Loan charge scandal takes a new twist with s.684 notices

money composition on wooden table Image credit - iStock - 529272761

Highly controversial s.684 notices have added to the mire surrounding the Loan Charge.

The Loan Charge scandal has been engulfed by further condemnation, with the uncovering of the highly controversial s.684 notices by Sky News last month [February 2024] as politicians round on the crisis and call for a full investigation on the matter.

According to the Loan Charge Action Group (LCAG), an s.684 is notice of a tax liability transfer, transferring liability for tax from employer to employee in this case, for use of contractor payroll loan schemes.

HMRC has discretion to transfer liability in certain cases, but FOI responses from HMRC to various requests shows it understands the controversy of the problem as the organisation has “discreetly” sent out 3,000 of these notices [correct at time of writing] to individuals.

From 1 November 2022 to 28 January 2024, the HMRC Counter-Avoidance directorate issued around 1,480 letters to exercise the discretion under s684(7A)(b) ITEPA 2003 in loan-related cases.

Receipt of the notice – which can’t be appealed, only judicially reviewed – means that HMRC will then issue demands for tax it thinks is due, says the LCAG.

The DUP’s Sammy Wilson has called the issues stemming from the recent loan charge debate “bureaucracy out of control”, as he and other MPs called on those affected to demand a public inquiry.

That call was heeded in late January by Labour’s Shadow Chancellor Rachel Reeves, who said on the Iain Dale radio show on LBC that the party would commit to an independent review on the loan charge if Labour win the next general election.

The LCAG has written to Reeves about the review and asked her to ensure that the s.684s will also fall under this remit.

Wilson, MP for East Antrim – and a proponent of the loan charge debate – said the issue was a “national scandal” that has all the hallmarks of another “Horizon thing [the British Post Office scandal]”.

HMRC, Her Majesty Revenue and Customs building- Image credit - istock-1133811588

“Then maybe at some stage in the future, public awareness will be increased because somebody will actually say, here’s another story which needs to have a public airing, and we’ll do something like [Mr Bates vs The Post Office],” he told Recruiter.

“It’s the only way you’re going to get any movement and hopefully we’ll finally get a minister who’s got the balls to do their job.”

Critics of the loan charge, which has been linked to 10 suicides so far, have rounded on financial secretary to the Treasury, Nigel Huddleston, imploring him to effect change on a matter that has affected ordinary working people like recruiters, IT consultants and nurses, to name a few.

Liberal Democrat MP for Bath, Wera Hobhouse told Recruiter that Huddleston mentioned for people to get in touch with HMRC but “they are the very body that is at the heart of the problem.”

“[HMRC behaviours] are sort of attitudes and cultures that one has had who has been particularly exposed during the post office scandal, but they seem to sort of be going right through the government itself,” she said. “That’s just not acceptable.”

The SNP’s Chris Stephens, MP for Glasgow South West added that the “blanket implementation has been unjust” and the party has been calling “full independent review” since 2020.

Conservative MP for Haltemprice and Howden David Davis and Plaid Cymru MP for Arfon Hywel Williams were both contacted but each declined to the opportunity to comment.

Image credit | iStock

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