The government has been accused of hiring a special team to 'intimidate' taxpayers into paying 'unfair' charges that have driven people to suicide.
That is the view of a group of MPs, who also said that ministers have 'deliberately' and 'dishonestly' misled an inquiry into how they have been trying to claw back allegedly unpaid tax as part of the controversial new Loan Charges policy.
The All Party Parliamentary Group (APPG) inquiry has produced a 91-page report into demands by Her Majesty’s Revenue and Customs (HMRC) for Loan Charge payments from an estimated 100,000 tax payers – including doctors, nurses and council workers.
And a Freedom of Information request shows that this year close to 390 of these demands have been issued across Merseyside - with 160 sent out in Liverpool alone.
The inquiry raises concerns that the HMRC’s actions in trying to force people to pay up have driven at least six people to taking their own lives.
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The report, which has been highlighted by our sister title Devon Live, calls HMRC's conduct 'disgraceful' and suggests it is an organisation that is 'out of control'.
It adds that the 'deliberate misrepresentation' it has been involved with on this issue is “as dishonest as lying”.
The report states: “The manner in which HMRC and Treasury Ministers have so far failed to properly acknowledge the suicide risk and the awful fact that people facing the Loan Charge have killed themselves is extraordinary and deeply concerning. It suggests a robotic and callous indifference to the catastrophic reality of this policy on individuals. The obvious effect on people being pursued by HMRC in relation to it is plain to see.”
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One of the more chilling passages of the report states how HMRC hired a team of behavioural psychologists - known as the 'nudge unit' - to ‘experiment’ with the use of psychological techniques on taxpayers to “intimidate” them into paying charges – often for tens of thousands of pounds – that the committee believes they were not liable for.
What is the Loan Charge?
The 2019 Loan Charge came into effect on Friday April 5 this year and applies to people who used what was previously a legal tax loophole, that saw people take some of their wages as a loan to legally reduce their tax liability, using tax avoidance schemes. The loophole was closed by legislation passed by Parliament.
The APPG report says NHS trusts – and even the HMRC itself – encouraged contractors, who were ‘disguised employees’ as the they worked exclusively solely for the HMRC, to take advantage of these tax avoidance schemes.
The HMRC has already agreed settlements with more than 5,000 tax payers – raising some £500 million for The Treasury. The APPG found that the Loan Charge law “rides roughshod over the law and legal process”.
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The APPG inquiry also said it found “the most startlingly dishonest misrepresentation by HMRC and the Treasury, including a Minister, has been over criminal convictions for promoters of loan arrangements. The answer to an FOI request exposed this clear dishonesty”.
It went on: “No court case has given the legal basis for the Loan Charge. We are deeply concerned at this cynical and systematic misrepresentation to try to make MPs and 40 journalists believe that court cases have deemed the loans taxable, when that is not the case.”
'Systematic campaign of misinformation'
The report is particularly damning for Devon Tory MP Mel Stride, who as the as the Financial Secretary to the Treasury and Paymaster General has responsibility for HMRC.
It states: “Mel Stride, Financial Secretary to the Treasury and the Minister responsible, has to date failed to acknowledge in the House of Commons that suicides have occurred on each occasion that the topic has been raised. Neither has he offered his condolences to the bereaved families. The APPG find this astonishing and unacceptable for a Minister.”
In its conclusion, the report states that 'there has been a systematic campaign of misinformation by HMRC and the Treasury over the Loan Charge.'
It adds: " This is a blatant attempt to airbrush the reality of what is a deeply questionable policy and also cover up the likely impact of the Loan Charge on individuals, an event that HMRC and the Treasury must be aware of. This is deeply worrying for a public body and Government department."
'Unacceptable'
Liverpool Walton MP Dan Carden said he has met with a number of his constituents who are being affected by the issue.
He said: "It is unacceptable that the Government is targeting individuals who may have been victims of this practice, rather than the tax advisers and bogus umbrella companies who facilitated this tax avoidance for profit.
"This retrospective action by government is causing stress and anguish for a number of my constituents.
"It is simply no good for Ministers to deny the impact this is having on people’s mental wellbeing, many of whom are now in fear of bankruptcy and losing their homes.”
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The APPG has now called for an investigation into 'this cynical campaign of misinformation.'
What The Treasury say
A statement from on behalf of the The Treasury said: “The loan charge means people paying themselves through loans, often from offshore trusts, will have to contribute their fair share to pay for our public services.
"As set out in our recent report, HMRC is committed to providing affordable payment arrangements and the enhanced support more vulnerable customers may need."
A HMRC spokesman said: “HMRC works to provide clear, tailored communication so that taxpayers are aware of the choices they face.
We appreciate that tax bills are stressful but our teams ensure that all cases are treated sympathetically, with payment terms that reflect the circumstances of each individual case, and appropriate support wherever needed.
"Many governments use behavioural insights to communicate with citizens, with the aims of making decisions easy to understand and actions simple to carry out.
"The UK Government’s Behavioural Insights Team was set up in 2010, and many departments use this approach. This is not new or specific to HMRC.”
