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Four years ago, Michael Squires received a letter that turned his life upside down.

A brown envelope containing a tax demand for £24,000 landed on his doormat.

It came out of nowhere and gave Mr Squires sleepless nights as he worried about where he would find the money.

“It’s a horrible anxious feeling, I knew that I had taken due diligence and I knew that I had done what I thought was right,” he said.

“So, you feel the system is against you, you feel like you can’t fight back. In a way, you know that you’ve been conned, and you feel stupid… and I felt that for quite some time.”

Mr Squires, a healthcare worker from Leicestershire, is not alone.

‘Unjust campaign is targeting wrong people’

Tens of thousands of people across the country are facing crippling tax demands from HMRC in a harsh campaign that has been linked to 10 suicides.

HMRC has been ruthlessly pursuing people with the “loan charge” which came into force in 2017 through a piece of legislation that targeted those who were paid their salaries through loan schemes. It made individuals liable for tax that their employers should have paid.

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Tax lawyers described it as an unjust campaign that is targeting the wrong people and undermining the rule of law by overriding statutory taxpayer rights.

HMRC has been targeting workers who had their salaries paid into umbrella companies, which would pay individuals a loan that was typically not paid back. Many of those who signed up, including nurses, supply teachers and council workers, had little or no choice but to take on work through these schemes.

They were directed to the schemes by their work agencies, reassured that their tax and national insurance was being taken care of and that the schemes were HMRC compliant.

In many cases, they were mis-sold.

Tens of thousands in fear of bankruptcy

For years HMRC failed to act against these schemes, which resulted in widespread underpayment of income tax and national insurance. The courts have since ruled that the employers or agencies should have been paying tax to the exchequer. However, the loan charge legislation allowed HMRC to pursue individuals in lieu of the agencies or employers.

Five years ago HMRC started sending letters to individuals, explaining that these schemes were “disguised remuneration schemes”, imposing a tax liability on what it now classified as income and applying interest – then urging them to settle.

In some cases, the bills ran into the hundreds of thousands of pounds. Those who could or would not pay were warned that they would be hit with a loan charge, typically a much larger amount because the total sum was taxed in a single year, often applying a 45% tax rate on the income. It meant that in many cases people were paying back far more than they would have done if they weren’t part of the schemes.

HMRC threatened to take people’s possessions and sell them at auction if they didn’t find the money.

In some cases, the agency set up payment plans, but in others, people had little choice but to take out further loans.

Tens of thousands of people are still living in fear of bankruptcy, and they could be forced to hand over cash if and when they sell their homes.

The consequences have been devastating.

Warning of further suicides

Sky News has spoken to families whose lives have been torn apart. One woman told us that her marriage was breaking down, while others described dangerous mental health spirals.

HMRC has admitted that there have been 10 suicides linked to the loan charge.

It has referred cases of suicide to the Independent Office for Police Conduct (IOPC), which oversees certain serious complaints about the conduct of tax inspectors.

Campaigners have repeatedly warned of the risk of further suicides and have demanded that HMRC provide a 24-hour suicide prevention helpline.

Mr Squires said: “We are being pursued by a very big organisation who hasn’t warned us. I received a warning letter four years later that I may have been employed by a company involved in a scheme that wasn’t legitimate.

“So, we’ve had no warning. HMRC is not out of pocket. The umbrella companies aren’t out of pocket.

“The agencies that pushed it aren’t out of pocket. It’s only the end worker and we’re just normal people.”

Michael Squires says he felt like the system was against him
Image:
Michael Squires says he felt like the system was against him

HMRC targeting individuals rather than scheme organisers

While some of those who engaged in loan schemes entered into them with the explicit intent to minimise their tax bills, a large number were simply trying to do the right thing.

In many cases individuals were advised by their work agencies to sign up to the umbrella companies to streamline their tax affairs, helping them to avoid the complicated process of setting up a limited company.

Others turned to the umbrella companies because they were worried about falling foul of new IR35 rules that apply to contractors operating as limited companies.

The NHS, local authorities and other public sector organisations all engaged workers who were part of these schemes.

Back in 2021 HMRC even admitted that it had at least 15 contractors on its own books who were part of “disguised remuneration schemes” between 2016 and 2020.

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Keith Gordon, a tax barrister, said: “When the contractors were paid, the PAYE rules applied and were meant to ensure the tax was deducted from the salary before it was received by the workers.

