Thread by @keithmgordon

@HMRCgovuk 1/23
Although the Finance Bill amendment forced upon the Government should suggest some soul-searching within @HMRCgovuk, they have instead responded by going on the offensive.
But it is still worth analysing the spin. Line by line.

@HMRCgovuk 2/23 HMRC: “People who use these schemes are paid in loans, rather than a salary in the normal way, to avoid paying tax and NIC.”
FACT: The tax code allows employees to be paid in different ways – cash or benefits or both. They are all taxed differently according to the rules.

@HMRCgovuk 3/23 FACT (Cont) So if you are paid wholly by loan, you pay tax under the rules for loans.
And in the loan schemes I have recently seen, the workers did just that – they paid tax and National Insurance on the loans.

@HMRCgovuk 4/23 HMRC: “Unlike normal loans, they aren’t repaid....”
FACT: Ask any bank manager – not all loans are repaid. That is normal. Of course, when a loan is made there should be the mutual expectation of repayment.

@HMRCgovuk 5/23 HMRC: “… and no tax is deducted.”
FACT: Of course no tax is deducted. There is no provision in the 20,000-odd pages of UK legislation that requires tax to be deducted from a loan.
But tax (and NI) is paid each year on the benefit of the loan … under the tax laws in place.

@HMRCgovuk 6/23 HMRC: “This is clearly income and tax should be paid.”
FACT: Just saying “clearly” does not make it true. If it is a loan, it should be taxed as a loan. And was.

@HMRCgovuk 7/23 HMRC: “HMRC does not approve these schemes ….”
FACT: HMRC does not have to approve arrangements. They do not even have to like them.
If they don’t like them then they should have challenged them or changed the law to stop them gaining momentum.

@HMRCgovuk 8/23 HMRC: “… and has always said they don’t work.”
FACT: HMRC said nothing of the sort until 2016 (at least not publicly).
But assuming that was indeed HMRC’s position – then why did they NOT challenge them?

@HMRCgovuk 9/23 HMRC: “50,000 users are estimated to be affected by the loan charge”
FACT – Some say more are affected. But if it is only 50,000 (rather than 100,000) then presumably it would cost less to cancel the loan charge or to remove its retrospective effect.

@HMRCgovuk 10/23
FACT cont – But does it really matter how many are affected? If the loan charge is immoral then it should be removed whether it affects 1 person or 1 million.

@HMRCgovuk 11/23 HMRC: “Users’ income on average was twice as much as the average UK taxpayer”
FACT: This is HMRC trying to play the politics of envy.

@HMRCgovuk 12/23
FACT cont
Plus relying on averages is notoriously misleading. It allows HMRC to merge the corporate directors who knew what they were doing with the contractors, many of whom were duped into using the schemes.

@HMRCgovuk 13/23 HMRC: “70% have used a scheme for two years or more”.
FACT: A bit of an own-goal here. Given that HMRC failed to challenge the arrangements, that told contractors that HMRC had no issues with them.

@HMRCgovuk 14/23 HMRC: “65% work in business services: IT consultants, financial advisers, and management consultants. Around 3% work in medical services (doctors and nurses), teaching, social and community services sector.”
FACT: See next tweet

@HMRCgovuk 15/23 HMRC know that everyone thinks those who work in medical services and teaching etc deserve sympathy.
HMRC are relying on people thinking that those who work in business services do not deserve sympathy.
HMRC are meant to treat all taxpayers equally.

@HMRCgovuk 16/23 FACT (Cont)
Even on HMRC’s numbers that's 1500 members of the caring sector being unfairly treated by the loan charge.
And most of those would have been employed in the public sector (as would many of the 65% as well).
Aren’t those payers also complicit in the avoidance?

@HMRCgovuk 17/23 HMRC: “Fewer than 1% of users have an outstanding loan before 2003.”
FACT: DOTAS was introduced in 2004. Presumably that means that nearly 99% of the loans were subject to early notification to HMRC. So what happened??????

@HMRCgovuk 18/23 HMRC: “Around half of outstanding loans were made in the last 7 years”
FACT: We know HMRC got their act together in about 2016. Even then, at that late stage, they would have been in time to assess half of all loans under their normal powers. If their figures are right.

@HMRCgovuk 19/23 HMRC: “The average user avoided £20,000 per year.”
FACT: First: cut out the use of averages.
The average contractor did not save 20k per year. Any so-called tax saving was used up in fees. And HMRC are ignoring the tax (and NI) that was actually paid on the loan benefits.

@HMRCgovuk 20/23 HMRC: “Tax avoidance takes money away from schools, hospitals and social care.”
FACT: Actually, tax evasion takes far more money away from schools, hospitals and social care.
Plus a lot of money is lost from these sectors by HMRC incompetence. This is a case in point.

@HMRCgovuk 21/23 HMRC: “The loan charge rightly tackles avoidance….”
FACT: No it does not. It targets one of many sections of society that has paid less tax than HMRC would like and singled them out for special treatment.

@HMRCgovuk 22/23
FACT cont. If HMRC had really wanted to stop these loan schemes, they should have made clear their position in 2003 or 2004 or even 2010.

@HMRCgovuk 23/23 HMRC: “and ensures people pay what they owe”
FACT No it does not. It simply imposes a new liability because HMRC missed the boat last time and because, under the law, the workers no longer owed the amounts HMRC would like them to have paid.