HM Revenue & Customs  

HMRC reports itself to watchdog over tax charge deaths

HMRC reports itself to watchdog over tax charge deaths

The taxman has reported itself to the police watchdog four times over the deaths of individuals who had been notified of a loan charge bill.

The controversial policy has left many with crippling tax bills and has led to widespread criticism from MPs, professional bodies and protestors.

As first reported by FTAdviser’s sister paper the Financial Times, Jesse Norman, the financial secretary to the Treasury, told the House of Commons yesterday (October 2) HMRC had reported itself to the Independent Office for Police Conduct three times over the perceived suicides of people who had received a loan charge bill.

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The government body later announced it was aware of four customers who used the schemes and had taken their own lives. The taxman first reported itself to the watchdog over one death in April.

HMRC’s activities are regulated by the IOPC, which regulates the activities of both the police and the taxman.

The loan charge relates to people who worked and received their remuneration through loans, which are not taxable, rather than a salary, which is.

The loans were never intended to be repaid resulting in the tax office treating them as tax avoidance, although the loans were legal at the time.

In the 2016 Budget the government confirmed it intended to ban the practice and have the tax repaid, and those affected by the policy were given an April 2019 deadline to settle or declare their tax bills and failing that would be levied the additional loan charge.

The process was above board for the years it was used until HMRC clamped down following the bankruptcy of Rangers FC, which had been operating a similar scheme.

This led to widespread action and the process was outlawed, but HMRC chiefs also applied the law to previous cases and are pursuing people who used a loan payment scheme as far back as 1999.

An HMRC spokesperson said: “HMRC is aware that four customers, who we have been told used disguised remuneration schemes, have very sadly, taken their own lives. We have referred these cases to the IOPC. A fourth referral was made to the IOPC on Tuesday afternoon.

 “The IOPC have advised in the first three cases - in one case, the IOPC felt it was appropriate for HMRC to conduct its own investigation. In the other two, they returned the matter to HMRC to proceed as we consider appropriate.”

Earlier this month prime minister Boris Johnson backed a ‘thorough’ review of the loan charge following mounting pressure from MPs and campaigners, a promise which earlier this month came to fruition when chancellor Sajid Javid commissioned a review to examine if the legislation was fair.

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