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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.

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
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.

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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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Heathrow bosses ‘warned about substation’ days before major power outage, MP committee hears

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Heathrow bosses 'warned about substation' days before major power outage, MP committee hears

Heathrow Airport bosses had been warned of a potential substation failures less than a week before a major power outage closed the airport for a day, a committee of MPs has heard.

The chief executive of Heathrow Airline Operators’ Committee Nigel Wicking told MPs of the Transport Committee he raised issues about resilience on 15 March after cable and wiring took out lights on a runway.

A fire at an electricity substation in west London meant the power supply was disrupted to Europe’s largest airport for a day – causing travel chaos for around 200,000 passengers.

“I’d actually warned Heathrow of concerns that we had with regard to the substations and my concern was resilience”, Mr Wicking said.

“So the first occasion was to team Heathrow director on the 15th of the month of March. And then I also spoke to the chief operating officer and chief customer officer two days before regarding this concern.

“And it was following a number of, a couple of incidents of, unfortunately, theft, of wire and cable around some of the power supply that on one of those occasions, took out the lights on the runway for a period of time. That obviously made me concerned.”

Mr Wicking also said he believed Heathrow’s Terminal 5 could have been ready to receive repatriation flights by “late morning” on the day of the closure, and that “there was opportunity also to get flights out”.

However, Heathrow chief executive Thomas Woldbye said keeping the airport open during last month’s power outage would have been “disastrous”.

There was a risk of having “literally tens of thousands of people stranded in the airport, where we have nowhere to put them”, Mr Woldbye said.

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Zhenhao Zou: More than 20 new potential victims come forward after ‘prolific’ rapist jailed for assaulting 10 women

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Zhenhao Zou: More than 20 new potential victims come forward after 'prolific' rapist jailed for assaulting 10 women

Another 23 female potential victims have reported that they may have been raped by Zhenhao Zou – the Chinese PhD student detectives believe may be one of the country’s most prolific sex offenders.

The Metropolitan Police launched an international appeal after Zou, 28, was convicted of drugging and raping 10 women following a trial at the Inner London Crown Court last month.

Detectives have not confirmed whether the 23 people who have come forward add to their estimates that more than 50 other women worldwide may have been targeted by the University College London student.

Metropolitan Police commander Kevin Southworth said: “We have victims reaching out to us from different parts of the globe.

“At the moment, the primary places where we believe offending may have occurred at this time appears to be both in England, here in London, and over in China.”

Metropolitan Police commander Kevin Southworth
Image:
Metropolitan Police commander Kevin Southworth

Zou lived in a student flat in Woburn Place, near Russell Square in central London, and later in a flat in the Uncle building in Churchyard Row in Elephant and Castle, south London.

Read more: How a student described as ‘smart and charming’ was unmasked as a prolific sexual predator

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He had also been a student at Queen’s University Belfast, where he studied mechanical engineering from 2017 until 2019. Police say they have not had any reports from Belfast but added they were “open-minded about that”.

“Given how active and prolific Zou appears to have been with his awful offending, there is every prospect that he could have offended anywhere in the world,” Mr Southworth said.

“We wouldn’t want anyone to write off the fact they may have been a victim of his behaviour simply by virtue of the fact that you are from a certain place.

“The bottom line is, if you think you may have been affected by Zhenhao Zou or someone you know may have been, please don’t hold back. Please make contact with us.”

***ONLY USE IF HE IS CONVICTED OF AT LEAST TWO RAPES***It is feared Zou may have carried out dozens more sex crimes. Pic: Met Police
Image:
Pic: Met Police

Zou used hidden or handheld cameras to record his attacks, and kept the footage and often the women’s belongings as souvenirs.

He targeted young, Chinese women, inviting them to his flat for drinks or to study, before drugging and assaulting them.

Zou was convicted of 11 counts of rape, with two of the offences relating to one victim, as well as three counts of voyeurism, 10 counts of possession of an extreme pornographic image, one count of false imprisonment and three counts of possession of a controlled drug with intent to commit a sexual offence, namely butanediol.

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Moment police arrest rapist student

Mr Southworth said: “Of those 10 victims, several were not identified so as we could be sure exactly where in the world they were, but their cases, nevertheless, were sufficient to see convictions at court.

“There were also, at the time, 50 videos that were identified of further potential female victims of Zhenhao Zou’s awful crimes.

“We are still working to identify all of those women in those videos.

“We have now, thankfully, had 23 victim survivors come forward through the appeal that we’ve conducted, some of whom may be identical with some of the females that we saw in those videos, some of whom may even turn out to be from the original indicted cases.”

Mr Southworth added: “Ultimately, now it’s the investigation team’s job to professionally pick our way through those individual pieces of evidence, those individual victims’ stories, to see if we can identify who may have been a victim, when and where, so then we can bring Zou to justice for the full extent of his crimes.”

Mr Southworth said more resources will be put into the investigation, and that detectives are looking to understand “what may have happened without wishing to revisit the trauma, but in a way that enables [the potential victims] to give evidence in the best possible way.”

The Metropolitan Police is appealing to anyone who thinks they may have been targeted by Zou to contact the force either by emailing survivors@met.police.uk, or via the major incident public portal on the force’s website.

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Girl, 11, who went missing after entering River Thames named

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Girl, 11, who went missing after entering River Thames named

An 11-year-old girl who went missing after entering the River Thames has been named as Kaliyah Coa.

An “extensive search” has been carried out after the incident in east London at around 1.30pm on Monday.

Police said the child had been playing during a school inset day and entered the water near Barge House Causeway, North Woolwich.

A recovery mission is now said to be under way to find Kaliyah along the Thames, with the Metropolitan Police carrying out an extensive examination of the area.

Location of Barge House Causeway, North Woolwich, where 11-year-old girl Kaliyah Coa went into the River Thames on 31/03
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Barge House Causeway is a concrete slope in North Woolwich leading into the Thames

Chief Superintendent Dan Card thanked members of the public and emergency teams who responded to “carry out a large-scale search during a highly pressurised and distressing time”.

He also confirmed drone technology and boats were being used to “conduct a thorough search over a wide area”.

He added: “Our specialist officers are supporting Kaliyah’s family through this deeply upsetting time and our thoughts go out to all those impacted by what has happened.”

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“Equally we appreciate this has affected the wider community who have been extremely supportive. You will see extra officers in the area during the coming days.”

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On Monday, Kerry Benadjaoud, a 62-year-old resident from the area, said she heard of the incident from her next-door neighbour, who “was outside doing her garden and there was two little kids running, and they said ‘my friend’s in the water'”.

When she arrived at the scene with a life ring, a man told her he had called the police, “but he said at the time he could see her hands going down”.

Barge House Causeway is a concrete slope that goes directly into the River Thames and is used to transport boats.

Residents pointed out that it appeared to be covered in moss and was slippery.

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