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HMRC has been accused of using “dangerous and sinister” new tactics in a tax crackdown that has already been linked to 10 suicides.

The government has recently come under pressure over the “Loan Charge” – controversial legislation which made tens of thousands of contractors who were paid their salaries through loans retrospectively liable for tax their employer should have paid.

The clampdown has been branded on par with the Post Office Horizon scandal as the unaffordable bills have been linked to suicides and bankruptcies, while one woman had an abortion due to the financial strain she was under, a debate in parliament heard last month.

HMRC has been criticised for going after individuals – including teachers, nurses and cleaners – rather than the firms that profited from promoting the schemes as tax compliant.

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However ministers have resisted pressure to overturn the policy, saying a review conducted by Lord Morse in 2019 resulted in a series of reforms to reduce the financial pressures of the some 50,000 people affected.

Crucially this included cutting the policy’s 20-year retrospective period so only loans received after December 2010 were in scope.

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However it has emerged that HMRC have been pursuing people involved in loan schemes prior to 2010 through a different mechanism – a s684 notice.

This effectively gives HMRC the discretion to transfer a tax burden from an employer to an employee for the tax years excluded from the Loan Charge.

Conservative MP Greg Smith, co-chair of the Loan Charge APPG, said it “flies in the face” of what Lord Morse intended and risks more people taking their own lives because of the unaffordable bills.

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Loan scheme causing tax turmoil

‘I could lose my home’

Sky News spoke to people who said they had experienced suicidal thoughts and feared becoming homeless after unexpectedly receiving the notices.

While the s684s don’t state how much tax is owed, one father-of-three said his bill could be as high as £250,000 as this is how much HMRC have previously tried to claw back from his time in a loan scheme pre-2010.

The IT consultant, who asked to remain anonymous, said he attempted to settle his tax affairs years ago but communication with the tax office “fizzled out” and following the Morse review he believed the “nightmare” was behind him.

Then in November he received a brown envelope containing an s684 and now he is worried HMRC is “going to absolutely hammer me” just as he is approaching retirement age.

“I have three children and in the worst case scenario I will lose my home.

“I can’t think of another government policy that has caused so much suffering. I fear this could really push some people over the edge.”

Wreathes to honour the suicides linked to the HMRC crackdown
Image:
Wreathes to honour the suicides linked to the tax crackdown. There have now been 10 confirmed by HMRC

‘Dreadful landscape’

It is not clear how many people have been sent the notices.

The government previously estimated that 11,000 people would be removed from the Loan Charge by introducing the 2010 cut off.

While the Loan Charge is seen as particularly punitive because it adds together all outstanding loans and taxes them in a single year, often at the 45% rate, the notices mean HMRC can use its own discretion to turn off an employer’s PAYE obligations and seek the income tax that would have been due that year from the employee instead.

Rhys Thomas, director of the WTT tax firm, told Sky News: “There is considerable and understandable confusion amongst taxpayers that when the Morse review removed the loan charge for payments pre 9th December 2010, it was assumed that HMRC had no further recourse for those years.

“Where enquiries were outstanding for the earlier tax years, HMRC will seek to conclude these by utilising tools such as s684 notices.”

He called the situation a “dreadful landscape” as those in receipt of the notices only have 30 days to respond to HMRC over something “that has taken them 15 years to investigate”.

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There is no right to appeal the notices, so the only way to challenge HMRC is through a costly Judicial Review.

“It’s causing a huge amount of distress and anxiety; it’s hugely concerning and for lots of people it’s come as a surprise,” Mr Thomas said.

WTT is representing around 200 people who are challenging the notices, saying HMRC has not done enough to go after the core parties who should have collected the tax at the time.

A spokesperson for HMRC said the Morse Review “recommend we use our normal powers to investigate and settle cases taken out of the Loan Charge”.

They said they had been issuing the notices since May 2022, having won a case at the Court of Appeal over their use in relation to loan schemes, “so it’s not a sudden change”.

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But campaigners disputed the use of the notices as “normal” and said it is another example of HMRC “abusing its power” to go after individuals rather than the companies that ran and promoted the loan schemes.

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‘We were mis-sold’

These became prolific in the 2000s and saw self-employed contractors encouraged to join umbrella companies that paid them their salaries through loans which were not typically paid back.

HMRC has argued those who signed up to the schemes are tax evaders who need to pay their fair share. But those affected claim they are victims of mis-selling as the arrangements were widely marketed as legitimate by the scheme promoters and tax advisers, and in some cases they had no choice but to be paid this way.

IT consultant Daniel (not his real name), from Stoke, said he did not stand to make any money from the scheme he joined in 2008 and was simply trying to avoid falling foul of complex off-payroll rules known as IR35.

His tax adviser said the scheme was HMRC compliant and the company said they “would sort out my taxes”, he added.

Loan Charge protest
Image:
Loan Charge protest

He said he “did not hear a peep” from HMRC during his time in the scheme and his payslip looked normal as around 20% was being deducted from his salary each month – money experts say will have gone into the profits of those running the company rather than tax to the exchequer.

Now, he is expecting a £30,000 bill after receiving an s684 in November – cash the father-of-four “does not have”.

“If I felt like I had done something wrong I would accept it but I did not make one penny from this scheme, it was all to do with compliance and to make my life as simple as possible.

“This is causing so much stress and frustration. I have had plenty of sleepless nights.

“It feels like the Post Office scandal where we are the little people being backed into a corner and there’s nothing we can do and those who are really guilty are just laughing.”

