The Association of Independent Professional and the Self-Employed (IPSE) has raised concerns about the loan charge in a letter to the Chancellor.

The organisation that represents independent professionals has urged the government to consider the effects of the retrospective loan charge that has put a lot of pressure on the contracting professionals. The agency has urged the Government to instead focus on those who have created and profited from the Employee Benefit Trusts (EBTs).

A lot of members had contacted IPSE regarding the loan charge. They had made use of EBTs and other similar loan schemes some years back and were facing financial problems due to the request to pay taxes on their income. The charges are significant in some cases amounting to thousands of dollars. That’s why the IPSE had written to the Chancellor Rt Hon Philip Hammond MP to reconsider the approach regarding the issue.

While the IPSE had always discouraged its members to avail schemes that appear too good to be true, the agency has been forced to act on behalf of the members as they and their families faced grave financial difficulties.

Many of the contractors had entered into the loan scheme years ago. They were wrongly guided by the scheme providers into signing up for the schemes. For these individuals, IPSE believes that consideration should be given to ease their problems.

Legislative Changes Required to Bring More Clarity about Tax Laws

The fact is that there is a clear link between shady tax avoidance schemes such as EBTs and IR35 that was introduced in 2000. The IR35 was viewed by contractors as a threat to the flexibility offered by independent work. As a result, many resulted to schemes such as EBTs that at the time were not illegal but considered to lie in the legal grey area.  Now the government is demanding that the workers who were involved in the arrangement to pay back the taxes due.

The EBTs were was touted as providing a safe harbour from a complex set of taxation rules. A lot of them were duped into signing the scheme by scrupulous through which they provided their services. They were led to believe that there was no other way and were assured that the schemes were legal.

The IPSE believes that the Government has a duty to ease the financial burden of workers. The Government should take a long-term view and create clear and equitable tax rules. Instead of viewing workers as criminals or swindlers, they should be looked on as a productive segment of the economy. The Government has also been urged to make changes to the rules to ensure that such mistakes don’t happen again that has resulted in grave problems for the workers.