state—the Post Office in the case of the Horizon scandal, and HMRC in the case of the loan charge scandal—be autonomous in being judge, jury and executioner at the same time? We simply have to take that away. Checks and balances must be built into HMRC if we are to see justice for the loan charge victims, as well as for victims of any other scandal that might well come about.

I could say much more on this subject, but I am mindful of the time limit that you have set, Madam Deputy Speaker. I am incredibly grateful to my hon. Friend the Minister for his letter yesterday offering a meeting with the all-party parliamentary group. I hope that we can get that meeting in the diary as soon as humanly possible so that we can have meaningful dialogue on how to get to a settlement, a review of HMRC practices and justice for the loan charge victims. Given the colleagues whom I have seen bobbing, particularly from the Conservative Benches, I suspect that we will hear many more powerful stories and testimonies from victims of the loan charge, whose lives we should see as totally valuable and deserving of our attention and of justice.

I am grateful for the opportunity to speak in today’s debate, and I congratulate the right hon. Member for East Antrim (Sammy Wilson) on having secured it. I thank the Backbench Business Committee for granting the debate. I declare my membership of the loan charge and taxpayer fairness all-party parliamentary group.

As we have heard, this is a long-standing issue that continues to have an impact on the health and wellbeing of thousands of people right across the country, including residents of Merthyr Tydfil and Rhymney. Among them is my constituent, Geraint Owen, whom I have met on a number of occasions over a long period of time. He and other victims of this scandal have experienced considerable frustration in attempting to deal with HMRC.

The way HMRC has dealt with this issue has caused unbelievable hardship, distress and anxiety for large numbers of the people we serve. This sorry saga bears striking similarities to the Post Office/Horizon scandal, which we have heard so much about in recent weeks. Ordinary people up and down the country are being asked for unrealistic payments, which is causing huge financial hardship, bankruptcy and worse, such as the risk of losing their home and an increased risk of suicide. There are real concerns that this is another scandal where the Government have ignored the alarm bells and cries for help, so I urge them to revisit it and ensure a fairer and more effective approach.

This debate is a huge opportunity to highlight the injustice of the loan charge scandal. At a recent meeting of the all-party group, we heard more harrowing stories about how people’s lives had been ripped apart by the loan charge. The Government’s approach has meant that ordinary people who were victims of mis-selling are facing huge bills, which is causing them untold distress and personal harm. Tragically, the number of suicides linked to this scandal has reached double figures. Clearly, Labour supports attempts to tackle tax avoidance schemes, but that is not what we are talking about in this case. The fact that there have been so many shocking accounts of harm and distress suffered by people liable to the loan charge, including those we heard at meetings of the all-party group, demonstrates how the Government’s approach has gone badly wrong.

Labour has consistently called for a fair and effective approach from HMRC instead of the current approach, which is extremely tough on those caught up in these schemes. We are clear that the 2019 Morse review cannot be the final word on this matter. We tabled an amendment to the Finance Act 2020 that would have forced the Government to review the impact of the scheme and the fairness of HMRC’s implementation of the policy, and a proposed new clause to the Finance Act 2022 that would have required the Chancellor to commission an independent review to consider HMRC’s approach to the loan charge scheme and make recommendations on how it should be altered; it would also have required the Government to explain to the House of Commons what efforts they had made to guarantee the review’s independence.

We need a fair and effective approach from HMRC instead of the current approach, which is extremely tough on those caught up in these schemes, but weaker on their architects. As the all-party group previously suggested, the tax burden should not fall solely on the individual users of the schemes, but should be shared by the employers and agencies and also, ideally and appropriately, the operators and promoters of the schemes. On that basis, the Government should change course and announce a fairer approach.

We must remember the human impact of the loan charge: as we know and as I touched on earlier, HMRC has confirmed that there have been 10 suicides of people facing the loan charge; it has also confirmed that there have been 13 suicide attempts. That in itself should be enough reason to stop this cruel retrospective policy. I urge the Government to accept that there is something deeply wrong with their current approach to the loan charge scheme.

Reports to the Treasury Select Committee last October stated that around 40,000 people still face the loan charge, meaning that four and a half years on, there are still many unresolved cases. The current approach has not worked: HMRC is still trying to resolve tens of thousands of cases, and 10 families have lost loved ones to suicide. This whole sorry saga is cruel and unacceptable. Action is needed now. The Government must think again. When ordinary people who are the victims of mis-selling face financial ruin and personal harm because of the way the loan charge has been pursued, action must be taken urgently. I hope that in summing up today’s debate, the Minister will address the points I have made.

I will try not to repeat everything that has been said, but it is very difficult not to. One thing relevant to this debate that I discovered in government, and that I have constantly observed, is that HMRC is a very peculiar Department. HMRC is unaccountable; it is the only Department that does not publish accounts every year, so there is no scrutiny of moneys lost or failed to be gained. HMRC acts independently, with many civil servants going on radio and television, not reliant on Ministers to take the responsibility for them. That has been one of the biggest problems: the backdrop to this issue is that HMRC operates almost with impunity. I have seen Ministers come and go at the Dispatch Box who are told one thing by HMRC, leave their position and then come back and say, “I did not know half of the stuff that was going on.” I simply say that there is a problem with HMRC.

Regarding the way that HMRC works, campaigners have often asked to see draft documents that are hidden from them—for example, they are not able to see a draft of a report. One of the things evident in the Post Office/Horizon/Fujitsu scandal is that holding back information is detrimental to justice. Does the right hon. Member agree that that information should be made available wherever it is practical to do so?

Absolutely, which brings me back to the point I was just making. I mean no insult to the civil servants, who work very hard; it is simply that the culture of HMRC is one of impunity. It does not behave like many other Government Departments. We have problems with other Departments—I ran one, so I know what that is all about—but HMRC acts very differently from them, and ultimately it is protected by the Treasury. That is where one of the biggest problems arises, and it is why it is so difficult to get any information out of HMRC, because even the Ministers who are in charge of it seem unable to command or direct it to provide that information. I make that observation from having worked in government.

My right hon. Friend is making a very powerful point about HMRC. It was the product of a forced merger of the Inland Revenue and Her Majesty’s Customs and Excise by, I think, Gordon Brown and the Labour Government. The merger was rushed—they were pushed together—and HMRC has never enjoyed the proper scrutiny and ministerial involvement that it should have received. Does my right hon. Friend agree that now is the time for a root-and-branch review and a change to the nature of HMRC—retaining its independent functions, of course, but allowing for greater ministerial oversight?

I agree. I did not intend my speech to head off down this track, but I will observe that it has now become clear that HMRC is unable to find any legal basis to justify its claim that it has to pursue individuals, but not those who promoted the schemes. HMRC has tried to deny that for some time, but it has now become very clear; even its head, the permanent secretary, has stated that

“In recent months I have repeatedly tried to obtain legal analysis to understand the strength of our claim with very little success. For yesterday’s hearing we were initially given a summary of avoidance wins, some of which seemed to have nothing to do”

with the schemes. I simply say that HMRC still cannot justify the legal basis for pursuing individuals and not going after those who promoted the schemes.

Will my right hon. Friend give way?

I am conscious of time. If my right hon. and learned Friend will forgive me, others have to speak, and I am going to try to stick to Madam Deputy Speaker’s prescription. I apologise to him.

I will quickly raise the cases of three of my constituents —Gareth Lloyd, Joe Green and Karen Duberry—all of whom have been facing terrible impositions. I am sure many colleagues have seen similar cases. Gareth Lloyd says that

“Facing and now paying the loan charge has meant years of stress with a constant stream of demands and letters from HMRC…when I should have been enjoying watching my young family grow up I’ve been constantly at fear of potentially losing our home.”

Joe Green says

“Nine years of worry, nine years of anxiety, nine years of not knowing what to expect from HMRC other than continual bullying tactics to try and extort monies from me”

with threats. Karen Duberry says that she was

“Shocked and alarmed when I learnt of the loan charge. I felt alone, scared, threatened and worried for me and my family…The mental stress on me and my family has been immense”.

We know that because at the far extreme of these cases, people have committed suicide, but there are many other problems between the extremes. All these people deserve a process that is better, fairer, open and reasonable and that goes after those who originally promoted the schemes. These people were under the impression—as was the case—that the schemes were quite legal.

The important point is that HMRC conjured up a retrospective process to deal with this, which is appalling. Historically, that has not been done—you deal with where you were at the beginning—but HMRC felt it had lost a whole load of taxation and did not want to blame itself. What it did was to go after those individuals, threaten them and cajole them.

An inquiry took place, but it now appears that the Morse review was not entirely independent. I gave some evidence, as many did, to the original inquiry, and I assumed at the beginning that it was completely independent. In fact, it turns out that it was not. HMRC got to see elements of the report before it was even published, which is astonishing to me as we were given a clear understanding that it was to be independent. There is much more that needs to be done, and that review is by no means the end of it.

I was surprised when my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who was the Minister at the time, said:

“We…have plans under way to crack down further on the promoters of these avoidance schemes.”

It turns out that he did not. Why is a Minister allowed to stand at the Dispatch Box to make a statement drafted by civil servants, which we then find out is not right? He was not right: HMRC was going after the individuals, not those who promoted the schemes. As we have discovered, HMRC has no legal basis for doing that, so the whole thing has become a terrible mess.

I congratulate those who brought forward this debate, because there is so much more here that needs to be said. I just want to conclude by saying that this has been going on for too long, with laws changed retrospectively, denials about what HMRC was doing, bullying and intimidation, and a failure to come clean about the processes engaged in all of this. It is so familiar; as the right hon. Member for East Antrim (Sammy Wilson) said, we are in the middle of the problem over the Post Office, and we see the same things in that process. We have been seeing the same denials, protections and pretences with the loan charge for a long time. It is very clear now, and I hope the Minister agrees, that we are long past the point where we need to start recognising that this is not the way for any Government Department to behave when dealing with an issue such as this that has clearly created a huge problem.

My constituents and many others who have faced this issue should not be pursued in a way that treats them from the start as a criminal, rather than as somebody involved in something that HMRC never said was illegal at the time, but is now pretending that it is. I hope the Government will now recognise that we do not want to see a repeat of what happened with the Post Office scandal as a result of HMRC’s bad behaviour.

I start by thanking the right hon. Member for East Antrim (Sammy Wilson) for securing this important debate, and by acknowledging the many thousands around the country affected by the loan charge. I know that some of them are in the Gallery today, including some of my own constituents. I pay tribute to their dignity and determination in pursuing their cause. I will focus first and foremost on the fundamental unfairness of the loan charge, but also, as has been mentioned, on the Morse review and the need for greater transparency.

