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.
Advertisement
Have you been affected by this story?
You can share your experience, pictures or video with us using our app, private messaging or email.
By sending us your video footage/ photographs/ audio you agree we can broadcast, publish and edit the material.
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.”
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.
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.”
Image: 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.”
The owners of Hovis and Kingsmill, two of Britain’s leading bread producers, are in talks about a historic merger amid a decades-long decline in the sale of supermarket loaves.
Sky News has learnt that Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, and Hovis, which is owned by investment firm Endless, have been involved in prolonged discussions about a combination of the two businesses.
City sources said this weekend that the talks were ongoing, but that there was no certainty that a deal would be finalised.
Bankers are said to be working with both sides on the talks about a transaction.
A deal could be structured as an acquisition of Hovis by ABF, according to analysts, although details about the mechanics of a merger or the valuations attached to the two businesses were unclear this weekend.
ABF is also said to be exploring other options for the future of Allied Bakeries which do not include a deal with Hovis.
If completed, a merger would unite two of Britain’s best-known ambient food brands, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.
More from Money
Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning strength of man.
Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair the bread industry’s financial health in recent decades.
The impact of the war in Ukraine on wheat and flour prices has been among the factors increasing inflationary pressures on bread producers, according to the most recent set of accounts for Hovis filed at Companies House last year.
The overall UK bakery market is said to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.
The principal obstacle facing a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis would reside in its consequences for competition in the UK market.
Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector in the UK, with Hovis on 24% and Allied on 17%, according to industry insiders.
A merger of Hovis and Kingsmill would give the combined group a larger share of that segment of the market, although one source said Warburtons’ overall turnover would remain larger because of the breadth of its product range.
Nevertheless, reducing the number of major supermarket bread suppliers from three to two would be a test of the Competition and Markets Authority’s approach to such industry-reshaping mergers at a time when the watchdog is under intense government scrutiny.
In January, the government removed the CMA chairman, Marcus Bokkerink, as part of a push to reorient Britain’s economic regulators around growth-focused objectives.
An industry insider suggested that a joint venture involving the distribution networks of Hovis and Kingsmill was a possible, although less likely, alternative to a full-blown merger of the companies.
They added that a combined group could benefit from up to £50m of cost savings from such a tie-up.
In its interim results announcement this week, ABF said the performance of Allied Bakeries had continued to struggle.
“Allied Bakeries continues to face a very challenging market,” it said.
“We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in [the second half of] 2025.”
In a separate presentation to analysts, ABF described the losses at Allied as unsustainable.
The company does not disclose details of Allied Bakeries’ financial performance.
Allied also owns Speedibake, an own-label bread manufacturer.
Hovis has been owned by Endless, a prominent investor in British businesses, since 2020, having previously been owned by Mr Kipling-maker Premier Foods and the Gores family.
At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites and its own flour mill.
Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.
This weekend, ABF and Endless both declined to comment.
Aston Martin is steering a path towards a twin-pronged pay row with shareholders as it grapples with the impact of President Trump’s tariffs on car manufacturers.
Sky News can reveal that the influential proxy voting adviser ISS is urging investors to vote against both of Aston Martin Lagonda Global Holdings’ remuneration votes at next week’s annual general meeting.
The pay policy vote, which is binding on the company, has attracted opposition from ISS because it proposes significant increases to potential bonus awards to Adrian Hallmark, the company’s new chief executive.
“Concerns are raised regarding the increased bonus maximums, which are built upon competitively[1]positioned salary levels and do not appear appropriate given the company’s recent performance,” ISS said in a report to clients.
More from Money
Aston Martin is also facing a meaningful vote against its pay report for last year – which is on an advisory basis only – because of the salaries awarded to Mr Hallmark and other executive directors.
The company’s shares have nearly halved in the last year, and it now has a market value of little more than £660m.
Despite the ISS recommendation, Aston Martin will win the vote by virtue of chairman Lawrence Stroll’s 33% shareholding.
The luxury car manufacturer has had a torrid time as a public company and now faces the headwinds of President Trump’s tariffs blitz.
This week it said it would limit exports to the US to offset the impact of the policy.
Aston Martin did not respond to a request for comment ahead of next Wednesday’s AGM.
A financial wellbeing platform which counts the alcohol-free beer producer Lucky Saint among its clients has landed a £6m funding injection from a syndicate of well-known investors.
Sky News understands that Mintago, which was founded in 2019, will announce in the coming days that Guinness Ventures has jointly led the Series A round alongside Seed X Liechtenstein and Social Impact Enterprises.
Mintago, which also counts car rental firm Avis and Northumbrian Police among its customers, aims to help employees save and manage their money more effectively.
More from Money
A number of the start-up’s current investors, Love Ventures and Truesight Ventures, are also understood to have reinvested as part of the fundraising.
Image: The company, which counts Lucky Saint and Avis among its users, has finalised a Series A funding round
The company was set up by Chieu Cao and Daniel Conti, and claims to offer more salary sacrifice schemes than any other UK provider.
It also provides independent financial advice, a service for finding lost pension pots, retail discounts and GP services.
“We realised that organisations are crying out for the same help we provide their staff,” Mr Conti said.
“The benefits of providing that support impact everyone.
“When a company improves their salary sacrifice benefits engagement, they can save thousands in National Insurance Contributions, but their employees save too, easing the strain on their finances.”
The new capital will be used to develop additional products using artificial intelligence, according to the company.
“Mintago is enabling its customers to become truly people-centric organisations by giving them the tools to support their employees’ financial wellbeing,” Mathias Jaeggi, a partner at Seed X Liechtenstein, said.