‘You feel like you can’t fight back’: How thousands are being targeted by a harsh HMRC tax-collecting scheme linked to 10 suicides
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.
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.
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.
HMRC threatens to auction off people’s property
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.
HMRC ‘aren’t out of pocket’
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
HMRC targeting individuals rather then 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 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.”
Virginia Giuffre, who accused Prince Andrew of sexual assault, has died aged 41.
In a statement to Sky’s US partner network NBC News on Friday, her family said she took her own life in the Perth suburb of Neergabby, Australia, where she had been living for several years.
“It is with utterly broken hearts that we announce that Virginia passed away last night at her farm in Western Australia,” her family said.
“She lost her life to suicide, after being a lifelong victim of sexual abuse and sex trafficking.
“Virginia was a fierce warrior in the fight against sexual abuse and sex trafficking. She was the light that lifted so many survivors.
“In the end, the toll of abuse is so heavy that it became unbearable for Virginia to handle its weight.”
Pic: AP
Police said emergency services received reports of an unresponsive woman at a property in Neergabby on Friday night.
“Police and St John Western Australia attended and provided emergency first aid. Sadly, the 41-year-old woman was declared deceased at the scene,” a police spokeswoman said.
“The death is being investigated by Major Crime detectives; early indication is the death is not suspicious.”
Sexual assault claims
Prince Andrew has denied all claims of wrongdoing. File pic: Reuters
Ms Giuffre sued the Duke of York for sexual abuse in August 2021, saying Andrew had sex with her when she was 17 and had been trafficked by his friend, the billionaire paedophile Jeffrey Epstein.
The duke has repeatedly denied the claims, and he has not been charged with any criminal offences.
In March 2022, it was announced Ms Giuffre and Andrew had reached an out-of-court settlement – believed to include a “substantial donation to Ms Giuffre’s charity in support of victims’ rights”.
‘An incredible champion’
Sigrid McCawley, Ms Giuffre’s attorney, said in a statement that she “was much more than a client to me; she was a dear friend and an incredible champion for other victims”.
“Her courage pushed me to fight harder, and her strength was awe-inspiring,” she said. “The world has lost an amazing human being today.”
“Rest in peace, my sweet angel,” she added.
Listen to The World with Richard Engel and Yalda Hakim every Wednesday
Dini von Mueffling, Ms Giuffre’s representative, also said that “Virginia was one of the most extraordinary human beings I have ever had the honour to know”.
“Deeply loving, wise, and funny, she was a beacon to other survivors and victims,” she added. “She adored her children and many animals.
“She was always more concerned with me than with herself. I will miss her beyond words.
“It was the privilege of a lifetime to represent her.”
Ms Giuffre said at the end of March she had four days to live after a car accident, posting on social media that “I’ve gone into kidney renal failure”. She was discharged from hospital eight days later.
Raised mainly in Florida, she said she was abused by a family friend early in life, which led to her living on the streets at times as a teenager.
She said that in 2000, she met Ghislaine Maxwell, a British socialite who was convicted in 2021 on federal sex trafficking and conspiracy charges and was sentenced to 20 years in prison.
Ghislaine Maxwell and Jeffrey Epstein. Pic: US Department of Justice
Ms Giuffre said Maxwell then introduced her to Epstein and hired her as his masseuse, and said she was sex trafficked and sexually abused by him and associates around the world.
‘A survivor’
After meeting her husband in 2002, while taking massage training in Thailand at what she said was Epstein’s behest, she moved to Australia and had a family.
She founded the sex trafficking victims’ advocacy charity SOAR in 2015, and is quoted on its website as saying: “I do this for victims everywhere.
“I am no longer the young and vulnerable girl who could be bullied. I am now a survivor, and nobody can ever take that away from me.”
:: Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. In the US, call the Samaritans branch in your area or 1 (800) 273-TALK.
The Pope’s funeral will take place today at St Peter’s Basilica at the Vatican.
A pope’s funeral traditionally brings world leaders together, and some have already revealed they are attending.
Watch full coverage of the Pope’s funeral live on Sky News from 8am
Here’s a look at the list.
The Prince of Wales will attend the funeral of Pope Francis on behalf of the King, Kensington Palace has said.
The King was in Rome with Queen Camilla earlier this month, and met the pontiff at the Vatican.
Pope Francis meets King Charles and Queen Camilla during a private audience at the Vatican on 9 April. Pic: Vatican Media/Reuters
The trip came just a week-and-a-half after Buckingham Palace confirmed the King had been taken to hospital following side effects related to his ongoing cancer treatment.
Number 10 has confirmed the prime minister received an invite and will attend the ceremony.
Speaking on Tuesday, Sir Keir said there had been “an outpouring of grief and love” for the Pope.
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Sky News inside Vatican
He added: “I think it reflects the high esteem in which he was held, not just by millions and millions of Catholics, but by many others, across the world, myself included.”