“That PAYE was not paid. The workers suffered a deduction but that was just simply taken as fees by the promoters of the schemes which were running rather dubious tax avoidance of agents without contractors’ knowledge.”

He suggested that HMRC were targeting individuals instead of the organisers of the schemes because it was an easier way of recouping the money.

Mr Gordon continued: “Number one: The promoters have deeper pockets and might be able to fight back against unfair legislation.

“Number two: That would probably amount to admitting the revenue made a mistake in the first place.

“Number three: Some of these promoters are now insolvent because they’ve had plenty of years to wind up their affairs and become out of the reach of the tax authorities.”

Keith Gordon have said HMRC is targeting individuals because it is an easier way of recouping the money
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Keith Gordon said HMRC is targeting individuals because it is easier

Loan charge has ‘no legal basis’

MPs and tax lawyers are calling for HMRC to rescind the policy – arguing that it amounts to a retrospective charge that overrides taxpayers’ statutory protections by effectively dismissing time limits on HMRC’s right to investigate tax affairs and by blocking individuals’ rights to fight their case in court.

It is also without any legal precedent.

The courts have repeatedly rejected HMRC’s interpretation that income tax can be applied on loans to individuals.

A 2017 Supreme Court ruling put the onus on the employer to deduct income tax before loans were advanced to an individual.

A 2019 parliamentary report concluded that “the loan charge is in defiance of the rulings of the court… no court case has given the legal basis for the loan charge”.

MPs are preparing to debate the loan charge in parliament today, where they will hear that tens of thousands of people were the victims of widespread mis-selling.

They will question why HMRC is not putting more energy into targeting the promoters and companies responsible for these schemes.

These companies made their money by charging individuals a fee to run the loan schemes. It meant that in many cases people had similar deductions to what they would have had if they were under PAYE.

David Davis, Conservative MP for Haltemprice and Howden, said: “The loan charge has been, frankly, a government-sponsored disaster for a very large number of people, ordinary decent people, nurses and other ordinary people who were faced with a work contract that denied them any employment rights, told them they had to accept and that was the basis on which they got the job.”

He added that HMRC should “go back to the promoters, go back to the contractors who insisted on these terms and say, ‘you can pay at least your share, if not the whole bill’, but they’re not doing that. And I’m afraid in my view, they’ve made a massive ethical error in not doing so”.

An HMRC spokesperson said: “The loan charge seeks to recover tax that has been avoided by disguising income as loans. It is our responsibility to collect the tax that people owe.

“We take the wellbeing of all taxpayers very seriously and recognise that dealing with large tax liabilities can lead to pressure on individuals.

“The support we have in place to help people settle their previous tax avoidance includes offering payment by instalments: these arrangements are based on what the taxpayer can afford, and there’s no upper limit over how long we can spread payments.

“Our message to anyone who is worried about paying what they owe is: please contact us as soon as possible to talk about options.

“Above all we want to prevent people getting into these types of situations and our message is clear – if a tax scheme sounds too good to be true, it probably is.”

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Assisted dying law ‘unworkable, unaffordable and naive’ says partnership of UK’s leading social care groups

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Assisted dying law 'unworkable, unaffordable and naive' says partnership of UK's leading social care groups

A partnership of the country’s leading social care and end of life organisations has told Sky News of their deep frustration at being excluded from important discussions around the assisted dying debate – describing the proposed change to the law as “unworkable, unaffordable and naive”.

The Coalition of Frontline Care for People Nearing the End of Life is worried about the impact of introducing assisted dying will have on their three million-strong workforce, which they say is on the frontline for delivering care to terminally ill adults.

The partnership includes The Gold Standards Framework Charity (GSF), National Care Forum (NCF), British Geriatric Society (BGS), Care England (CE) and the Community Hospital Association.

It submitted evidence at the committee stage of the Terminally Ill Adults (End of Life) Bill, but was not called to give evidence

Professor Martin Vernon, consultant geriatrician and spokesperson for ethics and law at the British Geriatric Society, told Sky News: “This is a huge problem for us.

“The majority of people this law will impact on are going to be older people with complex needs, and there has been virtually no engagement in the consultation process around this proposed legislation.”

