Government starts review of controversial tax charge

An Early Day Motion was tabled by the Independent MP Stephen Lloyd in 2018, protesting about the charge, and the motion was signed by 152 MPs.

Nicky Morgan MP, the current Culture secretary, said she regards the loan charge as violating the principle in law that an individual is entitled to “certainty”, that is, to know whether they are breaking the law at the time they take an action. 

But both Mr Johnson and Ms Morgan were MPs when the 2016 Budget was introduced, and as members of the Conservative party voted for the budget containing the loan charge.

Critics of the loan charge mainly contend that HMRC should not apply the charge to a time prior to when the law was enacted by parliament in 2017. 

Sir Edward Davey MP, said: "HMRC are wrong on the issue of retrospection, they are wrong in law. I agree that these schemes should be shut down, but not applied retrospectively.

"There are people involved who filed tax returns for previous years and had those returns agreed by HMRC, and are now getting bills for those years. HMRC were wrong not to ban this practice earlier."

But HMRC’s view is that the loan charge is not retrospective because the loans remained unpaid in the tax year during which the legislation took effect.