Jesse Norman, the Treasury’s Financial Secretary, faced a lot of criticisms from the House of Lords’ Economic Affairs Committee on the subject of the loan charge.
Baroness Kramer inquired about the 5-year period that was offered by the HMRC for repayments of the loan charge. She said it “allowed death over five years, rather than death over three”.
Baroness Kramer further dismissed his promise in which he assured that HMRC was attempting to strengthen communication with those who have been affected. She expected that he would be considering the “quality” of what was believed as a “limited assistance programme”.
Mr. Norman explained to the Committee that he plans to go ahead with several announcements that are targeted at dealing with the loan charge concerns. One of these concerns is associated with a commitment that HMRC does not intend to implement the loan charge for those tax years in which the enquiry was closed because of fully-disclosed information.
This announcement was positively received by some people in the EAC; however, Baroness Kramer was unimpressed. She said that individuals, who were without independent financial consultation in those times, are likely to have no knowledge about this process. Hence, this announcement does not benefit those who are the most vulnerable of the lot.
While the Baroness did welcome the “change in direction”, she remained adamant that it was far from a complete answer to concerns regarding loan charge.
Mr. Norman opposed her views; he supported terms and called out for the elimination of the “harsh public rhetoric” from reality.
He restated that individuals who are unable to pay will not be chased after an interval when they no longer can afford the repayments. He further revealed that according to his understanding, so far HMRC did not bankrupt anyone, however, he does expect that this may change in the future.
Mr. Norman was also asked if the rules for closed years were to be implemented retrospectively for those individuals who proceeded with settlements in the past. However, he did not have an answer.
Mr. Norman also made it clear that HMRC does not plan to tax on the same income again. Instead, they plan to adopt a more “collaborative” strategy for those who are disrupted by the loan charge, where ICAEW (Institute of Chartered Accountants in England and Wales) and the CIOT (Chartered Institute of Taxation) maybe involved.