Professor Martin Vernon, Consultant Geriatrician and spokesperson for British Geriatric Society
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Professor Martin Vernon says the majority affected by the bill will be older with complex needs

Professor Vernon and his coalition colleagues are especially concerned about sick and vulnerable adults being pressured into making choices.

More on Assisted Dying

“We then may see, increasingly, older people with life-limiting diagnoses like dementia, like frailty, feeling the need to opt for assisted dying or indeed feeling coerced either by their circumstances or societally,” he added.

“This may place a heavy burden on some individuals to choose assisted dying when, actually, the creation of better alternatives – supportive care, and palliative care to enable them to have a dignified and comfortable last few years of life should be the way to go.”

Caroline Southgate, founder and managing director of home care company Doris Jones, told Sky News there was simply not enough information about the impact assisted dying would have on her staff.

Caroline Southgate, Managing Director, Doris Hill Limited
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‘The way that the bill is presented doesn’t give us enough information,’ Caroline Southgate says

“I think we are concerned that we don’t have enough clarity about how we would train staff, how we support people if they make that decision,” she said.

“At the moment, the way that the bill is presented doesn’t give us enough information to know how we would deal with those issues.

“If someone chooses this route, all I need to know is what’s my role, where are my boundaries?”

Mrs Southgate is also worried about her staff being accused of coercion. Because of the nature of their work, home carers build up a strong bond with the people they tend to, often seeing them multiple times a day.

And sometimes, they might be the only contact their service users have.

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“I think we’ve got lots and lots of experience of being in homes with people, dealing with families, who trust us to look after the person who needs care and support at home,” she added.

“I need to know that we would be insured and protected should a family decide that one of our staff was accused of coercing someone, or the other way around, talking someone out of a situation.

“We really need a lot more information to make that safe for us and to make sure that our staff are really well supported.”

Katy Betz works for Mrs Southgate. She is a trained nurse originally from Germany but has lived and worked as a carer in England for over twenty years.

Kate loves what she does, but echoes the same concerns expressed by her employer: Assisted dying could change the relationship she has with her service users.

Driving along Southend’s seafront, she explains there is little else she and her care colleagues talk about these days.

Katy Betz, Carer, Doris Hill Limited
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Katy Betz tells Sky News the debate on assisted dying is all she and her colleagues talk about

“It is important”, she says. “Even within my friendship group, everyone has got a different opinion, a strong opinion actually.

Katy says she needs more detail: “More training, safeguarding – what do we do? Where do we go? Who needs to be informed about the client’s decision?

“You are there to make their life, and their end of life, bearable and as good as possible. I can’t explain how I deal with it, but I think you just have to be born to deal with it.”

Katy is on her way to see John and Brenda Barber for one of their daily visits. Brenda is 85 and John is 90.

Paul and Brenda

John took Brenda on their date to a jive dance in Southend.

He was twenty years old and had just returned from army service in Gibraltar. Brenda was just sixteen.

They have been inseparable ever since.

John’s arthritis makes every day tasks almost impossible, and he says if he did not have a carer like Katy, his life would be intolerable.

Paul Barber, Relies on home care
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Paul Barber said his life would be intolerable without Katy Betz

He says: “It’s becoming increasingly difficult with different parts of my body. My wife and I are together and that’s what we want. We would never want to be separated.”

There’s a pause while he reflects on that thought. “That’s despite the bickering,” he says before breaking into a mischievous laugh.

The bond that is shared between Katy, John and Brenda is clear to see. They are worried that this might change irreversibly if the assisted dying law is passed.

Katy looks after Paul and Brenda

The Terminally Ill Adults (End of Life) Bill returns to the House of Commons on Friday, where it will face greater scrutiny.

Earlier this week, two Royal Colleges, Physicians and Psychiatrists, withdrew support for the bill, saying it was “not fit for purpose”.

But campaigners in favour of assisted dying have told Sky News the bill includes more protections and safeguards for all dying people than any other jurisdiction where the choice is legal.

Sarah Wootton, chief executive for Dignity in Dying, said: “MPs voted by a clear majority to progress Kim Leadbeater’s Bill in November because they recognised that the blanket ban on assisted dying is failing dying people and their families.

“Every year, dying people are forced to endure unbearable pain, despite good care, travel overseas to die alone, or take matters into their own hands, often dying violent and lonely deaths without support.

