HMRC’s Secret Deals: A Scandalous Betrayal of Taxpayers and Justice

 

The recent revelation that HM Revenue and Customs (HMRC) quietly offered large corporations an 85% discount on tax liabilities tied to the notorious loan charge scandal, while ruthlessly pursuing individual contractors with life-ruining bills, is nothing short of a grotesque abuse of power. Documents uncovered through a Freedom of Information request, brought to light by Conservative MP Greg Smith during Treasury Questions, expose a deeply unequal and morally bankrupt approach by HMRC. This is not just bureaucratic incompetence—it’s a deliberate, systemic injustice that demands accountability and reform.

The Loan Charge Scandal: A Brief Recap

The loan charge, introduced in 2017, is a controversial tax policy targeting disguised remuneration schemes—arrangements where workers, often contractors, were paid via non-taxable loans instead of salaries. These schemes, dating back to the 1990s, were often marketed as HMRC-compliant by trusted tax advisers, luring approximately 50,000 self-employed workers into financial arrangements they believed were legitimate. HMRC, however, retroactively deemed these schemes tax avoidance, pursuing contractors for back taxes, interest, and penalties, often resulting in bills that dwarfed their earnings. Tragically, the policy has been linked to at least 10 suicides, with countless others driven to bankruptcy, depression, and despair.

The Smoking Gun: Secret Deals for the Powerful

The bombshell dropped via the FOI request reveals that in 2015, a year before the loan charge was introduced, HMRC struck clandestine settlement deals with multi-million-pound companies involved in these same payroll loan schemes. These corporations—often major players in banking and financial services—were allowed to settle their tax liabilities for a mere 15% of what was owed, effectively receiving an 85% discount. Meanwhile, individual contractors, many of whom were coerced or misled into these schemes, were offered no such leniency. Instead, they faced crushing demands for 100% of the alleged tax owed, plus interest and penalties, with some bills exceeding their total earnings from the period in question.

Ray McCann, a former HMRC assistant director and leader of the ongoing loan charge review, admitted in 2019 minutes with Lord Amyas Morse that these “generous” corporate settlements included “significant discounts” not extended to contractors. McCann himself called this disparity discriminatory, noting that “contractors weren’t offered these terms” and that “settlement opportunities have always had a discount, and contractor one is the only one that didn’t.” This admission is damning—a clear acknowledgment that HMRC knowingly treated small-scale contractors far more harshly than corporate giants.

A Tale of Two Taxpayers

The hypocrisy is staggering. Large companies, with armies of lawyers and accountants, were quietly let off the hook with sweetheart deals, while ordinary workers—IT consultants, nurses, teachers, and others—were hounded relentlessly. For example, one contractor earning £13,000 annually was slapped with a £250,000 tax bill, a sum so disproportionate it defies reason. Meanwhile, corporations that facilitated these schemes, reaping millions in profits, paid a fraction of their liability and walked away unscathed.

This double standard isn’t just unfair—it’s predatory. HMRC’s own rhetoric claims the loan charge is about “fairness for all taxpayers,” yet their actions tell a different story: one where the powerful are coddled, and the vulnerable are crushed. The Loan Charge Action Group’s Steve Packham put it bluntly: “Ten people have killed themselves as a direct result of HMRC’s ruthless persecution of people who the Chancellor herself has described as ‘victims of mis-selling’.” Yet, HMRC allowed corporate enablers to escape with a slap on the wrist.

HMRC’s Complicity and Inaction

HMRC’s defence—that it never approved these schemes and that settlements are based on “individual facts”—rings hollow. Many contractors entered these schemes in good faith, relying on assurances from tax advisers and promoters that they were compliant. HMRC failed to act on red flags, such as DOTAS (Disclosure of Tax Avoidance Schemes) registrations, allowing these arrangements to proliferate for years. When it finally moved, it targeted the easiest prey—individual contractors—while largely ignoring the promoters and employers who designed and profited from the schemes.

The 2019 Morse Review, which led to some reforms, including limiting the loan charge’s scope to post-2010 loans, was supposed to address these injustices. Yet, HMRC’s continued pursuit of pre-2010 cases through alternative mechanisms like s684 notices shows a refusal to let go, even when the law’s clarity at the time was questionable. This relentless hounding, coupled with the revelation of secret corporate deals, undermines any claim that HMRC operates with integrity or fairness.

A Call for Accountability

MPs and campaigners, including Sarah Olney of the Liberal Democrats and the Loan Charge and Taxpayer Fairness APPG, are rightly demanding answers. They’ve called for contractors to be offered the same 15% settlement terms as corporations and for a full, independent inquiry into HMRC’s conduct. The parallels with the Post Office Horizon scandal are undeniable: a government agency pursuing ordinary people with devastating consequences, while those truly responsible—promoters and corporate enablers—evade accountability.

HMRC’s actions are not just a failure of policy but a betrayal of public trust. The agency’s secrecy, its discriminatory treatment of taxpayers, and its refusal to pursue scheme promoters with the same zeal it applies to contractors reveal a rotten core. The government must act swiftly: offer contractors the same settlement terms as corporations, pause all loan charge enforcement pending the current review, and launch a root-and-branch investigation into HMRC’s practices. Anything less is complicity in a scandal that has already claimed lives and livelihoods.

Conclusion

The loan charge scandal is a stark reminder of what happens when power is wielded without accountability. HMRC’s secret deals with large companies, while punishing contractors with crippling bills, expose a tax system rigged to favor the powerful. The human cost—10 suicides, countless bankruptcies, and untold suffering—demands justice. It’s time for the government to stop hiding behind HMRC’s excuses and deliver fairness to the victims of this egregious miscarriage of justice. The call for an independent inquiry is not just warranted—it’s urgent.

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Tax does have to be taxing.


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