I have been contacted by a number of people whose lives have been turned upside down by the charge. While it is not possible for me to give voice to all of them today, I would like to share one story that I think speaks to the experience of many.

“I have been forced to raise huge sums, including borrowing from my mother and by borrowing huge sums against my home, leaving me in a position where I cannot plan for my own or my family’s future. The impact on my mental and physical health and my relationships has been huge and I am in genuine fear for my future wellbeing if HMRC is allowed to continue unencumbered.”

Another constituent in great distress told me how she made the difficult decision to have an abortion, based on concerns about affordability stemming from the loan charge. Combined with the number of suicides that have taken place, this paints a truly harrowing picture of the impact this unfair charge is having.

The report by the loan charge APPG published in 2020 found that there was direct interference in the Morse review by both the Treasury and HMRC, and that both organisations made clear attempts to direct the review from the outset. Given the tragic impact of the charge and the public interest in this matter, surely it is time the Government set up a genuinely independent review that achieves a fair and final resolution for all.

I shall end by raising a final point about the need for greater transparency. Late last year, one of my constituents was successful in overturning the Information Commissioner’s decision to allow the Treasury not to release the final draft of the loan charge review. The original freedom of information request was made in December 2020, yet over three years later the material has still not been released. My constituent tells me that their attempts to obtain the documentation have been met with what they consider to be “deliberate attempts” to avoid FOI obligations, including being told by the Treasury that the information had been destroyed, then that it could not be found and eventually that it was prohibitively expensive to locate it. Such lack of transparency undermines trust in our institutions and must be addressed. I hope the Minister can assure me that the Government will look into this particular matter and take all reasonable steps to ensure that the information is released as soon as possible.

With over 50,000 people directly impacted and the tragic death of 10 people, it is vital that we do everything we can to find a fair and final resolution to the loan charge scandal. To gain public trust, far greater transparency from HMRC and the Treasury is needed. Most importantly, we need a new and genuinely independent review to take place.

If, as Ministers insist, the law was clear in 2010, it would have been entirely unnecessary to have the 2017 legislation open up previous tax years, because my constituents who have been affected by this mis-selling scandal—for that is what it is—made their tax arrangements entirely clear in those years and were unchallenged by HMRC within the proper windows available. It was entirely unnecessary, and the reality is that the vendetta that HMRC is now pursuing, notwithstanding the obfuscation of the written answers to parliamentary questions, is exclusively against the victims of that mis-selling scandal.

Happy are those Members of this Parliament who were not here in 2017 and did not vote in favour of the Finance (No. 2) Bill of 2017, which contained the measure that is now torturing so many of our constituents. We are culpable for not having spotted, not having asked about and not having examined the consequences and implications of the measure that was brought before us. It is a measure that cries foul against every tenet of proper legislation with, first, its retrospective aspect, and secondly, its taking away from our constituents the right to appeal to a tribunal with an administrative or quasi-judicial process to have their case fairly considered. It made HMRC both judge and jury in their case—and what a judge and jury it turned out to be!

We now come to another of these debates in which we recount the latest injustices and enumerate the rising tally of suicides, and the Minister will in all probability make the same speech as his predecessor made the last time. I ask hon. Members: what is the point? The point, as I see it, is that it affords a recurring opportunity for hon. Members to recant what the House did when it created this injustice. Drip by drip and Member by Member, the tally will increase, and ultimately it will reach the public consciousness.

The right hon. Member for Kingston and Surbiton (Ed Davey) served on the all-party group, and we are indebted to him for his chairmanship when he was in the chair of the group. He has been hounded over the last few weeks and found himself in a very unfortunate position for being the postal affairs Minister at the height of the Horizon scandal, notwithstanding the fact that he was lied to on an industrial scale. Nevertheless, it has been very uncomfortable for him to have the charge that he did not ask the right questions, he did not pursue it enough and he did not spend time with the victims. Let that be an object lesson to us and to all those Ministers who stood at the Dispatch Box giving us flannel and peddling the fiction that the limited inquiry was in some way independent.

My advice to my hon. Friend the Minister today is this: set aside the brief that you have been given, and end this debate by just saying that you have sat here, you have heard what we have said and you are going to go away and ask the awkward questions and spend time with the victims. Because ultimately this will reach the public consciousness—we may even have our own TV drama; the reality is that there is plenty of scope for such a drama—and when it does reach the forefront of public consciousness, we will rue the day that we did not take the action when we could.

That was a phenomenally good speech. I also congratulate the right hon. Member for East Antrim (Sammy Wilson) on securing this debate and for his powerful and passionate speech, which was very impressive. I also thank the all-party group on the loan charge and taxpayer fairness and the Loan Charge Action Group for their diligent work on this very serious issue, and indeed my own constituents who have suffered greatly from this total injustice.

On 7 July 2021 I stated in this House that the loan charge was going to be the next Post Office scandal, and just look where we are with that today. Will it take another modern form of the stocks by way of a further ITV drama to expose and publicly humiliate HMRC or the Government into some action on the loan charge scandal? Unfortunately, it would seem so, but I certainly hope not.

As others have said, a vitally important part of the loan charge scandal is that these ordinary people were contract workers doing a job of work for somebody or some organisation that simply needed their services. Most importantly, they were workers, and as workers they were entitled to protection under the agency rules. The agency rules determine that their employer—be that the agency, the umbrella company or another body in the supply chain, or the end client itself—was liable to deduct the correct amount of PAYE and pay that to HMRC at the time, before paying the worker their salary. These companies simply did not do that. HMRC was well aware of the arrangements and, as has been said, did not pursue for tax any of the entities as the workers’ employer. HMRC was also well aware many years down the line that it was legally out of time to do so.

HMRC had, and still has, a duty to establish who the employer was and who was directing, controlling and supervising the worker who had been supplied. It has not done so; it has failed time and again to do so. Hence the invention of the retrospective loan charge to get around that very inconvenient and uncomfortable fact. It is entirely unacceptable to continue to hound ordinary workers with no rights or funds for legal defence against such a powerful Government body as HMRC.

This has all the hallmarks of the Post Office scandal. What is really vexatious and concerning is that HMRC continues to hoodwink MPs into believing that it is going after the promoters who put the workers into this abominable position, when we all know it is not doing so. A further issue is that these groups of companies—these promoters—that sold arrangements to freelancers have not only not been asked to pay a penny of the disputed tax, but their arrangements—“arrangements”—have caused the death of poor souls who were so distressed by the way they had been hounded and criminalised by HMRC that they took their own lives. We all know that HMRC has stated that a total of 10 people have taken their lives over this scandal; the figure is likely to be far more in reality, in this awful and unravelling scandal.

The number of people affected by the Post Office scandal is likely to be dwarfed by the number affected by the retrospective loan charge scandal, purely and simply because of the number of people affected—between 60,000 and 70,000 at the last count by HMRC, with the figure likely to rise far higher. Too many ordinary people are facing huge bills, and many of them have been suffering untold distress for many years, and in some cases personal harm and indeed suicide because of this ongoing retrospective loan charge scandal. The whole thing is an absolute mess.

I am sure that Ministers must by now be mindful of all these serious issues, so will the relevant finance Minister and the Government now speedily commit themselves to finally commissioning a truly independent review to deal with this mess wholly of HMRC’s own making, and thereby allow us as MPs and parliamentarians to help to right this grievous wrong?

This is such an important issue for our constituents and I am very grateful to the right hon. Member for East Antrim (Sammy Wilson) for bringing it to the House. It has been mentioned that, given the recent examples that have exposed excesses of power in public bodies, it is only right that the loan charge and the way it is infringing on the rights of individuals is debated in this House. One particular case in my constituency brought this issue to my attention, and it highlights several problems with the way HMRC has tried to combat disguised renumeration schemes through the loan charge.

The way in which HMRC is retrospectively trying to obtain income tax and national insurance contributions raises important questions. The first of them is that the law on tax should be knowable and accessible to the people to which it applies. Based on the case that I have seen in my constituency, that was clearly not the situation. Many individuals who worked for agencies simply did not know that their pay would one day be subject to a disputed tax argument with HMRC, because the loan charge did not exist or because they were mis-sold such schemes by hiring agencies. Added to this fundamental trespassing on the rights of individuals is the fact that we cannot continue with the situation whereby a public body is pursuing retrospective actions against our constituents with them having no right to due process.

First, I thank the right hon. Member for East Antrim (Sammy Wilson) for his kind words about my time as postal affairs Minister.

My hon. Friend is making the point that this is a really good example of why retrospective policy is not a good idea. There is the fact that HMRC needs to use its investigatory powers, which outstrip those of policemen, proportionately; the fact that it should be going after the practitioners and promoters of these schemes, which it can do under the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 that I passed a few years ago; and the fact that it should not be going after contractors, consultants and self-employed people who the Government and many Government institutions treat as tax evaders as the default, as was seen with the 3 million excluded during covid who felt they did not get the support that others did.

That brings me to one of my main points. These are ordinary workers. These are our constituents. They are not fat cats; they have not got offshore bank accounts. They are not like that. These are ordinary members of the public who desperately need our help.

That brings me on to another point, which is how HMRC is handling these cases. It is not unfair to say that it is hardly a lesson in how to handle dispute resolution or customer service. One of my constituents received a letter some four or five years ago telling them that HMRC was withdrawing the information notice it had sent in the post. As far as my constituent was concerned, that was the end of the matter and they could get on with their family life. There was no contact for a further three years, but now HMRC has informed my constituent that withdrawing an information notice is not the same as withdrawing its concerns and that, in any event, it is not aware of the reason for the withdrawal in the first place and it would like to revisit the matter. I say to Ministers that the situation is untenable. HMRC cannot have the power to suddenly request tens of thousands of pounds from individuals, appear to drop a case and then revive it on a whim, without any explanation at all. That is an exercise in excessive power by a public body.

We should be going after the disputed tax from those who promoted and operated the schemes and who made huge amounts of money doing so. I understand that might be more complex, but that should not be a barrier. We should be protecting ordinary workers from abuses of power and pursuing those opaque and monied bodies that sought to game the system. I will end on that note. I echo the point that these are ordinary people we are trying to assist. It is time that the Government acted.