“This Bill – already hailed as the strongest in the world – has been strengthened even further during committee stage, with amendments accepted to involve a range of skilled professionals in every application, specific training requirements around coercion, and that assisted dying can only be discussed within the context of all end of life options.”

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Sir Keir Starmer in Albania to tackle ‘revolving door’ of migration

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Sir Keir Starmer in Albania to tackle 'revolving door' of migration

Sir Keir Starmer is in Albania to announce an expanded crackdown on migrant smuggling gangs in the Balkans – a key staging post on the route to Britain.

In the first official visit to the country by a UK prime minister, he hopes to reinforce this week’s tough message about slashing levels of both legal and illegal migration.

Sir Keir is relying on “smashing the gangs” as the government’s policy to tackle small boat crossings, which remain at a record high this year; passing the 10,000 mark last month.

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But working with officials in Albania is seen as a success story in stopping migration at source, partly due to the actions of the previous Conservative government which Sir Keir will build on.

In 2022, arrivals from Albania accounted for around a third of all small boat arrivals – a higher number than from any other country.

Over the past three years, those numbers have been cut by 95%. The number of Albanians returned to their home country has also more than doubled to 5,294 last year, from just over 2,000 two years’ earlier.

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The prime minister will join Edi Rama, prime minister of Albania since 2013, at the Port of Durres on Thursday to see UK-backed efforts to tackle smuggling gangs and the criminal activities that fund them.

A programme to detect migrants attempting to travel using fake or stolen documents will be expanded, with the UK donating new anti- forgery machines. The government will also invest a further £1m in DNA technology to detect serious criminals on the streets of the UK.

Sir Keir is also expected to express concerns about a “revolving door effect” in which a migrant is returned home, only to evade law enforcement and leave the country again. He will support programmes in northern Albania – where migrants come from – to reintegrate young people and provide them with employment opportunities, the government said.

The prime minister will announce that the joint migration taskforce, with Albania and Kosovo, signed at the end of 2022, will be expanded to include North Macedonia and Montenegro.

The National Crime Agency will share intelligence with law enforcement agencies in these countries and deploy UK funded drones to detect gangsters funnelling migrants through the Western Balkans corridor and on to the UK.

The countries of the Western Balkans – including Serbia, whose government signed an agreement with Sir Keir last year – have for around five years been the key corridor to Europe for migrants from the Middle East, Asia and Africa.

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Sir Keir will say: “Global challenges need shared solutions, and the work the UK and Albania are doing together is delivering security for working people in both countries.

“Our joint work to deter, detect and return illegal migrants is further proof that intervening upstream to protect British shores and secure our borders is the right approach.

“Every step we take to tackle illegal migration overseas, cripple the criminal networks that facilitate it and stem the finance streams that fund it is delivering safer streets in the UK, and reducing the strain on taxpayer funded services.”

On Friday the prime minister will attend the European Political Community summit in the capital Tirana, a forum for European leaders to discuss security challenges in the wake of the war in Ukraine.

It’s expected to be a chance for the UK to discuss key points of a forthcoming defence pact with the EU and the terms of a “reset” of relations ahead of a summit in London next Monday.

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Leaked recording reveals top Tory knew of flaws in post-Brexit plan to return illegal migrants

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Leaked recording reveals top Tory knew of flaws in post-Brexit plan to return illegal migrants

One of Kemi Badenoch’s top team has admitted there were flaws in the plan to return illegal migrants after Brexit, Sky News can reveal.

Boris Johnson repeatedly told the public that Brexit would mean taking back control of Britain’s borders and migration system.

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But in a leaked recording obtained by Sky News, Chris Philp, now shadow home secretary, said Britain’s exit from the EU – and end of UK participation in the Dublin agreement which governs EU-wide asylum claims – meant they realised they “can’t any longer rely on sending people back to the place where they first claimed asylum”.

Mr Philp appeared to suggest the scale of the problem surprised those in the Johnson government.

Pic: Reuters
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Chris Philp is the shadow home secretary. Pic: Reuters

“When we did check it out… (we) found that about half the people crossing the Channel had claimed asylum previously elsewhere in Europe.”

In response tonight, the Tories insisted that Mr Philp was not saying the Tories did not have a plan for how to handle asylum seekers post Brexit.

Mr Philp’s comments from last month are a very different tone to 2020 when as immigration minister he seemed to be suggesting EU membership and the Dublin rules hampered asylum removals.

