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Tuesday Volume 660 21 May 2019 No. 304 HOUSE OF COMMONS OFFICIAL REPORT PARLIAMENTARY DEBATES (HANSARD) Tuesday 21 May 2019 © Parliamentary Copyright House of Commons 2019 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 593 21 MAY 2019 594 to be put in place retrospectively. In the light of all the House of Commons evidence, I am concerned about the wellbeing of those constituents who say that they may face financial ruin. Surely the only responsible thing to do is to pause and Tuesday 21 May 2019 announce a delay and an independent review, given that we know that people have already lost their lives. The House met at half-past Eleven o’clock Mel Stride: The loan charge is not retrospective. There has never been a time in the history of our country when the arrangements that I described a moment PRAYERS ago were ever compliant with our tax code. Of course, the loans,which there is no intention of ever repaying—they are simply there to avoid national insurance and income [MR SPEAKER in the Chair] tax—persist into the present. Generous “time to pay” arrangements are available with HMRC; I urge anybody who is involved in avoidance of this kind to talk to Oral Answers to Questions HMRC and come to sensible arrangements. Mr Lewis: Is the Minister not aware that the people TREASURY affected by this charge are strivers and people who are just about managing? They are the people who are The Chancellor of the Exchequer was asked— suffering as a consequence of this decision. How many Loan Charge times are the Government going to hit ordinary working people, including groups like the Women Against State 1. Dr Paul Williams (Stockton South) (Lab): What Pension Inequality, without Ministers fulfilling their steps he is taking to support people affected by the 2019 responsibilities, intervening in such circumstances and loan charge. [911001] ensuring that common sense prevails? 2. Christine Jardine (Edinburgh West) (LD): What representations he has received on the 2019 loan charge; Mel Stride: If we include the loans, the average and if he will make a statement. [911002] earnings of those who have been involved in this egregious tax avoidance is twice our country’s national average 12. Mr Ivan Lewis (Bury South) (Ind): What steps he wage. There is no need for people to get involved in is taking to support people affected by the 2019 loan these schemes, the sole purpose of which is to avoid tax. charge. [911013] Some Members have raised amounts of some £700,000 The Financial Secretary to the Treasury (Mel Stride): or £900,000 that HMRC is pursuing in this context; that Disguised remuneration is an aggressive and contrived would equate to a couple of million pounds going form of tax avoidance that involves a loan, which there through these schemes. I remind the House that these is never any intention of repaying, being routed via a are schemes that take loans from the UK out to an low or no-tax jurisdiction and then back to the United offshore trust in a low or no-tax jurisdiction and route it Kingdom, to avoid income tax and national insurance. back into the UK as a loan that is never due to be Her Majesty’s Revenue and Customs takes a measured, repaid, simply for the purpose of avoiding tax. We do proportionate and sympathetic approach to the collection not believe that is right. of this tax, which has always been due. Justine Greening (Putney) (Con): If the Minister is Dr Williams: My constituent contacted me about this right when he says that the loan charge is not retrospective, issue and said that he had no choice in how he was how come we have examples like the situation faced by contracted to work on a BP Norway project. Why is he my constituent, who was pursued with an accelerated being pursued rather than BP Norway and the other payment notice back in 2015, in relation to a loan companies, such as NRL, AML and ICS (Salary) Ltd, charge scheme? He paid the amount that HMRC asked which all work together to undermine workers’ rights him for, but now suddenly, out of the blue, a request has and minimise their own tax liabilities? What action have been sent to a wrong email address that means he will the Government taken against those agencies? probably have to pay more money. Does that not show Mel Stride: I refute the suggestion that anybody is that HMRC has shifted the goalposts and therefore that forced into making a tax-avoidance arrangement. If the loan charge is retrospective? something looks too good to be true, it generally means that it is just that. Of the settlements to date, which have Mel Stride: I entirely stand by my earlier remarks been worth more than £1 billion, some 85% have been about the measures not being in the least retrospective. from employers, not employees, and we are actively Of course, I cannot comment on the tax affairs of the pursuing the promoters of these schemes in exactly the individual that my right hon. Friend has just referred way in which the hon. Gentleman would wish. to; it would not be right or proper of me to do so. Christine Jardine: I understand that the all-party Julia Lopez (Hornchurch and Upminster) (Con): I group on the loan charge has been sent evidence of the have received increasingly distressed representations from suicide of three people facing the loan charge. More constituents affected by the loan charge. One of their than 100 people in Edinburgh West have been affected concerns is that in making any settlement with HMRC, by the charge. Many of them have come to see me at they risk giving up their right to review in the event of constituency surgeries and are worried about their financial any subsequent change in Government policy. Will the future. They did not understand that this tax was going Minister advise my constituents on what they might do? 595 Oral Answers 21 MAY 2019 Oral Answers 596 They currently feel trapped between that prospect and various schemes through the courts, including the Supreme the risk of further financial penalty from HMRC if Court, and on each occasion, these schemes have been they do not come to an agreement quickly. found not to work. Mel Stride: I have made it very clear, as have the 22. [911023] Mr Paul Sweeney (Glasgow North East) Government, over a long period of time—at least since (Lab/Co-op): The Treasury has claimed that the off-payroll 2016 when these measures were first brought into effect, tax should not affect the genuine self-employed, yet which is before I arrived in my current position—that HMRC’s Check Employment Status for Tax tool assessed our policy is our policy and that we will not change that 3,909 contractors across five key public sector bodies policy. For those who have been involved in this form of and the results were that 94% of the contractors were aggressive and contrived tax avoidance,the recommendation deemed to be employers. That clearly demonstrates that is very clear: the best thing to do is to speak to Her the CEST tool is leading to the wrong decisions. Will Majesty’s Revenue and Customs and come to a sensible the Minister now agree to cease the use of the CEST and reasonable arrangement for repayment. tool and to put on hold those plans to roll it out to the private sector? Joseph Johnson (Orpington) (Con): I understand the Minister’s sincere desire to tackle disguised remuneration and thank him for always being available to discuss my Mel Stride: The statement that the hon. Gentleman constituents’ concerns. However, something has clearly has made does not suggest that the CEST tool is gone very wrong with the operation of the loan charge inappropriate. The CEST tool is there to determine an and now, too, I fear with the roll-out of IR35 to the individual’s employment status. In 85% of cases, it private sector. Will the Minister commit please to pause does give a determination. HMRC will stand by that both the loan charge and the roll-out of IR35 to the determination provided the right data was put into the private sector until my constituents’ concerns have been CEST process. fully addressed? Ross Thomson (Aberdeen South) (Con): Following a Mel Stride: IR35 is often raised in the context of the recent case, an individual convicted of benefit fraud loan charge, but it is a completely unrelated matter. was given 900 years to pay off the £88,000 that they had IR35 is about making sure that those who are effectively defrauded from the state, but those facing the loan employed by other businesses are treated as employees charge have not committed any criminal offence or for tax purposes, and that is only right and proper. The broken the law, yet they are being hounded by HMRC loan charge is about putting right the situation of this for unaffordable sums. Can my right hon. Friend please aggressive tax avoidance. advise me on why HMRC is persecuting innocent people to the point that it is affecting their mental and emotional 21. [911022] Mr Jim Cunningham (Coventry South) (Lab): wellbeing while allowing convicted fraudsters such leeway? Given that nurses and cleaners—the lower-paid—can be adversely affected by this and distinguished from Mel Stride: HMRC is not persecuting people, as my those who are deliberately tax avoiding, will the Minister hon.