I begin by thanking the right hon. Member for East Antrim (Sammy Wilson) for bringing forward this incredibly important debate. The issue has been live for far too long, and the damage that has been inflicted on thousands of ordinary workers—whether freelancers, contractors or temporary workers—and their families by the loan charge is distressing. The comparison that he drew with the Horizon scandal is real. This is a serious injustice, but what is different from the Horizon scandal is that at least the Horizon victims had the appearance of justice. It may not have been justice, but they had the appearance of it.

As the hon. Member for Buckingham (Greg Smith) made clear, HMRC has persisted and acted as judge, jury and executioner with a ruthlessness that I cannot believe. I have been in meetings with HMRC and it has advised me, “We will never put people under enormous pressure. We will not take more than 50% of their disposable income to recover the costs,” but that is simply not true. The ferocity with which it has gone after my constituents and the amounts of money it has demanded are eye-watering—it is completely impossible for my constituents to meet its demands.

A simple point occurs to me: the real similarity between the Horizon programme and this situation is that those who were prosecuted under Horizon and put in jail and so on had it put about by the Post Office that they were greedy people who had stolen money, so the public at first did not have any sympathy. Similarly, in this matter, HMRC has basically said that they were greedy people evading tax that other people then had to pick up and pay. The public still have not picked up on that. These people were not doing that—that is the key point—and breaking through that will get public support for something to change.

I thank the right hon. Gentleman for that point. Not only were the victims of the loan charge victims of mis-selling; they are now the victims of HMRC’s pursuit of them for every penny they can possibly earn. That is not just now, but for future years, so that point is incredibly important.

It is important to remember that we had an opportunity a number of years ago to write off the retrospective element, with new clause 31 to the Finance Bill, which was supported by the loan charge and taxpayer fairness all-party parliamentary group. Unfortunately, because of the timidity of some Members, that new clause was not put forward for a vote. That is deeply regrettable.

It is important that I speak about my constituents, who are my main concern in all this. Four years ago, I spoke about the horrific plight of my constituent Doug Aitken, who was facing a bill of £500,000. To pay that off, he would lose his house and his car. As a self- employed person, he would lose his business, because he would be bankrupt. The Government simply did not listen. He was one of those who had successive completed and closed tax years that were reopened by HMRC, and he was being charged exorbitant, unjustifiable and unjustified rates for all the supposed earnings he had secreted away.

Today I want to speak about another constituent of mine, Alan Geddes, who has a disposable income of £360 a month. The payment demanded by HMRC from Mr Geddes is £783 a month for the next 12 years. That is not the only charge it is asking him to pay; it is also asking him to pay £50,000 up front.

The hon. Gentleman and many other colleagues across the House have made analogies in their excellent speeches between the horrors of the Horizon Post Office IT scandal and the scandal around the loan charge, which has affected so many of our constituents. I will share with him and the Chamber another analogy: is he aware that HMRC also uses an apparently bombproof system from Fujitsu?

The hon. Gentleman makes a very interesting point to which I think Members from all parts of the House will pay close attention. I thank him for doing so.

Not only is HMRC asking for £50,000 up front, but it has put a £50,000 lien against Mr Geddes’s home. Although his disposable income has now dropped below £360 a month because of the cost of living crisis, HMRC has suggested that perhaps they should renegotiate his terms to bring the rate down to £361.13. However, to get that new rate, he needs to give HMRC another £50,000. Those other charges would then continue for a further 12 years. The question is: what planet is HMRC on? These shocking figures exclude interest being added to allow the payments to be spread over 12 years. It is clear daylight robbery.

Ministers in the Department have previously advised me that approximately 80% of the £3.4 billion that HMRC has recovered through disguised renumeration settlements between the Budget of 2016 and the end of March 2022 has been from employers. Am I therefore correct in presuming that that figure is £2.72 billion? Given that the sum that HMRC expected to be brought into charge from employers has already been exceeded, why did it need to pursue loan charge customers for 100% of the tax plus interest, plus accelerated payment notice penalties and plus inheritance tax, particularly when it was fully aware that customers had already suffered a 15% to 20% deduction on their earnings through the mis-sold schemes?

Additionally, I would like to learn why HMRC continues to pursue customers with loans from before December 2010, given that Morse already pardoned those with no open inquiries on the basis that the law was not clear. Those key factors could all be addressed, because HMRC has the facility to amend its settlement terms. It requires no legislation or change in the law. I hope that the Minister will ask HMRC to apply the same treatment to those who have already settled.

Members across the House have been screaming on this issue until we are hoarse. We have sent repeated letters, including ones sent by 120 MPs. We have had publications put out by the APPG and debates in this Chamber, but it is simply not enough. People are on the brink and in despair. If we are to prevent any more constituents from resorting to suicide, we must urgently deal with this issue and grapple with it in a way that was not done with the Horizon scandal.

Order. Because some colleagues have taken slightly less than seven minutes, I have a bit of leeway. I do not want speeches to be extended massively, but if colleagues wish to speak for perhaps a couple of minutes more than seven, I would be content with that.

May I join the congratulations to the right hon. Member for East Antrim (Sammy Wilson) on securing this important debate? This is why Parliament exists: we are here to seek redress of grievance from an overmighty Executive who abuse their power. This is a classic example of the state abusing its power through aggressive tax collection.

Why is it that in the Bible the tax collector is seen as the villain on almost every occasion the tax collector is referred to? It is because the tax collector seeks to extract more than is by law allowed. In our system, it has always been the case that the job of the tax collector is to raise the tax set out by Parliament—not a penny more, nor a penny less. It is not for the tax collector to squeeze out extra from people if that was not intended.

We know from this discussion that HMRC did not think there was anything wrong with these schemes early on. How do we know that? As the right hon. Gentleman pointed out, it employed people using these schemes. So we are saying either that HMRC is so incompetent that it has no idea about the basis on which it is employing people, or that actually, because it saved some money, it thought these schemes were licit. The other thing we know is that constituents of ours sent in tax returns acknowledging that they were using these schemes, and HMRC did not question them.

Then, in a panic, worried about the tax receipts that were coming in—2010 is an important date when tax receipts were very low and the country had an enormous deficit—a squeeze gets put on, and that squeeze becomes retrospective. But retrospective legislation is basically unconstitutional except in extraordinary circumstances. Whenever there is any retrospective part of legislation, it has to be specifically approved and cleared by the Attorney General before it can be brought before the House. Why is that? It is to safeguard the constitutional right that people know the basis of the law under which they are operating. That is surely proper, because with retrospective legislation people who have behaved properly and honestly and followed the law that Parliament had passed suddenly find that they had not. That is entirely unfair and unreasonable, and it could criminalise any of us for actions we committed years ago.

Does my right hon. Friend agree that in all these scandals, the presumption of innocent until proven guilty has been turned on its head, and we see the presumption of guilt and one being unable to prove one’s innocence? To use a biblical analogy, this is not so much David versus Goliath; it is David versus an army of Goliaths, and David has had the slingshot taken away from him.

My hon. Friend is absolutely right. HMRC, through the amalgamation of the Inland Revenue and Customs and Excise, has extraordinary powers. Customs and Excise historically maintained extraordinary prerogative powers—much greater, actually, than those of the Inland Revenue—and the coming together of those two bodies has brought a more aggressive culture to our tax system. It is a culture that assumes that taxpayers, following the law as they understand it and indeed as HMRC understood it, may be doing something wrong. That is a bad principle under which to operate. Members need, as we are, to look after the interests of constituents who are being affected in that way.

We need to allow people to know that their tax affairs are cleared after an inquiry has not been opened. That is set out: there is a 12-month period in which tax returns remain open and a seven-year period under which people have to keep records, and yet we have passed retrospective legislation that overturns all of that. My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) was absolutely right that those of us who were here in 2017 should be appalled that this got through without being noticed and without being stopped. What he said to the Minister was absolutely right: we should look carefully at the ministerial responses.

HMRC is in the odd situation of being a non-ministerial Department. It is not properly accountable. With most Departments, the Minister says “Go” and—at least theoretically—they goeth. With HMRC, its independence is such that it can effectively ignore ministerial control. But that should work two ways. If the Minister cannot control HMRC, he should not read out the rubbish that it provides for him to read out from the Dispatch Box, and he should be well aware of the warnings given of Ministers who have either been willing to read out things that turn out in future to be untrue, or not asked the right questions.

I very much look forward to the speech by the shadow Minister, the hon. Member for Bristol North West (Darren Jones), because he has the advantage of independence. Not having gone native by virtue of being in the Treasury, he can bring—I hope—an independent mind to this. Bearing in mind that there will be an election this year, and who knows what may happen in that and what responsibilities may fall upon his shoulders, it is really important to know that the Opposition are on the side of proper constitutional practice.

The whole point of our system is that we come here, as we have done since the 13th century, to seek redress of grievance for our constituents when they are badly treated. This is a classic example, and Governments are absolutely appalling at answering it. People have mentioned the Post Office, but it is not just that; it is Hillsborough and infected blood. For some strange reason, Governments have a desire to defend the mistakes of long since past Administrations, and they do that to the disadvantage of constituents today. I hope that on this occasion it will not happen, or at least it will not continue to happen.

There is an ability to set it right, and there is an ability for the House to do more. If HMRC is not producing documents, we have things up our sleeves that the House can do to continue to exert pressure—the Backbench Business Committee can allow Humble Address motions to be tabled—but it would be so much better if the Minister at the Dispatch Box, who is one of the most able and intelligent Ministers in this current Administration, were to grasp this and deal with it to save our constituents from further pain—and, frankly, put HMRC in its box.

It is a pleasure to agree with so many right hon. and hon. Members, which I must say is a novel experience for me. Looking at the history of this scandal, it reminds me of the time when many of our constituents were claiming working tax credits. Sometimes those credits were overpaid, and they would receive letters from the Revenue, which were standard letters but had individual clauses stitched together to give the semblance of having been personalised. One such sentence is etched on my memory. It goes like this:

“Even though we told you that your assessment was correct, it was not reasonable for you to believe so.”

[Laughter.]Thank you. This, though, is an extremely serious matter. As I thought about how I would approach the debate, I thought that I would tell the story of my constituent, Rob Cowen, who was a victim of the loan charge scandal. I do, however, speak today for other colleagues in Plaid Cymru, and particularly my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts), who cannot be here, though she would wish to be.

While some people gained financially through the use of umbrella organisations and services, Rob Cowan was using the scheme on advice as a simple accounting service so that he could be paid legally and conveniently, as so many other people found. He had sought advice from accountants, who assured him that the product he was using was legal; only later did he find out that it was not.