Donald Trump and Pope Francis meet at the Vatican in 2017. Pic: Reuters
The US president was one of the first to confirm he would be flying to Rome, adding he would be joined by first lady Melania Trump.
Writing on his social media platform Truth Social on Monday, he said: “Melania and I will be going to the funeral of Pope Francis, in Rome. We look forward to being there!”
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Trump: ‘Pope Francis loved the world’
The Pope had been critical of Mr Trump at times during his tenure.
In January, he said it would be a “disgrace” if the president went ahead with his crackdown on immigration, telling an Italian television station: “It would make the migrants, who have nothing, pay the unpaid bill.
“It doesn’t work. You don’t resolve problems this way.”
Zelenskyy shakes hands with the pontiff in May 2023. Pic: Vatican News/AP
The Ukrainian president, who met the Pope three times, is expected to attend, according to officials in Ukraine.
In his tribute, Mr Zelenskyy said his country was grieving the Pope and recalled how he often prayed for peace in Ukraine.
Pope Francis shakes hands with Emmanuel Macron in December 2024. Pic: Reuters
The French president told local reporters he would be going to the funeral.
In his tribute on Monday, Mr Macron said of the Pope: “In this time of war and brutality, he had a sense for the other, for the most fragile.”
Pope Francis and Javier Milei at the G7 summit in Italy last June. Pic: Reuters
The president of Pope Francis’s native Argentina will attend, despite having launched insults at Francis in recent years.
Before taking office in December 2023, the far-right politician called him “an imbecile, the representative of evil on Earth”.
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Mr Milei alluded to their “differences” in his tribute to the late Pope, writing: “It is with profound sorrow that I learned this sad morning that Pope Francis, Jorge Bergoglio, passed away today and is now resting in peace.
“Despite differences that seem minor today, having been able to know him in his goodness and wisdom was a true honour for me.”
Lula da Silva and the Pope at the G7 summit last year. Pic: Vatican Media/Reuters
The Brazilian president and first lady Janja Lula da Silva will be at the funeral, the country’s government announced.
Brazil has also declared a seven-day mourning period for the Pope.
“Humanity is today losing a voice of respect and welcome for others,” the president said in his tribute.
“Pope Francis lived and propagated in his daily life the love, tolerance and solidarity that are the basis of Christian
teachings.”
Pope Francis meets Ursula von der Leyen at the Vatican in 2022. Pic: Vatican Media/Reuters
The EU Commission President confirmed she would be attending after calling Francis a worldwide inspiration.
“He inspired millions, far beyond the Catholic Church, with his humility and love so pure for the less fortunate,” she said in her tribute.
Council President Antonio Costa, Parliament President Roberta Metsola are also expected to attend.
Here are some of the other notable attendees:
• Ireland’s taoiseach Micheal Martin
• Spain’s King Felipe and Queen Letizia
• Albanian president Bajram Begaj
• Angola’s president Joao Lourenco
• Austrian president Alexander Van der Bellen
• Bangladesh’s chief adviser and interim leader Muhammad Yunus
• Belgium’s King Philippe and Queen Mathilde, along with prime minister Bart De Wever
• Canada’s governor general Mary Simon
• Cape Verde president Jose Maria Neves
• Croatia’s president Zoran Milanovic
• Cyprian president Nikos Christodoulides
• Czech Republic’s prime minister Petr Fiala
• Democratic Republic of Congo president Felix Tshisekedi
• Dominican Republic’s president Luis Abinader
• East Timor’s president Jose Ramos-Horta
• Ecuador’s president Daniel Noboa
• Estonia’s president Alar Karis
• Finland’s president Alexander Stubb
• Gabon’s president Brice Oligui Nguema
• German president Frank-Walter Steinmeier and outgoing chancellor Olaf Scholz
• Greece’s prime minister Kyriakos Mitsotakis
• Honduras president Xiomara Castro
• Hungary’s president Tamas Sulyok
• Italy’s president Sergio Mattarella and prime minister Giorgia Meloni
• Latvian president Edgars Rinkevics
• Lithuanian president Gitanas Nauseda
• Moldova’s president Maia Sandu
• Netherlands’ prime minister Dick Schoof
• New Zealand’s prime minister Christopher Luxon
• Norway’s Crown Prince Haakon and Crown Princess Mette-Marit
• The Philippines’ president Ferdinand Marcos Jr
• Poland’s president Andrzej Duda
• Portugal’s president Marcelo Rebelo de Sousa and prime minister Luis Montenegro
• Romania’s interim president Ilie Bolojan
• Sweden’s King Carl XVI Gustaf, Queen Silvia and prime minister Ulf Kristersson
• Switzerland’s president Karin Keller-Sutter
Who won’t be there?
Pope Francis walks next to Putin at the Vatican in 2015. Pic: AP
The Russian president will not be attending the funeral, the Kremlin has confirmed.
But the controversial leader paid tribute to the Pope, writing a message to Cardinal Kevin Farrell, who is interim chief of the Catholic Church.
