Tax experts ask Chancellor for simpler, more affordable policy settlement terms
A group of tax lawyers and accounting professionals are calling on HM Revenue & Customs (HMRC) to consider introducing easier-to-understand and more affordable payment terms for entrepreneurs considered within the scope of the controversial UK government loan fee policy.
In a letter to Chancellor of the Exchequer, Rishi Sunak, the group pleads for HMRC to introduce a disguised compensation settlement opportunity. This would, it is argued, “quickly resolve open investigations” by forcing those targeted by the policy to pay an affordable proportion of the total tax that HMRC claims entrepreneurs have avoided paying by participating in programs. disguised pay.
As it stands, HMRC is at an impasse with those affected by the loan fees, the letter says, as many of those who are in the grip of the policy have no way of paying the monies. money often “life changing” for which they are sued. .
“The situation between HMRC and the taxpayers concerned appears to be at an impasse,” the letter said. âThe taxes demanded often involve life-changing amounts, usually multiples of their current annual income (if indeed they are still earning). This has resulted in severe financial hardship, often with devastating consequences for the lives and livelihoods of affected taxpayers.
For this reason, the group said it would be “unnecessary” for HMRC to continue to prosecute those affected by the policy for the full amount of taxes they claim they have avoided paying and would only be used for them. causing “further hardship and misery” while continuing to generate negative publicity for HMRC.
“Obviously, this is neither in the best interest of HMRC nor in the interest of the government, and for the government and HMRC to continue on this path is doomed and unsustainable,” the letter added.
The group stressed that the proposed alternative regulation would not be intended for use by entrepreneurs who have knowingly signed up for tax evasion schemes.
“This is for entrepreneurs and the self-employed – workers in the odd-job economy – many of whom have been inadvertently drawn into these programs or who have been insufficiently informed of the risks,” the letter said. “These people are now facing unaffordable and often overwhelming tax bills.”
The “vast majority” of individuals included in the scope of the loan charge were “genuine victims of fraudulent sales rather than willful tax evaders,” the letter added, which is why the group is also demanding that HMRC not insist that access to these revised down payments depend on the contractors admitting they are at fault.
âWhen so many people were mis-sold these arrangements (some having effectively been forced to use them as a condition of engagement and others having no knowledge that they were being sold anything), we believe that ‘It is wrong to force people to mistakenly admit that they are willful tax evaders, âthe letter said.
“We strongly recommend that HMRC and the government take this recommendation seriously and accept that the proliferation and mis-selling of DR schemes was the fault of several parties other than the taxpayers to whom these schemes were sold, and that the opportunity settlement reflects this reality in the context of a fair and final resolution.
The group confirmed that the proposal had already been presented to the Parliamentary Group on Loan Charges and Taxpayer Equity (APPG) in the hope of securing the support of its 245 members and, ultimately, the support of the Chancellor and the Treasury. .
Sarah Gabbai, a tax lawyer and proposal coordinator, said the group’s proposal works in everyone’s interest. “HMRC has a legal obligation to enforce loan fees, but they know there will be people who simply cannot afford to pay the amounts demanded and that for some people bankruptcy will be inevitable. “she said.
“We also think it is unfair that taxpayers are forced to pay all disputed taxes, when the majority of people have been the victims of abusive sales and several other parties have been involved and must accept some responsibility in the situation. in which these taxpayers are located. “
Gabbai added, âWe hope Treasury and HMRC take this proposal seriously and work towards a fair resolution that will bring everything to a close and avoid the consequences if nothing changes. We will work with HMRC, Treasury, APPG and others to find a way to fix this and get everyone moving forward.
News of the proposal comes days after the APPG on loan fees and taxpayer fairness released its own letter to Lucy Frazer, Financial Secretary to the Treasury, calling on it to launch another independent review on the impacts of the policy, which has been linked to at least eight suicides to date.
The letter also called on HMRC to suspend application of the policy on the grounds that no ârelevant or justifiedâ legal basis remained.