HMRC has spent £186 million recouping loan charge taxes in what has been described as a 'shameful' six-year crackdown. The tax authority can claw back unpaid tax as part of a clampdown on 'disguised remuneration' schemes.
Cost of Compliance
An independent review found that 'loan charge compliance' cost HMRC £31 million a year. The charge came into effect in 2019, bringing the total cost to £186 million over six years. The Loan Charge and Taxpayer Fairness group, comprising 156 MPs and Lords, highlighted the figures and called for a public inquiry into the tax office's approach, describing it as 'a profound failure'.
Settlements and Criticism
A Freedom of Information request earlier this year revealed that HMRC had reached settlements with 800 individuals, collecting £44 million. Sir Jacob Rees-Mogg, a former Conservative Party cabinet minister, criticised the retrospective action, calling it 'completely unconstitutional'. He added: 'HMRC didn't have any objections at the time, and it's extremely unfair that it's now deemed that [the schemes are] not allowed. Innocent taxpayers killed themselves because of a disgraceful and unfair administration of tax, when they thought they'd done something perfectly legitimate. HMRC should have gone after the promoters of the schemes if they thought they were wrong.'
MPs and Campaigners React
Greg Smith, MP for Mid Buckinghamshire, said: 'All along, HMRC has been targeting the wrong people and yet even now, the Labour Government is still only pursuing people that are victims of mis-selling, while doing nothing to recover the millions made by those who mis-sold these schemes, which is shameful.' Steve Packham, co-founder of the Loan Charge Action Group, added: 'In opposition, [Labour Party Chancellor] Rachel Reeves said HMRC should go after the perpetrators, yet in government has done a complete U-turn. Whilst those who mis-sold PPI are being forced to pay back millions, those who mis-sold contractor loan schemes are not being asked to pay a single penny – it's double standards.'
HMRC Response
An HMRC spokesman said: 'Following the 2025 Loan Charge Review, the Government agreed a new settlement offer, and we are working with our customers to help bring this matter to a close.'
