Thousands face huge bills after years of loan scheme: be thankful I don’t take it all cos I’m the taxman

BY JAMES TWOMEY
james@slpmedia.co.uk

A business woman has said she constantly has suicidal thoughts after the tax man slapped her with a half a million pound bill.

Nora Ann Magee, 65, from East Dulwich, is one of a confirmed 2,470 South London people who thought their reduced tax bills were legitimate under a scheme called the “Loan Charge”, where an employee’s salary is paid in loans.

But Her Majesty’s Revenue and Customs (HMRC) says the tax deductions were an incorrect reading of the law – its website says: “It’s highly unusual to receive your salary in loans and is clearly a method used to avoid paying tax.”

Nora runs a domestic cleaning agency and says she might now have to pay back £500,000.

She and thousands like her could be forced to pay hundreds of thousands of pounds in just one tax year.

Many others have said they feel like taking their own lives after two suicides elsewhere in the country earlier this year directly related to the Loan Charge – at least 50,000 people in the UK are thought to be affected.

Nora says she has suicidal thoughts every day and it is seriously affecting her physical and mental health.

She said: “It’s the most horrendous thing that’s happened in my life. It’s horrendous for everybody who’s been affected.

“I run a very stressful business and I’ve not had a single holiday in 22 years and thought I’d be reaching a stage where I could let it all go and retire.

But at this rate I could be working until I’m 90.

“Sometimes I have nightmares and wake up to find the reality is 10 times worse. “I don’t have a partner and I sacrificed a lot in my life for the company.

“My business was shrinking at the time and if someone asks you would you like to reduce your tax bill legally, you would probably say yes, wouldn’t you?

I just assumed if HMRC had a problem with it, they would say so. “It could be that I decide to end my life. I really wanted a reasonable retirement and slogged my guts for it and if that’s taken away I might commit suicide. The idea of being on a treadmill for the rest of my life makes me not want to live.

“The constant suicidal thoughts are really painful, I’ve been given a prescription for people who have been tortured but it doesn’t stop the suicidal thoughts.”

The Loan Charge targets contractors and business owners who used loan schemes dating back to 1999 as a means of avoiding paying full rates of tax. At the time, the loans were technically legal having been recommended to many by accountants and lawyers.

HMRC is requesting payments of 45 percent on any loan scheme, which for many has to be paid back in the tax year of 2019-2020.

An All Party Parliamentary Group(APPG) has been set up to challenge the decision and promote an inquiry, with the topic drawing a large amount of MPs to a Backbench Business Debate.

Sir Ed Davey, chairman of the Loan Charge APPG said: “There is a clear majority in the House of Commons for suspending the unfair Loan Charge and holding an independent review, yet the Government is refusing to listen and is pressing on despite the risk.

“Many people are facing life-destroying bills when HMRC did nothing at the time and this inevitably will lead to bankruptcies and loss of homes. We need a delay and review and will keep pressing until this happens.”

The HMRC website says: “Normally, when you’re given a loan, you have to pay it back, often with interest added. “But these loans are paid to people in such away that it’s unlikely they’ll ever have to be repaid.

The person receiving money from a loan scheme gets to keep it all. And, they don’t pay any tax on this money, even though it’s clearly income.”

A HMRC spokesman said: “The loan charge means that people who paid themselves through loans, often from offshore trusts, will have to contribute their fair share to pay for our public services.

“As set out in our recent report, HMRC is committed to providing affordable payment arrangements and the enhanced support more vulnerable customers may need.

“If we didn’t collect this money, it will mean less funding for vital public services and taxpayers who play by the rules having to pay more to make up the shortfall left by those avoiding tax.

“HMRC continues to improve its support to vulnerable customers and will extend its Needs Enhanced Support Service to customers undergoing compliance checks.”