Rob has suffered immensely since then. Back in 2011 when he was in his early 50s, he was considering winding down his business, changing his work pattern, moving from full-time to part-time work and enjoying the fruits of his work over many decades. He then started receiving communications from HMRC, informing him that he was liable to pay back thousands of pounds due to the loan charge. That forced him back into full-time work, but that aggravated a repetitive strain injury that he had developed over the course of his working life. Eventually, that led him to becoming disabled, so he could no longer work and make an income to pay back the money due under the loan charge.

At the age of 63, Rob found himself unable to work and unable to pay back the money that allegedly he owes, and he faces a very bleak future. He now has no savings and no ability to work. He cannot pay HMRC the money that it says he owes. He has suffered psychological and physical trauma from this ordeal, as have so many. To give just one example, which I am sorry to say is common, he told me recently that he was unable to switch on the heating during this very cold period. He cannot afford it, as so many people have found.

I thank the hon. Gentleman for sharing that powerful example. I have constituents in my Livingston constituency who have suffered and who have come to see me. As the right hon. Member for North East Somerset (Sir Jacob Rees-Mogg) spoke about the other scandals that we have faced and challenged in this place, I was reminded of the Primodos scandal, and the words of Baroness Cumberlege, “First do no harm”. It should be the duty of the Government of the day, and of this place, to first do no harm to our constituents. When harm is done and policies are wrong, as this one has been proven to be, surely it is the duty of Government and HMRC to take some responsibility, and not to put the hon. Gentleman’s constituents, my constituents and others through hell before they get the justice that they need. How many more folk need to die before this will be sorted out?

I thank the hon. Lady for that powerful point. It is an old saw, but justice delayed is justice denied, which is quite obviously the case in this matter.

My constituent also points to the stigma associated with what has happened to him, as other right hon. and hon. Members have pointed out. He feels that he is in the wrong; he is being made to feel that he did something wrong but he acted in good faith throughout, sought expert advice and followed the advice that he was given, because he had no intention of doing anything wrong. In contrast, as has been pointed out—I will finish on this point—the owners of the companies that ran these schemes have made considerable sums of money. Rob feels that he has been denied a fair hearing, while other people have got away with it.

As the hon. Member for Buckingham (Greg Smith) said, HMRC is judge, jury and executioner in its own case, which is obviously wrong. People are receiving retrospective punishments even though they acted in good faith. There must be justice for Rob Cowen and the other victims of these schemes and of HMRC’s behaviour. I join the calls on the Minister to act quickly.

In the interests of time I will try not to repeat all the self-evident truths that have been stated throughout this debate. The right hon. Member for East Antrim (Sammy Wilson) made a characteristically fluent exposition of the case. Everyone, from him through to my right hon. Friend the Member for North East Somerset (Sir Jacob Rees-Mogg), reiterated essentially the same point: all of a sudden, in the last few weeks, the public have become aware that huge state or quasi-state organisations put their own interests ahead of the interests of the public and, unfortunately, that is not abnormal behaviour. The right hon. Member for East Antrim quite rightly characterised that as being repeated in a high-handed and insensitive way by HMRC but, frankly, I think he understated the point.

Why do I think that? Because HMRC has referred itself to the Independent Office for Police Conduct over those 10 suicides and some other attempted suicides and self-harm. When dealing with Government Departments, that is as close as we get to a confession. Those at HMRC know they have done wrong, and they have known it for some time. They have known that the consequences of this have led to death and enormous harm to people, yet they have continued to do the same thing over and again. How on earth do they justify that when they look at themselves in the mirror?

The only thing I can come up with is that HMRC thinks this is a deterrent. Clearly, it will not raise that much money—three quarters of people will go bankrupt —so maybe it is a deterrent. If it is, that brings us to the next question that the right hon. Member for East Antrim raised: why does it not go after the promoters? The promoters exacted 18% to 20% of the incomes of these people in carrying out this scheme, so there is a large sum of money there—someone said hundreds of millions. It may even be that the victims of the scheme—that is the right word—thought that was the tax deduction, because it was of that order of magnitude. Why has HMRC not done that? We know that many of the organisations using those promoters and contractors were state organisations, including HMRC itself. That might be a reason—it does not want to embarrass itself. It might be because of that that it is complicit in covert advice to those contractors at the beginning. It is entirely possible that HMRC approved it, and those documents are hidden away in HMRC.

What is the answer? My right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) was not quite right in saying that HMRC is completely protected. There is one body—the Public Accounts Committee—that can get at this. One of the things that should come out of this debate is that the Public Accounts Committee should look at the documents —not the numbers—associated with those early contracts and see why they were done. That would be one way to get past the assertion made by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) that we cannot deliver a practical outcome. That is one practical outcome that we can deliver.

The second practical outcome we can deliver among ourselves is to address the fact that this is retrospective taxation. As my right hon. Friend the Member for North East Somerset rightly pointed out, our country does not believe that people who undertake behaviour that is not illegal at one point in time should be prosecuted if it becomes illegal in future. That applies in spades to taxes.

One of the things I wanted to do early on in our collective campaign was to move a motion in the House at the beginning of the Budget, under the general motion that is normally put, explicitly to ban retrospective taxation. Let us guess what happened: since then, the Treasury has not moved a general motion. We always get narrow finance motions, which makes it difficult to change anything. I wrote to the Procedure Committee, which I gather is still concerned about this, to ask it to request the return of the general motion at the beginning of the Budget. Then, we could actually put it to the House. Back in those days, we probably did not have the 100-plus supporters that we now have. Today, we could probably carry that motion. I ask everyone taking part in this debate to support that—I might write around and ask everyone—and to write to the Procedure Committee to try to get that corrected. We can use our right of initiative, which we do not have much of anymore, to stop this explicitly.

I agree entirely on the amendment of the law resolution. In fact, whenever I have spoken on a Finance Bill since it stopped being common practice to use it, I have said that we should have an amendment of the law resolution. I appreciate what the right hon. Gentleman says about the Procedure Committee. As a member of the Committee, I can tell him that we have looked at this but, ultimately, it is the responsibility of the Government to make the change—they need to table the amendment of the law resolution. The previous Chancellor was clear that it was a small, technical change that he would not make.

Forgive me, but I have been here a long time. The Procedure Committee can do it—it can put it to the House and seek a Back-Bench motion. Guess what? We can move Back-Bench motions that instruct the Government. Some may remember that we did it on prisoner votes, and we won that day. It is about time that we exerted our own rights in this House on this matter.

The last point I want to make is that this whole thing was, if not precipitated, then certainly made worse by the 1999 move by the Government with what is now known as IR35. The complex rules associated with the IR35 triggered part of this behaviour pattern. What is interesting is that the behaviour of HMRC on IR35 pretty much mirrors its behaviour on the loan charge.

A large number of people out there, one of whom is in the Gallery today, have been oppressed by HMRC, frankly. They have an argument over money, let us say £70,000. They win in the first tribunal, so HMRC appeals. They win in the upper tribunal, so HMRC appeals again and takes them to court. The court, of course, then sends them back to the beginning and they do it again.

The House will remember a previous Backbench Business debate when we started the action against SLAPPs—strategic lawsuits against public participation—in which oligarchs use their huge financial power to destroy people. What is HMRC doing? Precisely the same thing. The Government are now moving to stop oligarchs doing what they do themselves, so we need to look at that too. IR35 is a disgrace. When a state organisation with infinite resources—actually, your tax money and mine—uses that power to overrule and reduce the ability of ordinary citizens to protect themselves, I am afraid it is behaving in a way similar to how countries behind the iron curtain used to behave.

My right hon. Friend’s powers of forensic analysis are second to none, but does he agree that it is actually slightly worse than that? He is entirely right in what he says, but there are also cases, particularly for those affected by the loan charge, where people have allowed themselves, against their better instincts and judgment, to make a false confession of guilt. They have gone through the process and ended up having to pay an extortionate amount of money and think the matter settled; then, HMRC has come back and gone after even more.

Yes, my hon. Friend is right. I am afraid that one of the characteristics of miscarriages of justice—I have forgotten who raised this point earlier, so please forgive me for not referencing them—is that the victim at the beginning is probably the most unpopular person in society. They are thought to be guilty and may even doubt themselves over whether they have made a mistake. These people, by and large, have been compelled to do what we are talking about. They have been offered a job on these terms only, so they have had no choice, but then they think, “Well, maybe I should have known.” Then, like the sub-postmasters, they are persuaded by the people dealing with them that they are the only one.

Until our campaign started, all these people felt that they were the only one, or one of a few nasty tax evaders—not tax avoiders—so they gave in. Of course, it is like the Gestapo: confession never saves you; it is a step to execution. That is how it works, I am afraid. That is true of all big organisations full of people who are well-intentioned, but who defend the institution. That is why, answering my right hon. Friend the Member for North East Somerset, it goes on through Government after Government after Government. It is not the Ministers who do this, but the members of the institution.

I get all of that and my right hon. Friend is right, but there is a peculiarity about HMRC, with its powers and lack of accountability. It does not publish accounts, and Ministers come and go; they do not really run that Department. That really is the issue. Bad as it might be elsewhere, it is astonishingly bad now because of HMRC’s behaviour.

My right hon. Friend the Member for North East Somerset listed a few of the other cases, from Hillsborough onwards, so it does come back to that. Even the Department for Work and Pensions, the Department my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) used to run, has its own police force, in effect, and its own prosecutors. That is one of the clues. This will come back time and again with HMRC and others. He is right that we need to hold this organisation to account. It serves the people, not the Government of the day. This Parliament is the institution that serves the people and, starting with the Public Accounts Committee, we should be holding HMRC to account, but there are many others who should get involved.

I have given a completely different speech from the one I intended to give, because everybody else said everything before I rose, but I will finish with a point I certainly wanted to make. The BBC once referred to me as an old war horse, so I will give the Minister some old war horse advice, having been there once or twice myself. One of the lessons of the last few weeks is that Ministers—junior Ministers in particular—are very easily led to give dead bat answers in the Chamber. They are the answers handed to them by their officials, and they have no other answers to give, unless they want to end their career on the spot—I have done that twice, but never mind. This is not about his answers today, but the simple truth is that unless he wants to be seen in the same light as Ministers in the past—maybe he wants to be a future leader of the Liberal Democrats—he needs to go back to his Department and say, “I want to see the truth. Here are the things you’ve done. Why did you not tell the House of Lords why you are not pursuing the promoters of these schemes? Why did you tell people you only go for half their disposable income when you’re not doing that?” Get the answers, Minister. Then, when you next come back to the Chamber—and you will have to come back to the Chamber again—you can give us the truth.

