If HMRC Had Joint & Several Liability Sooner: Would the Loan Charge Still Have Happened?

The UK’s Loan Charge is often described as an exceptional measure — but for tens of thousands of contractors, it has been exceptional in a far more personal sense. Years after its introduction, its effects are still being felt: severe financial distress, long-running uncertainty, damaged careers, and in some cases consequences far beyond tax.

Looking ahead, Joint and Several Liability (JSL) rules are due to expand from April 2026, extending potential PAYE liability beyond promoters and employers to agencies and end clients in defined circumstances.

That contrast raises an uncomfortable but important counterfactual question — not to relitigate the past, but to understand policy choices:

If HMRC had access to broader JSL-style powers earlier, would the Loan Charge — with all the harm it caused — still have been imposed in the same way?

This article does not argue that the two are legally connected. They are not. Instead, it asks whether the absence of alternative enforcement tools helped make a damaging policy feel unavoidable.

The problem HMRC was trying to solve — and who paid the price

By the mid-2010s, HM Revenue & Customs faced a large and genuine enforcement problem with disguised remuneration schemes:

• Thousands of open enquiries stretching back many years

• Employers that had dissolved or moved offshore

• Promoters that were insolvent, untouchable, or long gone

• Litigation moving slowly, often without resolution

But the way this problem was ultimately addressed matters just as much as the problem itself.

The Loan Charge did not simply accelerate enforcement. It reallocated the burden of systemic failure onto individual contractors, many of whom:

• Used schemes that were widely marketed as compliant

• Declared arrangements openly

• Had no realistic ability to influence promoter or employer behaviour

By collapsing years of disputed arrangements into a single tax year and imposing immediate personal liability, the Loan Charge prioritised finality over fairness, and certainty for the state over proportionality for the taxpayer.

That design choice is at the heart of why the policy remains so controversial.

What JSL is designed to do — and what is set to change in 2026

Joint and Several Liability takes a fundamentally different approach. Rather than creating a new charge borne almost entirely by individuals, it spreads responsibility across those who designed, enabled, or economically benefited from an arrangement.

The JSL framework due to come into effect from April 2026 is significantly broader than earlier versions. In defined PAYE failure scenarios, HMRC will be able to pursue:

• Agencies within labour supply chains

• End clients who sit at the top of those chains

• Connected or controlling parties who facilitated or benefitted from non-compliance

This is a notable shift. It reflects a policy recognition that workers are often the least powerful actors in complex labour and tax structures, and that risk should not automatically rest with them simply because they are easiest to assess.

The counterfactual: could earlier JSL have reduced the need for the Loan Charge?

If comparable JSL powers — including agency and end-client exposure for unpaid PAYE — had existed earlier, the enforcement landscape might have evolved very differently.

1. The burden may not have fallen so heavily on contractors

Earlier access to wider liability could have:

• Reduced HMRC’s reliance on individuals as the primary recovery target

• Shifted pressure towards solvent, sophisticated entities higher up the chain

• Made mass retrospective recovery from workers less attractive as a policy option

That alone could have materially reduced the scale — and severity — of the Loan Charge population.

2. Scheme economics may have collapsed sooner

If agencies and clients faced real downside risk:

• Fewer schemes may have been viable

• Fewer contractors may have been channelled into them

• The long tail of unresolved cases may never have accumulated

In that scenario, the justification for a sweeping, retrospective charge would have been weaker — not because avoidance was acceptable, but because the system would have intervened earlier and more proportionately.

Why the Loan Charge might still have happened — but why that matters

Even with broader JSL powers, it is possible that some form of decisive intervention would still have occurred.

But that does not mean the same intervention, applied in the same way, was inevitable.

JSL would not have required retrospection

The most damaging aspect of the Loan Charge was not enforcement itself, but retrospective crystallisation of liability, often many years after the fact, with little regard to personal circumstances.

JSL does not require that approach.

JSL would not have concentrated harm

By design, JSL disperses risk. The Loan Charge concentrated it — overwhelmingly on individuals least able to absorb it.

That distinction goes to the heart of the fairness debate.

What this comparison really exposes

The comparison between the Loan Charge and forthcoming JSL rules highlights a deeper issue:

• The Loan Charge reflects a moment where administrative convenience overtook proportionality

• The expansion of JSL suggests a later recognition that earlier, broader accountability might prevent such outcomes in future

Seen this way, JSL is not a validation of the Loan Charge. It is, arguably, an implicit admission that placing the full weight of enforcement on contractors was neither sustainable nor just.

A critical, but constructive conclusion

So — if HMRC had JSL sooner, would the Loan Charge still have happened?

Possibly. But it is difficult to argue that it would have happened at the same scale, with the same human cost, or with the same concentration of harm.

Earlier access to wider liability — including agencies and end clients — could have:

• Reduced reliance on retrospective mass charges

• Prevented years of unresolved drift

• Avoided treating individual contractors as the system’s shock absorbers

The enduring lesson is not simply about tools, but about who bears the consequences when enforcement architecture fails.

And if the forthcoming JSL rules succeed in preventing a repeat of that experience, they will stand less as a continuation of the Loan Charge story — and more as a response to its shortcomings.