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.
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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.”
Image: 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.
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.”
A workman saved a seven-year-old boy from a burning car in the aftermath of a deadly crash caused by a suicidal ex-pilot, an inquest has heard.
The schoolboy’s rescue came following the collision on the M6, which killed former RAF man Richard Woods and four others, in October last year.
Last week a coroner ruled that Woods, 40, took his own life by deliberately driving his Skoda the wrong way down the motorway while drunk and hitting a Toyota Yaris head-on.
The driver of the Toyota, Jaroslaw Rossa, 42, was also killed, along with his two sons, Filip, 15, and Dominic, seven, and his partner Jade McEnroe, 33.
Cockermouth Coroner’s Court heard on Thursday that Ms McEnroe’s son was also in the car but survived after workman Gavin Walsh came to his rescue at the scene, which was near Tebay services in Cumbria.
In a statement to the inquest, Mr Walsh said he was a passenger in a transit van travelling to Scotland when he witnessed the crash.
He jumped out of the vehicle and used a jack to smash the rear windscreen of the Toyota and pulled the boy out of the burning vehicle.
Mr Walsh said: “We really did try, I can assure everyone we did our best. We only had minimal time.
“I saved a life that day and I hope never to witness anything like that again.”
He added that he has never stopped thinking about the boy, and said: “I hope we will meet again one day and I will give you a massive hug.”
At the time, the family were returning to Glasgow from a trip to Legoland in Windsor, Berkshire.
The inquest heard that Wood, who was travelling at a speed of at least 65mph, would have been charged with manslaughter had he survived.
Recording conclusions of unlawful killing, Cumbria assistant coroner Margaret Taylor said: “I found that Jaroslaw, Jade, Filip and Dominic died as a consequence of the unlawful acts of another driver.”
The inquest heard how Mr Woods, from Cambridgeshire, had served a distinguished 14-year career in the RAF and was a flight instructor for BAE Systems at the time of his death.
Image: Jade McEnroe. Pic: Cumbria Constabulary
Image: Dominic and Filip. Pic: Cumbria Constabulary
In Ms Taylor’s record of inquest, Mr Woods was said to have been experiencing “a number of stressors in his life” and had a “history of harmful use of alcohol”.
Following the crash, he was found to be nearly four times over the legal drink-drive limit and a two-thirds empty bottle of gin was found in his car.
On the day of his death, concerns had been raised over his behaviour at a work conference near Preston in Lancashire.
Mr Woods failed to return to his seat after lunch and was later spotted driving erratically and swerving across three northbound carriageway lanes on the M6.
After pulling onto the hard shoulder, he then proceeded to U-turn and drove southward on lane three.
Image: Filip, Dominic and Jaroslaw Rossa. Pic: Cumbria Constabulary
Detective Sergeant Deborah Story, from Cumbria Police, told the inquest that Mr Woods would have been prosecuted on four counts of manslaughter had he lived.
She said hypothetical charges of murder were considered by detectives but not thought appropriate because of a lack of information that Mr Woods knew the family or anything that provided a link between them.
Ms McEnroe’s parents, Marie McEnroe and George McNellis, told the coroner they thought it was “murder”.
A statement from the mother of Filip and Dominic, and the ex-wife of Mr Rossa, Kamila, was read out at the inquest.
She said Mr Rossa, known as Jarek, was born in Poland where they became a couple and went on to have three boys.
He loved playing computer games and had “lots of friends”, she said, and worked at the Wagamama restaurant in Silverburn, Glasgow.
She said she was “devastated” over the deaths, adding: “Our lives will never be the same.
“I am heartbroken at the passing of my beloved angels Filip and Dominic.”
Marie McEnroe said her daughter, a spa therapist, had been in a relationship with Mr Rossa for about two-and-a-half years.
She said Jade had been a “brilliant mother” to her only child, was “really happy” with Mr Rossa and it was “lovely chaos” when all the boys were playing together.
Ms McEnroe added: “Life changed forever that day”.
Ms Taylor praised the “selfless acts of bravery” from those in the aftermath of the collision, including Mr Walsh, who she said went towards the burning car “without hesitation for his own safety”.
The coroner added: “Without his swift response, Jade’s child would also have perished.”
Addressing the bereaved family members, she said: “Your loss is unimaginable but you have conducted yourself with dignity and I thank you for that. I wish you strength for the future.”
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.
A ‘vile’ former police officer who was caught in a sting operation after travelling to meet what he thought was a 14-year-old boy has been jailed.
Thomas Kettleborough, 35, then an inspector with Avon and Somerset Police, was arrested in July 2023 while attempting to meet up with ‘the teenager’ after communicating with him on Grindr and Snapchat.
However, he was actually speaking to undercover officers.
After being detained at a car park in Bristol, officers found a bag in the boot of his car containing “an assortment of sex toys, condoms and bondage equipment, including a pair of limb restraints,” Exeter Crown Court heard.
More than 150 indecent images of children were also discovered on his phone and computer.
Kettleborough used the apps to have sexually explicit chats with the teenager, using the name Liam, while claiming to be 28, prosecutors said.
In February, he pleaded guilty to several child sex offences, including attempting to engage in sexual communication with a child and attempting to cause or incite a child to engage in sexual activity.
Last month he was sacked by Avon and Somerset Police and barred from policing for gross misconduct.
He was sentenced to two years and eight months in prison on Thursday.
Assistant Chief Constable Joanne Hall, from Avon and Somerset Police, said the public would be “appalled by the vile and manipulative actions of this former officer”.
She added: “He was caught following a policing operation designed to keep children safe which has resulted in his wider offending being identified.”
Detective Inspector Dave Wells, who led the investigation, said Kettleborough’s crimes took place over four years,
The former officer held positions of trust in the police, the Sea Cadets and the Royal Lifesaving Society, but “concealed his true identity through an online persona as ‘Liam’, ‘L S’ and ‘Liamss5506’,” Mr Wells said.
Mr Wells added: “Specialist investigators are ready to listen and investigate any reports relating to Thomas Kettleborough or any other matters of concern. I want people to know that they will be believed.
“Thomas Kettleborough is now behind bars. I hope if there are others that have been affected by this case, they now feel empowered to tell someone, if they are ready to do so.”
Lee Bremridge, defending, said Kettleborough had shown genuine remorse for his crimes.
He added that the former officer had “done everything that he can attempt to do to try and understand why it is he committed the offences that he did.”
Kettleborough was also handed an indefinite Sexual Harm Prevention Order and will be on the Sex Offenders’ Register for life.