Like everyone else in the Chamber today, I have constituents who have been affected in a way that is incredibly distressing, so I understand completely the howls of outrage sounding across the House today. I want to deal with process, though.

Some hon. Members here took part in the debate in 2018. I would like people to read the speech made in that debate by my hon. Friend the Member for West Ham (Ms Brown). I was the shadow Chancellor then, and she was in my shadow Treasury team. Speaking from the Opposition Front Bench, she set out exactly case after case, as hon. Members have done today, but there was one additional case we drew on which has not been mentioned today—a case in which, because of cuts to local councils and elsewhere, staff had been laid off and then rehired on this basis by public bodies, which was particularly shocking.

Let me read the ministerial response that was given then, because I think we should learn from it. The then Economic Secretary said:

“Although…I have tremendous sympathy for those facing large tax bills, it is unfair to let people get away with not paying the tax they owe. There is support for people who have used the schemes and now find themselves in difficult situations, which require those affected to approach HMRC and bring the matter to a close.”—[Official Report, 20 November 2018; Vol. 649, c. 295WH.]

That was the ministerial response. I do not think we can tolerate a similar ministerial response today, because that led to immense human suffering, including, as some have said, some people losing their lives. Many of them did approach HMRC and they did try to negotiate deals, but there was no element of clemency and no understanding of the individual plight of those people. As a result, many of our constituents suffered badly.

I just want to move on and try to get some resolution. I hope that we and the Government can agree today on review. That review should be immediate and time-limited in months, not years. It should be truly independent, with its independence assured by the victims. It should propose a specific range of resolutions, which will have to include some element of compensation for what people have suffered. The review should look at where the compensation should come from. I think it should come not from from other taxpayers, but from a levy on those who promoted the schemes, and perhaps some elements of the finance and accountancy sector that were involved up to their necks, to be frank. That is my first point.

I also think that we need to review our own role in this, and in what has happened over time. I agree with the right hon. Member for Haltemprice and Howden (Sir David Davis) that not only should the Procedure Committee examine the House’s role, but the Public Accounts Committee should look into how we have arrived at current situation.

Let me give two examples of the background to all this. HMRC has come in for considerable criticism today, and I agree with much of it. What I say now is not in mitigation of HMRC’s role, but an attempt to gain some element of understanding of what has been going on there. HMRC is, rightly, under pressure from all of us, on both sides of the House, to tackle tax avoidance and evasion. Some of us have led campaigns over the last 20 years or so to try to get HMRC to work on that effectively, and I pay tribute to the Government for putting it under pressure to tackle the tax gap. They were the first Government to identify a tax gap of £38 billion, or whatever the amount is; I disagree with the figure, but at least we have a target to aim for. However, at the same time, over those 20 years, both parties have excelled in a Dutch auction to establish the extent to which HMRC’s staff levels can be cut.

I can understand a wish to reduce staffing, but there are better ways of doing it, and for a while the way in which it was done at HMRC was fairly brutal. That resulted in redundancy schemes whereby a whole wave, a generation, of expertise was lost, and it had an effect on the culture of HMRC. According to my understanding, HMRC looked for short cuts and a way of meeting the demand for it to tackle tax avoidance and evasion and the tax gap, and I think that this was one of the short cuts that it invented. In latter days, there would probably have been wiser heads in HMRC itself to suggest that this was not the route to go down because it would bring about more problems than solutions. However, a culture of secrecy and protectionism has developed in HMRC, and we need to understand that if we are to tackle this properly as an institutional failing.

Secondly, we need to look at the role that the House played. I have been going back to the year 2017, and trying to remember what was happening in the House at that time. Some Members will recall that there was not a normal process for the Finance Bill, because the right hon. Member for Maidenhead (Mrs May), who was then the Prime Minister, having assured us all that there would not be a general election—I think she assured us of that five times in the House—went for a walk in Wales, came back, and declared an election. So the finance measures were thrown into the wash-up procedure, which, as Members will know, means political parties sitting down to decide what measures are urgent and must be passed. It was agreed that the Finance Bill would go through in a single day, and as a result of that, this measure was introduced. I should like the Public Accounts Committee and others to look at how that process worked and how it did not work.

The right hon. Member for Haltemprice and Howden made an extremely valid point, which we made about every Finance Bill, or Budget Bill, that came forward. When the Government introduced the “no amendment to law” procedure, that tied the hands of the House when it came to what it could open up, what debates it could have and what amendments it could table. That was introduced by—

Hammond.

Yes, by Lord Hammond. I think it was almost unprecedented. As I say, it tied the hands of the House, even when it came to further investigating issues relating to the Budget and Finance Bills.

I also think that we need to look at the process whereby Ministers and Opposition are able to question impact assessments and how they are developed, as well as the independence of those assessments. I still find it problematic that impact assessments are prepared largely by the Department and the ministerial team that are promoting the legislation involved, rather than its being done independently. Had there been an independent impact assessment in this case, and time for a proper debate and for amendment as well, the House would probably not have agreed to take this course. When I look back, I think that the implications should have been drawn to the attention of the whole House. The impression given was that this would be focused on a small number of “hard case” tax avoiders or evaders, and their scheme promoters.

I agree with nearly everything that the right hon. Gentleman is saying, but why can we not address it now? Why can we not go back and put it right?

The point I am making is about enabling us to do that. I hope that some of the lessons being learned are learned not just by the whole House but by the Government as well, whichever party is in power. As soon as we introduce measures to fetter the role of individual Members of the House or the House as a whole, we open up the opportunity for mistakes to be made, because policies are not tested effectively in democratic debate in this Chamber.

I welcome the fact that reviews are to happen, but believe they should happen as a matter of urgency, if for no other reason than because I do not want to be here again in a few years’ time—we are now in 2024, and I do not want to be here again in 2026, 2027 or 2028—and find that we are in the same situation as we were in 2019. I do not want to find that more people have suffered and, worryingly, that more people may not be with us as a result of this because they have taken their own lives.

There is an element of urgency about rectifying this issue, and doing it with compassion and, in many instances, with clemency. That will enable us to focus properly on tackling tax avoidance and evasion, and also the institutional arrangements that exist to enable that to happen. We need to have a thorough debate in the House about our regulatory mechanisms, especially with regard to the accountancy and finance sector.

It has been referred to many times this afternoon, but the number of times in the last few weeks that I have spoken here about the Post Office scandal is well known, and it has rightly dominated our headlines. However, the question that we have probably not addressed enough is “Why?” There are clearly parallels between why we have addressed the Post Office scandal and the reason for the encouraging speeches we have heard this afternoon. If there is one thing that the British people hate more than anything else it is injustice, and it is the injustice of the loan charge scandal that makes it so important. The stark reality is that the people who were affected by it have had their lives ruined at just the same levels, in terms of financial as well as personal and family impacts, as those affected by the Post Office scandal.

I have been a member of the loan charge APPG since I was elected and have spoken about it in the House. When the APPG ran sessions, back when I was first elected, I heard harrowing accounts of people who are innocently caught up in this situation, including some of my constituents. My constituent Peter Phillips fell into a loan scheme on the advice of tax professionals, as a means to be clear of and compliant with IR35—you could not make it up. There was never any intent to avoid tax: it was simply a means to keep up the income and standard of living that his work as a contractor afforded him.

I have got to know Peter over the four years since my election. There was a time when I probably did not wake up in the morning without an email from Peter—he is watching this debate, too. He is a good, decent, kind and law-abiding man, like so many of the constituents we have spoken about this afternoon. If he had been aware of HMRC’s view on these schemes, he would never have chosen that route, but it was never made plain to him, either by the tax professionals or by HMRC. In addition, he knew many other contractors who had been working through loan schemes for many years without any issues with HMRC.

Peter has settled his scheme with HMRC and, quite rightly, he is utterly aggrieved by the unfairness that, because he told HMRC of what he had done, he became an easy target, whereas the others, who did not tell HMRC, are getting away with it, so to speak. That is grossly unfair and unjust.

In the loan charge scenario, HMRC is treating the loans as both income and loans to the individual’s estate, and is therefore forcing Peter to pay income tax and inheritance tax on the amounts. We have been talking about this issue for a while, and many of the victims are older. As they get older, they are thinking about planning for their family, so these issues become even more of a worry and even more pertinent.

I do not think he should, but Peter is prepared to accept that he made an error of judgment. Of course, he did not make an error of judgment. In my view, this is retrospective penalisation by HMRC. At the very least, HMRC is equally at fault in the well-known retrospective penalties that it imposes. It seems wrong that Peter is paying a penalty for his honesty in disclosing the scheme. If Peter understands that he has to accept some responsibility, why is HMRC not doing the same and, at the very least, offering better settlement terms to all those affected?

Again, the parallel with the Post Office scandal is that many loan charge victims are not believed. These were complex tax arrangements in many cases, and they were simply mis-sold to people. The individuals who took out these arrangements are not tax professionals. They just went along with what they were told and, as we have heard, they have been financially crippled, way beyond any sensible, proportionate rationale. They need help.

I agree with other Members who said we have an opportunity to put this right. At the very least, these individuals could be better supported in three ways. For a start, the loans should be exempt from IHT. Where victims are subject to accelerated payment notices, which occur when HMRC thinks it has detected a tax avoidance scheme—the disputed tax is paid to HMRC—why is proper discretion not applied to the circumstances? Minister, go back and look at the cases and help the victims.

Finally, we should scrap or, at the very least, extend the residual tax waiver, which has been thoroughly unjust time and again. Remember, if a person did not settle before 30 September, HMRC applied the penal loan charge and calculated the settlement, giving a higher figure. That, again, has disadvantaged many, many people.

We took decisive action last week, and many applauded us for that. Were the extent of the loan charge exposed, I think there would be a willingness in society to act. Something should be done, and it can be done. Remember that so many people are innocently caught up in this scandal. It has huge parallels with the Post Office scandal, and it should be put right.

It is a pleasure to speak in this debate. I thank my right hon. Friend the Member for East Antrim (Sammy Wilson) and the hon. Member for Buckingham (Greg Smith) for setting the scene, securing the debate and bringing this matter to the Chamber.

I believe that the job of this House is to act on behalf of our constituents. Although HMRC is independent, it is a tool of the Government, so there has to be some accountability. With great respect, I believe that the ball will lie at the feet of the Minister, whom I am very fond of, at the end of this debate. He will tell us what is going to happen.

