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The UK government has launched a review into “loan payments” in an attempt to “close” a backlog of tax avoidance that has since been linked to mass suicides.
Treasury Secretary James Murray told the Financial Times that the impact behind the reforms, announced On Thursday, it was to resolve outstanding tax bills related to prevention schemes.
But he added that the review, which will be led by former Inland Revenue and Revenue inspector Ray McCann, will “maintain fairness (in) the public purse” and other taxpayers who have not been involved in tax evasion.
“Some people affected by loans find it difficult to think of a way out of their situation. . . “For me, trying to resolve and close this issue for them is what drives this study,” Murray said in an interview before the announcement.
In 2019, then Conservative the government introduced “loan payments” in an effort to curb “hidden wages” schemes, which involve workers in a range of sectors being paid on loans through offshore trusts and which have proliferated over the past two decades.
HMRC can he had said before Around 50,000 people are estimated to be affected by the loan repayments and users' incomes are “on average twice that of the average UK taxpayer”.
The loan disbursement initially required the affected individuals to pay taxes on up to 20 years of income in a single financial year, which caused public outcry and accusations that the government was making unreasonable demands.
The former Tory administration later softened the policy, halving the 20-year term and making it easier to spread payments.
But in the six years since the policy was introduced, tens of thousands of people have not settled their affairs with HMRC. The tax authority has reported that this policy has been linked to at least 10 suicides and 13 attempted suicides.
Labor committed to a new independent review of mortgage payments before last year's general election. Lord Amyas Morse's previous report in 2019 was criticized by MPs and campaigners for including Treasury and HMRC officials.
Murray said the government “went to great lengths” to ensure public confidence in the review, which will continue until the summer and is staffed by public servants who have no connection or experience working on loan repayment policy. They will work in a separate building from the Treasury.
McCann, a former president of the Chartered Institute of Taxation, said he was “pleased to be asked to help find ways” to resolve the dispute.
McCann has previously criticized the way HMRC has tried to engage with payday loan campaigners, noting that “all the people (within the agency) who work in the loan process can work in customer service”.
In a statement the government said the review would examine “the barriers that prevent those under arrears from reaching a settlement with HMRC and suggest ways to encourage them to do so”.
Campaigners have called for a wide-ranging inquiry – looking at the role of scheme developers, umbrella companies, recruitment agencies, accountants and tax advisers who recommended the schemes, and HMRC – to hit back at the announcement.
Steve Packham, of the Debt Relief Group, said the proposed review was “a travesty” and “won't solve the problem”.
“We are very concerned about the impact on mental health that this sham advertisement will have if not reviewed,” he added.
Murray said his meetings with payday loan campaigners last year warned him of the impact of the policy and the government wanted a McCann review, which he will answer to in the Autumn Budget, “to provide a way for the taxpayers concerned to come to a solution”.
Despite others calling for a “separate review”, Murray added that his priority was “to help those people who feel stuck”.