Three cases of suicide have been reported to the Independent Office for Police Conduct (IOPC) by HM Revenue & Customs, the UK financial secretary to the Treasury, Jesse Norman, has revealed.
They appear to be related to loan charges, which have left many people facing sky-high tax bills.
It was introduced in the Finance Act 2016 and is an anti-avoidance measure to tackle disguised remuneration schemes.
HMRC can require individuals to pay charges for avoiding tax as far back as 20 years.
When addressing the House of Commons on 1 October 2019, Norman said: “We have been notified of three suicides that may have some connection with the loan charge, and which have been referred to the [IOPC].
“In one case there has been a referral back to HMRC, but in all other cases there has been no further development.”
Following his speech, it was reported in the media that a fourth referral has been passed to the police conduct watchdog.
Admitting responsibility
Paul Spenceley, tax manager at Irwin Mitchell, told International Adviser: “While the initial reaction may be that these people have had the money and surely the arrangement seemed too good to be true, it was based on the original legislation and many professional advisers would have confirmed that it worked.
“The plan would have involved receiving loans that would have been written off on death without an income tax charge. HMRC’s loan charge is felt by many to be retrospective.
“It has been widely reported that HMRC’s loan charge legislation has led to a number of suicides, and this is probably the first time we’ve actually seen HMRC admit to it.
“It is no surprise as the loan charge benefit would result in people having up to 20 years’ worth of income charged to tax in one year, pushing many of them into the 45% bracket.
“HMRC tried to reduce the impact of this by agreeing longer terms to pay than their usual terms, but for those who had substantial demands it is easy to see that these would still cause significant stress.
“Many feared that they would lose their home (something that HMRC have stated they would not do) but also many have enjoyed the money and are now faced with explaining to spouses and families how much debt they are in and probably can’t see an end to the situation,” he added.
Promoters v taxpayers
In March 2019, HMRC reported that promoters of such schemes were likely to come from “offshore locations, such as Cyprus, Malta and the Isle of Man”.
Many people have received an accelerated payment notice from HMRC requiring them to pay their due tax within 90 days, against which they cannot appeal.
There is, however, the issue of people being advised to use a disguised remuneration scheme, who now face major tax bills for evading tax.
This has led a rise in suicides, now totalling seven, according to Carol Monaghan, shadow Scottish National Party (SNP) spokesperson for armed forces, veterans and education, who has criticised Norman for not going after the promoters of these schemes.
“Although these effects have been much bruited, there is also the question of collecting the several billion pounds of back tax that is due,” Norman added.
Possible reversal?
Irwin Mitchell’s Spenceley added: “At present the loan charge benefit is under an independent review and a number of MP’s have called for it to be cancelled.”
Scottish auditor Amyas Morse is leading the review, which is scheduled to be published in mid-November 2019.
“It is difficult to see what may happen because many have already settled with HMRC and there is no word yet on whether they will be refunded,” Spenceley said.