The loan charge is a controversial tax policy that has affected thousands of employees, freelancers and contractors who were persuaded or, in many cases, coerced into using loan schemes to reduce their tax bills. The policy, introduced as a tax-related measure in 2019, gives HMRC the ability to collect taxes going back to April 1999. Some people have faced bankruptcy or depression, or even committed suicide, because of this. I ask the Minister how it is possible for HMRC to investigate individuals for unpaid taxes going as far back as 20 years, given that its limit for holding information on taxpayers is only seven years. I cannot quite get my head around that. How does a person challenge a 20-year-old tax demand? Does HMRC breach the GDPR by holding such information for this length of time?

The loan charge policy is unjust and unworkable. It is a retrospective tax that violates the principle of legal certainty and the rule of law. It is a punitive measure that targets innocent taxpayers who acted in good faith and followed professional advice. It has resulted in disastrous consequences, causing immense hardship, distress and tragedy for thousands of people across the country. It is a retrospective tax of an insidious nature, because it changes the rules after the game has been played. Imagine winning a football match 3-0 and then someone comes and says, “By the way, you didn’t win 3-0. You lost 3-0, and here’s how it happened.” That is what has happened with the loan charge. It ignores the fact that many people used schemes because they had no choice, as they were forced to do so by their employers or clients. It disregards the fact that many people who used schemes did not benefit from them, as they paid fees, interest and taxes on their loans.

We all seek professional advice daily in our jobs. If we follow it because we believe that it is legal and correct, we expect to be protected. In this case, people have not been protected. The loan charge is a retaliatory measure, and imposes disproportionate and unreasonable demands on taxpayers who have already paid their fair share. It calculates the tax liability based on the total amount of loans, regardless of the actual income or profit derived from them. It adds interest and penalties on top of the tax, inflating bills to astronomical levels. It denies the right to appeal, challenge or settle tax disputes at a fair and independent tribunal. It forces people to pay the tax in one lump sum, with no regard to their current financial situation or ability to pay.

HMRC employs a process that has caused immense hardship and distress for thousands of people across the country. It has pushed people into debt, poverty and homelessness. It has ruined careers, businesses and reputations. It has damaged mental health, wellbeing and relationships. It has driven people to despair and suicide. According to the Loan Charge Action Group, at least 10 people have taken their own lives because of the loan charge—a sobering figure. It has also identified 13 suicide attempts and 11 cases of serious self-harm. We need to remember that these are not just numbers, but human lives. These are constituents, colleagues, friends and family members. How many more lives will be lost before the Government listen and act? There is an immense responsibility on the Minister and I hope, on behalf of our constituents, that he can give us reassurances on this issue.

Perhaps the most striking feature of all this is the brutality of HMRC’s ruthless approach, which extends to cruelty. It is no stretch to say that people are effectively pursued to the grave and beyond, because bereaved families are ruthlessly pursued by HMRC for its demands. HMRC continues to be unyielding and relentless. It defends its actions by claiming that it has a duty to collect tax that is owed, and that it offers support and flexibility to those who are struggling. I believe that, above else, HMRC has a duty to be competent and to uphold its charter, which states that it will always act to “get things right”. HMRC is in breach of its own charter, and the Minister needs to come clean and give us some reassurance on that.

The loan charge policy has failed on every level—fiscal and human. It has failed to collect the tax that it claims is due. It has failed to uphold the principles of justice and fairness that underpin our tax system. It has failed to protect the rights and interests of taxpayers who have done nothing wrong. It has failed to prevent the harm and suffering that it has inflicted on thousands of people. It has failed to acknowledge the errors that have been made in implementing and enforcing the policy. It has failed to respond effectively to the recommendations and criticisms that have been made by various bodies, including the House of Lords Economic Affairs Committee, the loan charge and taxpayer fairness APPG, and the independent review led by Sir Amyas Morse.

To conclude in adherence to the timescale that I was given, the loan charge is a policy that must be abolished. It is not too late for the Minister and the Government to do the right thing. It is not too late to end this injustice. It is not too late to save lives. I urge the Minister and the Government to listen to the voices of reason, compassion and conscience, and to abolish the loan charge once and for all. The quicker it is done, the better.

What I am going to say will echo what has already been said this afternoon, but I want to add my voice to those of all Members, and particularly to those of my constituents, because Bath constituents have been affected, and I want to help them as much as I can.

The loan charge has destroyed lives. Of course businesses and individuals should pay their fair share in tax; however, much damage has been done to people who acted in good faith. They have been punished in an entirely inappropriate way, while those who were behind the schemes have got away scot-free. We must defend individual taxpayers, even if we think that they might have been ill advised in the first place. As we have heard, many were forced into the schemes and did not have a choice.

The Morse review concluded that the loan charge was not an appropriate or fair response to the use of payroll loan arrangements. It focuses on loans made many years ago. They were not taxable under the law as it was understood at the time, and HMRC did not act against them. As enacted, the loan charge means that income tax must be paid as if the outstanding amount were part of the income taxed in the current tax year. That does not account for changed financial circumstances, which is particularly relevant for freelancers. Those taxpayers pay much more than they would have if they had paid tax on the loan at the time.

The loan charge’s stated aim is to end tax avoidance schemes, which is understandable. We all want to ensure that people pay their share; however, the central injustice is that HMRC has pursued only the users of the schemes, who acted in good faith, instead of those who recommended, promoted and operated them. As a result, the loan charge is not even a deterrent. There has never been a conviction of those promoting loan schemes that are now subject to the charge. The people who were compliant and disclosed information on their tax returns have been hit the hardest. Nearly all respondents to a survey by the loan charge and taxpayer fairness APPG reported that the risks of payroll loan arrangements were not explained to them. Now some face tax bills as high as £400,000.

Families have broken down, and there have been suicides. People were made to feel like criminals, despite having entered into the arrangements following professional advice. Many have said that as contractors they had little or no choice but to enter the schemes. Many small and medium-sized company owners and directors were also impacted after following professional tax advice. Their staff now face redundancy. As well as the awful mental health impacts, which the hon. Member for Strangford (Jim Shannon) mentioned, tax bills of hundreds of thousands of pounds leave some with no option but to go bankrupt. In many cases, being declared bankrupt will prevent people from working again or paying tax.

None of that would have happened had HMRC identified the issue earlier, publicised the risks of payroll loan schemes and penalised those behind them. The nightmare now unfolding has echoes of the Post Office scandal, where individuals with no intent of wrongdoing were left with impossible choices. Livelihoods and lives are being destroyed while those running the schemes, who knew what they were up to, are getting away with it. In addition, Government bodies are magnifying the injustice, pursuing people with intimidation and making them fearful. We should put that right, rather than making this wrong even more wrong.

We urgently need a genuinely independent review of the whole loan charge, and a fair and final resolution for all. It is clear there is huge cross-party interest. It is in everyone’s interest to finally resolve this, not just for those facing overwhelming tax bills but for HMRC and the Government. The loan charge has not even achieved its intention. Instead, it represents a policy failure that has left thousands suffering. It is for all of us to act, and act quickly.

I call the spokesperson for the Scottish National party.

I congratulate the right hon. Member for East Antrim (Sammy Wilson) on securing this important debate and I thank the Backbench Business Committee for making time for it.

To paraphrase the hon. Member for Strangford (Jim Shannon), this is an absolute mess. It is not an ethereal mess or something that is not happening to real people; it is happening to real people and affecting their lives today. We have a situation where the promoters and operators have faced no recourse. Tens of thousands of people have had their lives changed and torn apart, but HMRC has not been held to account for its behaviour. We must get to a point where there is a resolution. An end must be found, so that people do not have the sword of Damocles hanging over them.

First, on the promoters and operators, as has been said, there have not been any arrests or prosecutions, never mind convictions, of anybody who has been promoting or selling the schemes. Looking at debates from that time, the then Minister made it very clear that they were cracking down on schemes, not the individuals who use those schemes, and gave commitments that they were chasing promoters and operators. Whether Ministers were lied to by officials or knowingly came and told us something that was incorrect, I do not know, but we should never have been given those assurances, which were patently false.

There has been a consistent and concerted campaign of disinformation. MPs talking on behalf of their constituents, as well as MPs talking about the general issue, have been faced with disinformation. Whenever we have tried to find out information, we have been told stuff that is untrue, so I agree with the right hon. Member for East Antrim that we need to redouble our efforts. In fact, it is not even that we need to redouble our efforts, because doubling nothing still makes nothing; we need to make efforts to actually go after the promoters.

It is not only those promoters who promoted schemes back in the day, but the new ones that are springing up, along with other individuals and organisations that are taking advantage of people who are caught up in the loan charge scandal. People are being told, “Oh, you’re involved in the loan charge stuff—I can help you with that.” The person offering the help is then taking their money and running for the hills. That is still happening today, but those folk and those organisations are not facing any sanctions for their behaviour. The Government need to ensure they are taking action.

In many cases, the lives of individuals have been irrevocably damaged. Communication has been terrible and there have been contradictions throughout. Every Member who has talked about individual cases has said that people have been given conflicting information by HMRC. People were told, “If you pay this much, it will be fine,” but then they were told, “Actually, we’ve discovered we want another 50 grand from you,” or, “We need this,” or, “We are going to serve an APN,” or, “We’ve reopened tax year 2003.” As constituency MPs, we have all heard reports that people have been told conflicting information. Either every one of our constituents who has come to us about these issues is lying to us, or this is actually happening. I tend to assume that this is actually happening and that people have been mistreated by HMRC. That is a major concern.

It is impossible even for MPs to find out how much HMRC thinks people owe. There are times when I have had a settlement figure and an amount on behalf of a constituent, and then HMRC has chased that person again for other money later. As I said, it is a sword of Damocles hanging over people. They cannot ever get to the stage of resolution, because even if they settle, HMRC can come back and say, “Sorry, we miscalculated. We are going to chase you for another year.”

There is no point at which people can get out of this trap. I have spoken to so many constituents who—whether it was because of the loan charge or other things—reached the stage where they were terrified of opening envelopes that came through the door. Those of us who are dealing with constituents who are caught up in this know that they are terrified of opening any official-looking envelope, because it might be another demand for tens of thousands of pounds. It might be another demand for money that they do not have.

I am following the hon. Lady’s arguments and agree very much with her. Does she not agree that this is almost contrary to jurisprudence? There is no double jeopardy, so a person cannot be tried more than once for the same offence, yet HMRC, on those occasions, seemed to be doing just that.

I am concerned that we will not get to the end of this and that our constituents will never feel comfortable opening letters again. They will never get out of it.