“Please accept my most sincere condolences on the passing of His Holiness Pope Francis,” Mr Putin said.
“Throughout the years of his pontificate, he actively promoted the development of dialogue between the Russian
Orthodox and Roman Catholic churches, as well as constructive cooperation between Russia and the Holy See.”
Pope Francis and Benjamin Netanyahu meet at the Vatican in 2013. Pic: AP
The Israeli prime minister is not expected to attend, with the country’s ambassador Yaron Sideman going instead.
The Jewish state and the Vatican have had strong relations in the past, with Israel sending a presidential delegation to the funeral of Pope John Paul II in 2005, and Pope Francis visiting Israel in 2014.
But their relationship has deteriorated since the start of the war in Gaza.
A month after the conflict started in 2023, a dispute broke out over whether Pope Francis had used the word “genocide” to describe events in Gaza. Palestinians who met with him said he did, but the Vatican said he did not.
The Pope met relatives of Israeli hostages on the same day.
Israeli officials have since lobbied the Vatican to be more forceful in its condemnation of Hamas.
In January, the Pope called the humanitarian situation in Gaza “shameful”, prompting criticism from Rome’s chief rabbi, Riccardo Di Segni, who accused Francis of “selective indignation”.
Rabbi Di Segni says he will be attending the funeral, despite it taking place on the Jewish sabbath.
Is there a seating plan?
The seats are assigned in advance, with the heads of state sitting in French alphabetical order based on their country’s name, rather than on the individual’s.
This applies to everyone apart from the presidents of Italy and Argentina, who get the best seats because the Pope lived in Italy and was an Argentinian native.
UK
Vincent Nichols: British cardinal who will be in the conclave says picking the next pope is ‘intimidating’
The head of the Catholic Church in England and Wales has told Sky News it’s “intimidating” to be one of those responsible for choosing the next pope.
Vincent Nichols is among four UK cardinals in Rome for the Pope’s funeral on Saturday.
Following the funeral, and after nine days of mourning, cardinals from around the world will gather in the Vatican’s Sistine Chapel to cast their votes, with white smoke announcing to the world when a new pope has been elected.
Cardinal Vincent Nichols speaks to Sky’s Anna Botting
Cardinal Nichols told Sky’s Anna Botting: “I hope nobody goes into this conclave, as it were, with the sole purpose of wanting to win. I think it’s very important that we go in wanting to listen to each other… It has to be together, trying to sense what God wants next. Not just for the church.”
He described the procession that took Pope Francis to lie in state as “the most moving thing I’ve ever attended here”.
Describing the Pope as a “master of the gesture and the phrase”, he also recalled the pontiff’s last journey away from the Vatican.
Cardinal Nichols said Pope Francis had visited the Regina Coeli prison, telling the inmates: “You know, except for the grace of God, it could well have been me … Don’t lose hope, God has you written in his heart.”
Read more:
How Pope Francis’s funeral will unfold
The full order of service
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‘Pope touched the hearts of millions’
The Pope later told his doctor his last regret was not being able to wash the feet of the prisoners during that visit.
Becoming emotional, he also said the final message he would like to have given Pope Francis is “thank you”.
The 88-year-old died peacefully on Easter Monday, the Vatican confirmed.
Heads of state – including Sir Keir Starmer, Donald Trump and Emmanuel Macron – have all confirmed their attendance at his funeral, which takes place on Saturday at St Peter’s Square.
Prince William will attend on behalf of the King, Kensington Palace has said.
You can watch full coverage of the funeral live on Sky News on Saturday
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Where will Pope Francis be buried?
Talking about the seating plan at the funeral, Cardinal Nichols said he understood it to be “royalty first, then heads of state, then political leaders”.
Cardinal Nichols explained event would be “exactly the same Catholic rite as everyone else – just on a grander scale”.
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3D map shows pope’s funeral route
In a break from tradition, Pope Francis will be the first pope in a century to be interred outside the Vatican – and will instead be laid to rest at his favourite church, Santa Maria Maggiore Basilica in Rome’s Esquilino neighbourhood.
He will also be buried in just one simple wooden coffin, instead of the traditional three coffins which are usually used for pontiffs.
Born in Crosby near Liverpool, Cardinal Vincent Nichols hoped to be a lorry driver as a child – but as a teenager reportedly felt the calling to join the priesthood while watching Liverpool FC.
As cardinal, he is known for leading the church’s work tackling human trafficking and modern slavery, for which he received the UN Path to Peace Award.
He was criticised by the UK’s Independent Inquiry into Child Sexual Abuse, which said he “demonstrated a lack of understanding” of the impact of abuse and “seemingly put the reputation of the church first”.
Cardinal Nichols, responding to the findings, previously told Sky News he was “ashamed at what has happened in the context of the Catholic Church” and promised to improve the church’s response.
He has appeared to rule himself out of the running for pope, telling reporters he was “too old, not capable”.
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