The government is being sued for trying to collect billions of matching taxes accusing it of tax evasion. The activists then applied for judicial review of the controversial new loan application on the ground that it violated human rights.
Thousands of British contractors, including doctors, dentists and IT staff, are at risk of bankruptcy after HMRC introduced new retroactive rules on tax regimes that freelancers used in the past.
In the 2017 budget, Chancellor Philip Hammond introduced a tax on loans to collect unpaid taxes from people using “disguised remuneration systems”, also known as “umbrellas of employment”.
This system allows freelancers to be paid by means of “loans”, which was considered a legitimate way to reduce income tax.
However, with the loan fees due in April next year, thousands of people are facing “revolutionary” tax legislation.
HMRC said its projects should reach up to 50,000 people and that loan costs should increase to 3.2 billion pounds.
The LCAG, which directs the judicial process, represents more than 1,600 people involved.
The group told the Independent that many of its members “are facing bills that change the lives of their lives, the loss of their homes and bankruptcy”. A survey of 500 members found that 68 percent of those surveyed had depression and anxiety, while 39 percent had suicidal thoughts.
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The tax office acknowledged that some people would be unable to repay their loans, reach an agreement with HMRC or pay the borrowing fees due on April 5, 2019 “.
According to the LCAG, neither the Ministry of Finance nor HMRC has made an adequate assessment of the impact of the credit charge.
LCAG commissioned Robert Venables QC, a tax specialist.
Mr. Venables said: “The cost of credit implies an unjustified interference with property and this interference is unjustified because it is disproportionate to any legitimate objective pursued.
“Borrowing costs are collected in cases where there is no tax evasion and where taxpayers are taxed on non-existent benefits and non-existent income – this is in all respects retroactive legislation – it’s totally unfair, arbitrary, depressing and unfair. ”
He added that he thought the LCAG had “good chances of success” in challenging the cost of credit under the Human Rights Act.
Richard Horsley, spokesman for LCAG, said, “We strongly believe that credit applications are not only badly thought out, but also in contradiction with the principles of natural justice.” Law-abiding and hard-working people will benefit. from this retroactive and draconian tax break all lose. ”
Horsley said the LCAG has treated “many self-employed and former independent workers who have never violated the law and have never tried to conceal their tax regulations.”
“It is not surprising that the Treasury Department has refused to reveal the impact of human rights and it is time to question this extremely unfair policy which, if it succeeds, will ruin and even cost lives” .