The Minister needs to look not just at this issue as a whole, but at each individual case. It is very clear that there has been a disparity in the way that people have been treated. We were given the utmost reassurance that nobody would lose their home and nobody would be made bankrupt as a result of this. That was made utterly clear to us. I remember being in Westminster Hall when the Minister stood up and made those promises. Those promises have dematerialised completely. I have a constituent on universal credit whose only asset is his home, and he has been asked for tens of thousands of pounds—not tens of thousands of pounds over a 12 or 20-year period, but tens of thousands of pounds today. The only way that he can get that money is to sell his house. That is directly opposite to what the Minister told us at the time. We need to ensure that these changes are made.

Finally, a resolution to this is the most important point for me. This needs to end, so we need to get a resolution for individuals or for the whole group. People need to be absolutely confident that they will never again get through the door a terrifying demand from HMRC about something that they thought had been sorted out. If we get a proper resolution for each of those individuals —our constituents—we will have done our jobs as constituency MPs.

May I start by congratulating the right hon. Members for East Antrim (Sammy Wilson), for Hemel Hempstead (Sir Mike Penning) and the hon. Member for Motherwell and Wishaw (Marion Fellows)—with whom I have worked for many years on the Post Office Horizon scandal—and the hon. Member for Buckingham (Greg Smith), on securing this important debate today? I thank the Backbench Business Committee for granting the time and pay tribute to the members of the loan charge and taxpayer fairness all-party parliamentary group, other right hon. and hon. Members here in the Chamber today, and the journalists who have investigated this issue so doggedly, including The Yorkshire Post.

One of my core political beliefs is that, when one person has power over another, they must be subject to effective checks and balances. That is a crucial part of our democratic system and at the heart of the freedoms that we should all enjoy in a democracy such as ours. In my roles as a lawyer, a trade unionist, a Member of Parliament, the Chair of a parliamentary Select Committee —the Business and Trade Committee—and now a member of the Shadow Cabinet, I have always contributed to ensuring that the delicate balance of power is tilted towards the citizen and away from the powerful, and that unchecked power is challenged and brought into line. On this issue today, I recommit myself to that cause.

That is why we in the Labour party believe a key principle of our tax system is that the Government should treat everybody fairly. It is why we support attempts to tackle tax avoidance schemes, including disguised renumeration schemes. However, HMRC’s approach to the loan charge, which has affected tens of thousands of people to date, means that the Government have failed in ensuring that duty of fairness.

As we have heard, ordinary people who are victims of mis-selling are facing financial ruin and personal harm because of the way in which HMRC has pursued the loan charge. Tragically, at least 10 people affected by HMRC’s behaviour are known to have taken their own lives. The House should pause and reflect on that fact. We are talking about 10 people who were in such a state of despair—10 people who had not only the thought of ending their own lives, but the will to do so. There are 10 families now grieving for the loss of a loved one, all because of an administrative approach to tax collection. It could therefore not be clearer that the Government’s approach is not working. Ministers, including the Prime Minister when he was Chancellor, routinely referred to the 2019 Morse review and asserted that there was nothing else to do. That review cannot and must not be the final word on the matter or a roadblock to getting a fairer solution for people who have been victims of bad professional advice and mis-selling.

While people in everyday jobs, from NHS workers to social workers, are being pursued by HMRC, and some taxpayers are being told that they owe hundreds of thousands of pounds, the Government, as we have heard repeatedly, are doing little to pursue the actual promoters behind mis-selling schemes. Incredibly, HMRC has been issuing fewer than two fines a year against the architects and enablers of failed tax avoidance schemes. How can the Government possibly justify such a light-touch approach for the promoters of such schemes while many of those people caught up in them suffer such serious harm?

Over the course of this Parliament, the Labour party has repeatedly called on the Government to find a fair and effective way forward on the impact of the loan charge. There is no disagreement that such schemes are illegitimate and damaging. However, there have now been significant cases and testimonies to raise alarm bells in the heads of Ministers about the nature of the current approach.

In June 2020, during consideration of the then Finance Bill, hon. Members debated a new clause that would have forced the Government to review the impact of the loan charge scheme, including the fairness with which HMRC implemented the policy. Unfortunately, the Government dismissed the proposal, claiming that the Morse review went far enough. Again, in December 2021, my hon. Friend the Member for Ealing North (James Murray) tabled a new clause to then Finance (No. 2) Bill. It would have required the Chancellor to commission an independent review to consider HMRC’s approach to the loan charge scheme and make recommendations on how it should be altered. That review would have required the Government to explain to this House what efforts they had taken to guarantee the review’s independence. Also, once the review had made recommendations, it would have required the Government to say, on a six-monthly basis, whether they agreed with them, and if so, how effective they were on implementing them.

Such a review could finally have offered a way forward. Labour voted in favour of that new clause and the review it proposed in December 2021, but sadly it was defeated by the Government. Treasury Ministers must realise that this issue is not going away. Two years on from that vote, it is still clear that the Government’s approach to the loan charge means that ordinary people who are victims of mis-selling are suffering financial ruin and personal harm.

Ministers and hon. Members across the House have heard the harrowing accounts of people whose lives have been ruined. That cannot be what the Government envisaged in the first place, and it must not be allowed to continue. Will the Treasury use this moment today to finally agree to commission a further truly independent review? Such a review could consider the approach of HMRC towards the ordinary people caught up in the loan charge schemes and further consider what action should be taken against the architects and promoters of those schemes. That would be in the interests of restoring fairness in our tax system. It could provide a way forward for the many thousands of people caught up in the loan charge and should end the devastating consequences suffered by the people involved to date. That is all we are asking for: an independent review—albeit one, as hon. Members have said, that should be conducted quickly.

Finally, I urge the Minister to answer the specific question put to him today of whether HMRC officials are being awarded bonus payments for the recovery of loan charge moneys. I urge the Government to learn the lessons of other scandals and to stop burying their heads in the sand. I urge the Minister to be brave and to do the right thing.

I would also like to thank the right hon. Member for East Antrim (Sammy Wilson), my hon. Friend the Member for Buckingham (Greg Smith) and others for securing the debate, and I am grateful for all the contributions from hon. Members across the House. I would like to name them all, because it is important that we get on the record all those who have contributed. They include my right hon. Friends the Members for Chingford and Woodford Green (Sir Iain Duncan Smith), for New Forest West (Sir Desmond Swayne), for North East Somerset (Sir Jacob Rees-Mogg) and for Haltemprice and Howden (Sir David Davis); my hon. Friend the Member for North Norfolk (Duncan Baker); the right hon. Member for Hayes and Harlington (John McDonnell); and the hon. Members for Merthyr Tydfil and Rhymney (Gerald Jones), for Chesham and Amersham (Sarah Green), for Kirkcaldy and Cowdenbeath (Neale Hanvey), for Arfon (Hywel Williams), for Strangford (Jim Shannon) and for Bath (Wera Hobhouse); and, indeed, others who have contributed to the debate.

There is no doubt that we have heard today the strength of feeling on the issue. Of course, I stand at the Despatch Box as not only the Minister—Financial Secretary to the Treasury—but a constituency MP who has also had representations on these issues from my constituents.

The loan charge, alongside the wider issue of the use of disguised remuneration schemes, is a complex subject that is deeply impactful for many of our constituents. I can assure hon. Members that the Government take the issue incredibly seriously and recognise the impact the loan charge has had. I will endeavour to address the points that have been raised in the debate, but I also wish to reassure colleagues that many of the questions they have asked, about disguised remuneration, Government policy, the loan charge and the approach and tone taken by HMRC, are precisely the questions that I have been asking officials, for the very reasons they have outlined.

I hope that during the course of my response I can provide some additional reassurance because, particularly in the light of recent circumstances, I want to make sure that I am making the right decisions and asking the right questions. Tax authorities and tax Ministers are never popular—it is the nature of the work—but I want to make sure that we act in a way that is reassuring, correct and fair to all taxpayers. I take that duty and responsibility very seriously. For example, I have had discussions and conversations with Jim Harra, the chief executive of HMRC, in the light of the Post Office scandal, about whether there are commissions or perverse incentives for people that may lead to distorting behaviour, and I have been reassured that there are not. This debate and these conversations are very useful, because they enable me to ask the right questions of my officials.

I will not be able to give everybody the answers they want, and I am going to disappoint some people with this response, because I believe we have taken the right approach. There are certain areas where I will continue to ask questions. I am aware that I will not be able to satisfy everybody today, but that will never stop me from continuing to ask the right questions.

Briefly, by way of context, because not everybody who is listening to this may be aware, the purpose of the loan charge was to ensure that users of disguised remuneration schemes paid their fair share of income tax and national insurance contributions. Disguised remuneration schemes are contrived tax avoidance arrangements that seek to avoid income tax and national insurance on income by disguising it as some other type of payment, typically in the form of a loan that is wrongly alleged to be non-taxable. Hon. Members should be in no doubt that, as has been recognised across the House, those schemes cost the Exchequer and other taxpayers hundreds of millions of pounds a year. Indeed, the total burden is to the tune of billions of pounds.

It is therefore right that, when we identify these completely inappropriate schemes, we take action. From the earliest days of the schemes, HMRC opened thousands of inquiries into their use and challenged their operation through the courts. In 2017, the Supreme Court agreed that the schemes did not work and have never worked to legitimately avoid tax, so tax is due on these payments. However, as I have heard very clearly in this debate, many questions have been raised about how we recover that tax due and who has paid it.

In 2022, the Court of Appeal ruled that, even where other parties may have obligations to withhold tax under PAYE, the liability for income tax is always that of the individual, fully endorsing a long-standing position of HMRC and of Governments of all colours. That is a key point: the individual is ultimately primarily responsible for the tax they owe and for their own tax affairs.

Does the Minister not recognise that quite a lot of people who used the schemes, who were made contractors against their will, are often just individuals who are not tax experts, who paid the tax they were asked to pay at the time and did not think anything was wrong until years later, when suddenly HMRC came to pursue them? Does he not recognise that he is doing the wrong thing to those people who really did not know better?

I thank the hon. Lady for her comment and I understand completely where she is coming from, but there are multiple points to discuss there. The schemes were never legitimate; they were always tax avoidance, and therefore there was always a clear path that tax was owed. With respect to who then pays, I will mention that in a moment, but, if we move away from the underlying principle that individuals still have personal responsibility to check their tax affairs, it is very difficult to move back to it. I will also come on to the point she raises about further Government action in a moment, because there are some people are being deceived and forced into errors that are completely inappropriate.

