However the government department has been referred to the Financial Conduct Authority (FCA) about whether its “advice” broke the regulator’s rules.
Around 50,000 self-employed people are subject to the 2019 Loan Charge which aims to claw back unpaid taxes by those who, HMRC says, used disguised remuneration schemes since 1999. Some tax-payers have received bills for six-figure sums.
According to the FT, HMRC wrote to about 50,000 individuals encouraging them to consider selling assets and taking out loans in order to pay tax bills.
The letter stated: “It is expected that you use every means to meet your obligations and pay the tax and interest liabilities that are due. This may include raising a loan or selling other assets.”
In January, HMRC director of counter-avoidance Mary Aiston told the Treasury select committee: “For some people, (HMRC) may say you need to take a loan out if you have got equity in your property, if that’s the right answer and people can manage the repayments.”
But mortgage lenders could be reluctant to allow borrowers to remortgage for the purpose of paying off a loan.
The FT reported that, following Aiston’s statement, one anonymous individual facing a £100,000 bill asked his mortgage provider if he could remortgage. He was told that they could not do that, a decision he found “devastating”, and he added that his request had given his lender the impression he was in financial difficulty.
Breach of FCA rules?
The All-Party Parliamentary Group on the loan charge has written to the FCA and chancellor Philip Hammond to query whether the advice given by HMRC breached FCA regulations.
The chair of the group, Sir Ed Davey, said: “The FCA has stated that ‘debt advice and the provision of personal loans or lending is a regulated activity’ so we have written to [them] asking if HMRC’s advice is in breach of their rules, as HMRC are not on the FCA list of approved organisations to offer debt advice.”
The FCA told Mortgage Solutions that it did not wish to comment on HMRC. However, a spokesperson added: “We have received the letter and will respond.”