The Reader: HMRC has failed freelancers over the tax timebomb

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Freelancers mis-sold on loan schemes are confronted with significant repayments after HMRC ordered a tax-levy on the loans in 2016
PA
15 June 2018
WEST END FINAL

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I read Russell Lynch’s piece [“Suicide watch: ‘the preventable tax timebomb’ looming for freelancers”, June 13] with interest. I was mis-sold a loan scheme — whereby salaries were paid into trust and therefore became tax-free — over a five-year period to 2017 and got a letter of enquiry from HMRC only six months after leaving its books. I am facing a tax bill of up to £40,000 after HMRC decided, in 2016, to levy a tax on the loans.

My savings do not even make half this amount and I may lose my home. Surely with around 100,000 freelance contractors affected this will have an impact on votes in the next election?

Jack

Russell Lynch’s article is an eye-opener for anyone who has done contract work over the past 20 years. HMRC’s communication is appalling. Were it not for the Loan Charge Action Group, I would have still been in the dark about potential demand deadlines and the 2019 Loan Charge itself. Thousands are still in the dark: agency nurses, locum doctors, supply teachers, contract cleaners, engineers, IT consultants, interim managers, the list goes on.

The letter advising that I might be liable to further taxes (with no clarification as to what these were or how much), and to register with HMRC arrived last week and was dated June 4. The deadline originally set by HMRC was May 31. Apparently this has been extended, but again, without any form of communication.

For a taxpayer-funded public entity this hardly gives me confidence that it knows what it is doing.

Sabina Mangosi

EDITOR'S REPLY

Dear Jack

The tales we heard while researching this article were heart-rending. Self-employed people as diverse as health workers, IT contractors and locum doctors innocently took advantage of what was sold as an easy way of saving on paperwork and income tax.

At the time they were unaware that loan schemes were controversial, let alone illegal. Many were coerced into using them by the big companies for whom they were working because it cut the National Insurance bill. Yet now they receive demands from HMRC to repay the tax they saved, immediately and in full. Many cases, like yours, involve impossible sums.

HMRC is right to clamp down on tax avoidance and go after it retrospectively when the courts rule against particularly aggressive cases. But people like you clearly are not aggressive abusers. We need a compromise where contractors repay some of the money and the companies they worked for pay the rest. It would be nice to think the accountants who invented the schemes get clobbered too, but I suspect most are long gone, and the fees they charged.

Jim Armitage​, City Editor

The secrets and pain of adoption

It is a pity so many people in the past did not share Sam Leith’s views on adoption [“Mothers who were forced to give up their babies for adoption are long overdue an apology,” June 11].

I was born in 1948 in a mother-and-baby home run by the Catholic Crusade of Rescue. My Irish mum left Ireland because of my real father, as well as the lack of contraception and the hypocrisy at the time.

All the people involved in my birth and adoption were Irish Catholics (my real parents and adoptive mother), except my adoptive father, who was English. My adoptive parents were sworn to secrecy by the Crusade so that I knew little about my birth mum until after she died. My adoptive parents kept the adoption papers hidden from me until they both died.

Without these papers there was no chance of finding the mother I never knew, although this has been legally possible since 1975. I made enquiries to trace my mother but I was too late.

I was brought up Catholic and knew I was adopted but was told little else. I did not ask my parents about it. Maybe I should have.

Phil Lewis

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