The early stages of such loan schemes involved the very wealthy and people who, I think we can all agree, knew exactly what they were doing, but as the schemes evolved and got more sophisticated, and more people were drawn into them, there was a long tail of people who were acting in good faith, and theirs are many of the cases that we have heard today. Although we keep the principle that ultimate responsibility lies with those individuals, it is important that we do the right thing in ensuring that tax affairs are straightened.

I will give way to the hon. Member for Strangford.

Further to the point made by the hon. Member for Bath (Wera Hobhouse), I think of those who were unknowingly brought into the scheme by their employers and then found themselves with a financial burden that they were not aware of. I am reminded of the TV programme about the Post Office Horizon scandal, in which the terminology “the little people” was used. With the greatest of respect, these people are “the little people”—people who accept the systems that are put down before them. There must be a way to help them.

I completely understand where the hon. Gentleman is coming from in relation to going after employers that have been deceptive. The loan charge ensures that tax is paid in respect of individuals who entered into the schemes and received payments with no tax deducted, but where possible, HMRC has been seeking that tax from the employer in the first instance. I would like to reassure hon. Members that 80% of the revenue collected to date has come from employers, so we are targeting the employers, as he rightly points out.

I will take a couple more interventions, but I fear that colleagues will ask about the very things I am about to come to, so I may then resist further interventions.

My hon. Friend refers to the 2017 Supreme Court judgment. As I understand it, that judgment decided that responsibility for the use of an employee benefit trust for tax fell unequivocally on the employer, so it does not necessarily support him in the way he may think.

There has been debate and disagreement on that, particularly as it relates to section 44 of the Income Tax (Earnings and Pensions) Act 2003 and so on. HMRC has outlined the policy stance on this. Although I understand that there is disagreement, the line is quite clear at the moment.

I agree with the Minister that there is responsibility on all individuals to ensure that their tax affairs are in order and the correct tax is paid, but what will he tell the House about HMRC’s responsibility to make the public aware that certain schemes may be seen as tax evasion and therefore do not qualify for tax relief?

That is another important point to which I will come in a moment. I will now make some progress before I take further interventions, because I fear that otherwise I may ruin my responses.

As I said, the way in which we recover tax owed is important, including the interactions that individuals have with key bodies such as HMRC. The Government recognise that there were areas where the impact of the original loan charge was disproportionate to its aims. We have listened to concerns raised by hon. Members in the years since the loan charge was announced, and I have had conversations with HMRC about how it has, for example, endeavoured to improve the tone of communication with impacted individuals.

Changes in approach were also made following Lord Morse’s review, about which I have heard many comments today. Many people may not be aware, but in September 2019, the Government asked the former Comptroller and Auditor General of the National Audit Office, Lord Morse, to lead an independent review of the loan charge policy and its implementation. Lord Morse had full discretion over how the review was run, who he consulted and the recommendations made. That consultation included the APPG and many of the people in the Chamber today.

Following the review, Lord Morse recommended notable changes to the policy, and the Government accepted 19 of his 20 recommendations. Those changes benefit about 30,000 people and meant that the loan charge would apply only to outstanding loans made on or after 9 December 2010, rather than April 1999. That was the date when the Government announced anti-avoidance legislation that put beyond all doubt that the schemes were taxable—a very important date. The loan charge would also not apply to outstanding loans made in any tax years before 6 April 2016 where a reasonable disclosure of the use of a tax avoidance scheme was made to HMRC, but HMRC did not take action—again, some have made that point today. Taxpayers were also given additional flexibility in the way they pay in line with their individual circumstances, but Lord Morse was clear that the loan charge was necessary and in the public interest, and should remain in force.

Does the Minister accept that HMRC officials helped to service the Morse review, and restricted its grounds and parameters? The original of that review has not been disclosed, and we do not know how it was changed in the meantime. There are great doubts about whether or not the Morse review was ever an independent review, and ever came to conclusions that would have dealt with the issues and the unfairness we have been discussing today.

Before the Minister replies, I do want to say that I have given him more time than would normally be allocated for a Backbench Business debate. Several colleagues have tried to intervene, but do be aware that we have another important debate to follow. I am sure the Minister will be cognisant of that fact.

I thank you for that guidance, Madam Deputy Speaker. I will try to proceed through the comments, because I am keen to make a few more points.

The Morse review followed the normal process for such reviews, in terms of the secretariat and support being provided by Government Departments. I have heard the comments made today, but I do not believe a case has been made for another review. I always stand ready to listen, but I think that review stood up quite well. I do not think anybody has impugned the integrity of Lord Morse today, but that review was thorough and significant, and 19 of the recommended changes were implemented. It was a hugely impactful and very thorough review.

Many hon. Members have also made points about tackling promoters, and some individuals facing the loan charge feel rightly aggrieved at the promoters and enablers who facilitated the use of these schemes. Promoters of tax avoidance schemes are parasites on the tax system—let us be in no doubt about that. They cause untold misery to the people they tempt into using those schemes, which almost never deliver the tax savings that were promised. The Government have prioritised tackling promoters of tax avoidance schemes and have given HMRC additional powers to do so, as a result of which many promoters have stopped promoting those types of scheme. One individual involved in the promotion of schemes subject to the loan charge has already been convicted, and others are currently under criminal investigation for offences linked to the loan charge.

Through Finance Acts in 2021 and 2022, the Government also introduced powers that allow HMRC to take action more quickly against promoters. Those include the power to publish details of promoters of tax avoidance schemes and others involved in the implementation of such schemes. In 2022, for example, HMRC issued a penalty of £1 million to a promoter of disguised remuneration schemes, and provisions included in the Finance Bill currently progressing through this House will make it a criminal offence to promote tax avoidance schemes after HMRC has issued a stop notice under the promoters of tax avoidance schemes rules. I am very pleased to say that those measures are receiving support from all parties.

The Government also consulted last summer on measures to address non-compliance in the umbrella company market—again, many hon. Members have commented on that market today—including tackling the types of schemes we have discussed. We will respond to that consultation in due course, but I can let hon. Members know that I and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), the Minister for small business at the Department for Business and Trade, are already discussing what the next steps should be. In the meantime, HMRC will continue to use its full range of civil and criminal powers to disrupt the operations of promoters.

Will the Minister give way?

Very briefly, and for the last time.

I really am getting anxious—we do need to move on very quickly. I call Neale Hanvey, if he can be brief.

I will be very brief, Madam Deputy Speaker. One of the key problems we have is the inflationary costs that are added to the loan charges. Will the Minister at least commit to look at those costs that are added on to the taxable sums?

The hon. Member will be aware that I cannot pre-empt the conclusions of the consultation or our response to it, but I hear his point.

Many Members have raised the personal and emotional impact of the loan charge on their constituents. This is something that I, the Government and HMRC do take very seriously. We recognise the distress that loan scheme users may feel when faced with large tax bills on their earnings, often many years after the event, which the scheme promoters wrongly told them they would be able to avoid. We are aware that some people who faced the loan charge have, very sadly, taken their own lives or harmed themselves. HMRC has made 10 referrals to the Independent Office for Police Conduct where a person has taken their own life, and following each referral, HMRC has conducted an internal investigation. Nine of the 10 investigations have concluded, and although no misconduct was found, HMRC is taking forward organisational learning from these matters to further strengthen the support provided in identifying individuals who need extra help. I completely understand the points raised by hon. Members and, indeed, I have myself heard about the emotional distress from individuals impacted by the loan charge. Colleagues have also commented on the nature and tone of interactions with HMRC in the past. Again, I have raised this with HMRC officials, and I will continue to make the point that they should adopt a more understanding tone.

Other points of clarification were raised by hon. Members, and I will endeavour to write to them because there were a few factual inaccuracies. For example, there is an appeals process—it is very important to make that point—and this is not an area in which criminal convictions are acted against the individuals. I will write to hon. Members because there is a lot to debate in this area, but it is very important to make sure that we do not scare people. For example, we must make it clear that there is an appeal process, and there is of course no cost for the appeal process. There are also other matters that I would like to make hon. Members aware of.

I am aware of the timing, Madam Deputy Speaker, and thank you very much for your patience during what has obviously been a very emotive debate today. Finally, I make an appeal. I would encourage those who still have disguised remuneration or loan charge liabilities to engage with HMRC. Thousands of people are still not engaging with it and are therefore not able to seek clarity or the support and guidance available, including emotional support, help from the Samaritans and other measures that HMRC has in place to identify and support vulnerable individuals. I repeat my thanks to hon. Members for their engagement, and I welcome continued engagement, including with the APPG and all MPs who have raised this topic with me on behalf of their constituents.

I call Sammy Wilson, who has one minute to wind up.

Since time is short, I will not go through all the speeches, but I thank Members for taking part and for the powerful speeches they have made. There are two points that I will take away. First, there is the frustration, fear and powerlessness that many of our constituents feel in the face of oppressive Government bureaucracy, and the pursuit of those individuals by people who are not and currently cannot properly be held to account. Secondly, to repeat what the right hon. Member for Hayes and Harlington (John McDonnell) said, I hope that we will not be sitting here in four years’ time finding out that, although we had this debate, we heard platitudes from the Minister and there was no action. I do not want to take part in a debate similar to the one we have taken part in today. I think it is the duty of the Minister and the duty of Parliament to hold those who have this power to account and to make sure that it does not continue to be abused.

Question put and agreed to.

Resolved,

That this House is deeply concerned that HMRC has confirmed the suicides of 10 people facing the Loan Charge and that, despite the Morse Review, thousands face unaffordable demands, with the risk of further suicides; notes that HMRC has also confirmed 24 cases of serious harm, including 13 suicide attempts; believes that many people who used schemes were victims of mis-selling, and that in other cases employers and agencies pushed people into using them, yet HMRC is demanding all disputed tax from scheme users, not from those who recommended, promoted and operated the schemes; further notes that section 44 of the Income Tax (Earnings and Pensions) Act 2003 deems agency workers to be taxable as employees of those agencies and that HMRC should have collected tax from agencies at the time; criticises HMRC transferring the liability to individuals despite its own failures; observes that HMRC is pursuing open enquiries for schemes before 2011 despite the Morse Review; also notes that HMRC is seeking additional payments from those who settled; further believes that the Morse Review was limited and not genuinely independent of HM Treasury and HMRC; highlights the resolution proposed by tax professionals; calls on the Government to work with all parties to find a fair resolution and for a full independent investigation, including into the conduct of HMRC; and believes that taxpayer rights must be enshrined in law and enquiries closed after four years if HMRC fails to act.