The APPG Inquiry was a Select Committee style inquiry that took place between Wednesday 6th February and early March, and reported on 3rd April.

The inquiry gave the opportunity for a detailed review into the 2019 Loan Charge both in terms of the policy and its impact. The Government conducted a review, including of the Loan Charge, due to the passing of New Clause 26 in the Finance Bill. The Government had stated that they would accept the APPG inquiry report as part of that review. Preliminary findings only from the APPG Inquiry were submitted to the Treasury on March 13th. The Government presented their report to the House of Commons on 26th March 2019. It did not include any of the Loan Charge APPG Inquiry’s preliminary findings.

Scope of the inquiry

The inquiry into the 2019 Loan Charge looked at the Loan Charge legislation, the background and its introduction and how people came to be using loan-based arrangements in such numbers.

It considered the legal position at the time and what powers HMRC had to close down or tax such arrangements. It looked at whether the Loan Charge is justified by court cases and whether, as has been suggested, it overrides legislation and statutory taxpayer protections.

It also examined the impact that promoters’ fees paid had in the arrangements, as well as the tax not paid by organisations using contractors/freelancers, and whether this is being taken into account in calculations being levied on individuals.

The inquiry was especially focused on the reality of the situation people now find themselves in: the level of liabilities and the impact the Loan Charge will have on individuals, their financial situations, their lives and families and career.

It also examined HMRC’s record when dealing with affected taxpayers, the timeframe in which people have been informed about their liabilities and in particular the arrangements being proposed for repayment and whether they are realistic and affordable for those facing them.

It scrutinised HMRC’s claim to pursue promoters of the arrangements over which users are now facing the Loan Charge.

How did this happen?

• The reasons that people joined loan-based payroll solutions and what advice was given to them at the time
• Whether HMRC acted as they should have done if they and Governments had concerns about these schemes

The legal situation

• The legal position of the payroll solutions and the case law
• The extent to which the Loan Charge overrides the previous legislation and case law
• The extent to which the Loan Charge overrides established statutory protections for individual taxpayers

The situation of those facing the Loan Charge

• When, how and by whom people were informed about the Loan Charge
• The impact on those facing the Loan Charge, including family breakdown, mental health deterioration, social exclusion, loss of home, etc
• The expected number of bankruptcies that will result from the Loan Charge

HMRC

• How HMRC have calculated proposed settlements and whether these are supported by the law
• The activities and conduct of HMRC in dealing with those affected including whether communication has been sufficient in the past
• The role that promoters’ fees paid in the schemes, as well as tax not paid by organisations using contractors/freelancers and whether they are being taken into account in calculations being levied on individuals
• The reality and affordability of HMRC’s repayment plans
• Action against promoters of schemes

Structure of the Inquiry

The inquiry consisted of examining written evidence and also oral evidence sessions. The three identified groups that the inquiry invited to give oral evidence were as follows:

• Sector professionals
• Individuals facing the Loan Charge
• HMRC and HM Treasury

Responding to the Call for Evidence

Formal invitations were issued to certain stakeholders, but any individual that wished to present evidence and make representations could do so in written format.

The APPG welcomed submissions of evidence from as many individuals and professionals with knowledge or experience of the Loan Charge as possible. Over 900 submissions were received.

Report and Follow up
The APPG Inquiry report was published on April 3rd 2019. It includes recommendations for ministers. A formal response to the report was requested from government ministers.

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