The Treasury has appointed Sir Amyas Morse, the former head of the National Audit Office, to lead an independent review into the loan charge, a controversial tax-recovery scheme.
The loan charge – a mechanism HM Revenue and Customs uses to recover tax that has been avoided using so-called disguised remuneration schemes – has attracted fierce criticism in recent months, following reports that it has forced people into financial hardship.
The loan charge is seeking repayments from thousands of people who signed up to schemes that disguised their pay as loans, which were never meant to be paid back, so that they and their employers could avoid income tax and national insurance payments.
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The crackdown was introduced in the 2016 Spring Budget, giving disguised-remuneration scheme users three years to either repay the loan or settle their tax bill with HMRC. Those that did not faced an income tax charge that was introduced in April.
Around 50,000 people are thought to have used the schemes, mostly contractors and consultants, over the last two decades.
Last week, Boris Johnson said he would order a review into the loan charge following pressure from MPs and campaigners. Asked about the issue during prime minister's questions, he said: “It is a very, very difficult issue and what I have undertaken to do is have a thorough review."
A campaign group has been lobbying for an end to the charge, which it says has caused financial hardship and distress for people who face hefty tax bills for schemes they used years ago. The group claims six people have been driven to suicide over the charge.
A cross-party group of MPs opened an inquiry into the effects of the charge earlier this year. In March, the Loan Charge All-Party Parliamentary Group accused HMRC permanent secretary Sir Jon Thompson of “wilfully and deliberately” evading questions about the suicides.
In a joint announcement today, the Treasury and HMRC said “concerns have been raised about the use of the loan charge as a way of drawing a line under these schemes”.
The review will focus on the impact on those individuals who were using the schemes directly, reflecting the main concerns that have been raised by MPs and campaigners about the loan charge.
Morse, who left the NAO in May, will complete his review by mid-November, ahead of the January self-assessment tax deadline.
Announcing theappointment, Treasury financial secretary Jesse Norman said the government "fully appreciates the concerns expressed by individuals, campaigners, and MPs who have raised concerns about the loan charge".
"Sir Amyas is known and respected across parliament for his expertise and independence of mind. The Government looks forward to his report as it continues to tackle these and other tax avoidance schemes," he said.
The charge will remain in force during the review.