Shock Over HMRC's 15% Settlement With Companies
Settlement Terms Spark Outrage
Recent disclosures reveal that HMRC, in 2015, agreed to let several multinational corporations resolve payroll loan scheme liabilities for only 15% of the sums owed. This arrangement predates the Loan Charge—legislation targeting individual contractors with retrospective tax bills—by a year. The existence of this "sweetheart" deal, uncovered through a Freedom of Information request by Greg Smith MP, has prompted demands for consistency and fairness in HMRC's approach.Details of the Agreement
- HMRC’s 2015 settlements offered major companies an 85% discount on amounts sought for using contractor payroll loan schemes.
- The arrangement surfaced publicly after being referenced in parliament during Treasury Questions.
- At the time, Lyn Homer led HMRC and awareness of the 15% figure extended to senior tax advisers and professional institute members.
- Individuals were not offered similar discounts despite ministers labeling them as "victims of mis-selling".
- APPG MPs have tabled an Early Day Motion demanding the same terms for individuals as those previously offered to large corporates.
- Ray McCann's comments in meeting records highlight that contractors uniquely did not receive any discounts, unlike companies or other parties involved in similar disputes.
- Greg Smith MP: “It’s absolutely staggering to discover… HMRC agreed a deal allowing large companies to settle for just 15% of what HMRC said they owed, for use of similar arrangements.”
- Sarah Olney MP: “It is unacceptable that victims have been consistently refused the justice they deserve while large companies received settlements a decade ago... This information shows the need for a proper, independent inquiry.”
- Steve Packham (Loan Charge Action Group): “Ten people have killed themselves as a direct result of HMRC’s ruthless persecution... The contrast is stark.”
- Monitor announcements related to the McCann review and autumn Budget.
- Consider seeking support from advocacy groups.
- Stay informed about developments in parliament regarding the Loan Charge and settlement terms.
Minutes from the 2019 Morse Review, now publicly released, confirm industry-wide awareness. Ray McCann, former Chartered Institute of Taxation president and current reviewer of settlement terms, described the magnitude of the discounts and compared them with settlements offered to individuals.
Calls for Fairness and Review
The Loan Charge and Taxpayer Fairness All Party Parliamentary Group (APPG) has expressed concern that individuals now face much less favourable terms. Key points include:Appraisal and Criticism
The FOI disclosure also included remarks about former HMRC boss Sir Jon Thompson. McCann questioned the truthfulness of public statements suggesting consistent HMRC victories and asserted that contractors’ arrangements represent discriminatory treatment.With roughly 50,000 people still affected by unresolved demands, stakeholders argue that imposing harsher terms on individuals than on corporations raises serious equity concerns. Ten suicides have reportedly been linked to the pressure resulting from HMRC's pursuit of individuals under the Loan Charge.
Quotes & Responses
HMRC Comment:
An HMRC spokesperson responded, "We don’t recognise these claims. We’re absolutely committed to ensuring every taxpayer, regardless of size, pays the tax that’s legally due. Given an independent review is underway it would be inappropriate for us to comment further."
What Happens Next?
The McCann review into individual Loan Charge settlements is expected to report later this year, with any government action likely at the autumn Budget. The APPG and affected individuals seek an independent investigation into HMRC's practices and insist future settlements should not exceed the 15% precedent set for large companies.For those affected:
Table: Key Dates and Events
| Date | Event |
|---|---|
| 2015 | HMRC settles with companies at 15% of claimed liabilities |
| 2016 | Loan Charge legislation introduced |
| 2019 | Morse Review and McCann's comments recorded |
| 2025 (July) | FOI disclosure makes 15% deal public through parliament |
| Autumn 2025* | Expected government response after McCann review (*date TBC) |