In August that year, he said: “The Dublin regulations do have a number of constraints in them, which makes returning people who should be returned a little bit harder than we would like. Of course, come the 1st of January, we’ll be outside of those Dublin regulations and the United Kingdom can take a fresh approach.”

Mr Philp was also immigration minister in Mr Johnson’s government so would have been following the debate closely.

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Philp was previously a close ally of Liz Truss. Pic: PA

In public, members of the Johnson administration were claiming this would not be an issue since asylum claims would be “inadmissible”, but gave no details on how they would actually deal with people physically arriving in the country.

A Home Office source told journalists once the UK is “no longer bound by Dublin after the transition”, then “we will be able to negotiate our own bilateral returns agreement from the end of this year”.

This did not happen immediately.

In the summer of 2020, Mr Johnson’s spokesman criticised the “inflexible and rigid” Dublin regulations, suggesting the exit from this agreement would be a welcome post-Brexit freedom. Mr Philp’s comments suggest a different view in private.

The remarks were made in a Zoom call, part of a regular series with all the shadow cabinet on 28 April, just before the local election.

Mr Philp was asked by a member why countries like France continued to allow migrants to come to the UK.

He replied: “The migrants should claim asylum in the first safe place and that under European Union regulations, which is called the Dublin 3 regulation, the first country where they are playing asylum is the one that should process their application.

“Now, because we’re out of the European Union now, we are out of the Dublin 3 regulations, and so we can’t any longer rely on sending people back to the place where they first claimed asylum. When we did check it out, just before we exited the EU transitional arrangements on December the 31st, 2020, we did run some checks and found that about half the people crossing the channel had claimed asylum previously elsewhere in Europe.

“In Germany, France, Italy, Spain, somewhere like that, and therefore could have been returned. But now we’re out of Dublin, we can’t do that, and that’s why we need to have somewhere like Rwanda that we can send these people to as a deterrent.”

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Mr Johnson announced the Rwanda plan in April 2022 – which Mr Philp casts as the successor plan – 16 months after Britain left the legal and regulatory regime of the EU, but the plan was blocked by the European Court of Human Rights.

Successive Tory prime ministers failed to get any mandatory removals to Rwanda, and Sir Keir Starmer cancelled the programme on entering Downing Street last year, leaving the issue of asylum seekers from France unresolved.

Speaking on Sky News last weekend, Home Secretary Yvette Cooper said there has been a 20% increase in migrant returns since Labour came to power, along with a 40% increase in illegal working raids and a 40% increase in arrests for illegal working.

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Britain’s membership of the EU did not stop all asylum arrivals. Under the EU’s Dublin regulation, under which people should be processed for asylum in the country at which they first entered the bloc.

However, many EU countries where people first arrive, such as Italy, do not apply the Dublin rules.

The UK is not going to be able to participate again in the Dublin agreement since that is only open to full members of the EU.

Ministers have confirmed the Labour government is discussing a returns agreement with the French that would involve both countries exchanging people seeking asylum.

Asked on Sky News about how returns might work in future, the transport minister Lilian Greenwood said on Wednesday there were “discussions ongoing with the French government”, but did not say what a future deal could look like.

She told Sky News: “It’s not a short-term issue. This is going to take really hard work to tackle those organised gangs that are preying on people, putting their lives in danger as they try to cross the Channel to the UK.

“Of course, that’s going to involve conversations with our counterparts on the European continent.”

Pressed on the returns agreement, Ms Greenwood said: “I can confirm that there are discussions ongoing with the French government about how we stop this appalling and dangerous trade in people that’s happening across the English Channel.”

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A Conservative Party spokesman said: “The Conservative Party delivered on the democratic will of this country, and left the European Union.

“The last government did have a plan and no one – including Chris – has ever suggested otherwise.

“We created new deals with France to intercept migrants, signed returns agreements with many countries across Europe, including a landmark agreement with Albania that led to small boat crossings falling by a third in 2023, and developed the Rwanda deterrent – a deterrent that Labour scrapped, leading to 2025 so far being the worst year ever for illegal channel crossings.

“However, Kemi Badenoch and Chris Philp have been clear that the Conservatives must do a lot more to tackle illegal migration.

“It is why, under new leadership, we are developing g new policies that will put an end to this problem – including disapplying the Human Rights Act from immigration matters, establishing a removals deterrent and deporting all foreign criminals.”

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