In December 2019, Sir Amyas Morse published his independent review of the loan charge and made a series of recommendations about its design and its impact on those within its scope. The Government acknowledged the concerns raised and vowed to address them with all except one of the recommendations being accepted.
The December 2020 inquiry reviewed HMRC’s progress in implementing the Morse recommendations. On 22 January 2021 the chair of the House of Lords Economic Affairs Finance Bill sub-committee sent a long letter to the Finance Secretary setting out their concerns along with some further recommendations of their own.
There were two clear and resounding messages. First, there had not been enough progress by HMRC in implementing the recommendations and, second, anecdotal evidence showed taxpayers’ experience is that HMRC is not following the spirit of either their Charter or the Morse review.
The latter point is clearly demonstrated in HMRC’s processes for repaying those who reached settlement with HMRC in good faith to avoid incurring the loan charge under the original legislation and are now due, in some cases substantial, repayments following the Morse recommendations.
It would seem, in principle, to be a simple enough exercise for HMRC to review historic settlements, apply the Morse criteria and make repayment. However, HMRC has chosen to make the repayment process overly complex, involving several steps to even obtain an application form let alone process the resultant claim. Presumably it is hoped some people will give up at the first hurdle.
The inquiry also noted that HMRC has adopted a narrow definition of what constitutes ‘reasonable disclosure’ which again appears to be aimed at reducing the number of repayment claims, and the inquiry has called upon the Government to review the definition.
These practices are clearly not in keeping with the spirit of the Morse recommendations, so it is encouraging to see that monitoring is in place to ensure that HMRC is being held to account.