Read More:
Post Office scandal: New concerns raised over second IT system used in branches
Buying a flat ruined my life’: Leaseholders plead for tougher legislation against home ownership ‘scam’

HMRC ‘abusing its powers’

The notices have renewed calls for the government to find a new solution to the Loan Charge scandal.

Keith Gordon, a tax barrister, said HMRC “is effectively responsible for this mess because they failed to warn employees that they did not like these schemes”.

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

“Most people, if they got a whiff of HMRC dislike, would have left these schemes but they were sold it as being tax compliant. Why should the blame be on people who were at the very worst merely naïve?”

Campaigners fear the s684s will be used across the board instead of the Loan Charge, which Labour has said it will review if it wins the next election.

Steve Packham, of the Loan Charge Action Group, accused HMRC of being “downright reckless” in light of the 10 confirmed suicides, adding: “This is sinister and dangerous and is another example of how out-of-control HMRC is.

“The government must immediately order a stop to these notices and instead agree to find a resolution to the Loan Charge Scandal before there are more lives ruined.”

Greg Smith. Pic: PA
Image:
Greg Smith, co-chair of the Loan Charge Action and Taxpayer Fairness APPG. Pic: PA


A HMRC spokesperson said: “We appreciate there’s a human story behind every tax bill and we take the wellbeing of all taxpayers seriously.

“We recognise dealing with large tax liabilities can lead to pressure on individuals and we are committed to supporting customers who need extra help with their tax liabilities. We have made significant improvements to this service over the last few years.

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

Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK.

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SEC and Gemini ask to pause lawsuit to explore ‘potential resolution’

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SEC and Gemini ask to pause lawsuit to explore ‘potential resolution’

SEC and Gemini ask to pause lawsuit to explore ‘potential resolution’

The US Securities and Exchange Commission and crypto exchange Gemini have asked to pause the regulator’s suit over the exchange’s Gemini Earn program, saying they want to discuss a potential resolution. 

In an April 1 letter to New York federal court judge Edgardo Ramos, lawyers representing the SEC and Genesis requested a 60-day hold on the case and that all deadlines be pulled “to allow the parties to explore a potential resolution.” 

“In this case, the parties submit that it is in each of their interests to stay this matter while they consider a potential resolution and agree that no party or non-party would be prejudiced by a stay,” the letter states.

The lawyers added that a stay was in the court’s interest as “a resolution would conserve judicial resources” and proposed that a joint status report be submitted within 60 days after the entry of the stay.

The SEC sued Gemini and crypto lending firm Genesis Global Capital in January 2023, alleging they offered unregistered securities through the Gemini Earn program.

In March 2024, Genesis agreed to pay $21 million to settle charges related to the lending program, but the enforcement case against Gemini remains outstanding.

SEC and Gemini ask to pause lawsuit to explore ‘potential resolution’

Letter from SEC and Genesis Global requesting extension of stay. Source: CourtListener

The letter did not specify what a possible resolution would entail, but the SEC has dropped several lawsuits it launched against crypto companies under the Biden administration, including against Coinbase, Ripple and Kraken.

Related: Will new US SEC rules bring crypto companies onshore?

In February, Gemini said the SEC closed a separate investigation into the firm as the regulator winds back its crypto enforcement under President Donald Trump. 

“The SEC cost us tens of millions of dollars in legal bills alone and hundreds of millions in lost productivity, creativity, and innovation. Of course, Gemini is not alone,” Gemini co-founder Cameron Winklevoss said at the time.

OpenSea, Crypto.com and Uniswap, among others, have also recently reported that the SEC had closed similar probes into their companies that were investigating alleged breaches of securities laws.

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Crypto PAC-backed Republicans win US House seats in Florida special elections

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Crypto PAC-backed Republicans win US House seats in Florida special elections

Crypto PAC-backed Republicans win US House seats in Florida special elections

Two Republicans who received a combined $1.5 million from the crypto-backed political action committee (PAC) Fairshake will enter the US House after winning special elections in Florida.

Republican Jimmy Patronis won the vacant seat in Florida’s 1st Congressional District to replace Matt Gaetz, taking 57% of the vote to defeat Democrat Gay Valimont, according to AP News data.

Randy Fine also took Florida’s 6th Congressional District with 56.7% of the vote to beat his Democratic rival, public school teacher Josh Weil, and fill a seat left vacant by Mike Waltz, who took a job as White House national security adviser.

Florida’s 1st and 6th Congressional Districts — located in Florida’s western panhandle and along the state’s northeast coast — have been controlled by Republicans for roughly 30 years, but their lead has narrowed in recent years.

Fairshake, a PAC backed by crypto industry giants including Coinbase, Ripple and Andreessen Horowitz, gave Fine around $1.16 million in advertising spending and funneled $347,000 to Patronis to support his campaign.

Both Republicans have expressed support for the crypto industry, with Fine stating in a Jan. 14 X post that “Floridians want crypto innovation!”

Crypto PAC-backed Republicans win US House seats in Florida special elections

Source: Randy Fine

Fairshake and its affiliates poured around $170 million into the 2024 US presidential and congressional elections to back candidates who committed to supporting the crypto industry.

The wins by Patronis and Fine increased Republican representation in the House to 220 seats, with the Democrats holding 213 seats.

There are two vacant seats to be filled after Texas and Arizona Democrats Sylvester Turner and Raúl Grijalva died on March 5 and March 13, respectively.

Florida can expect to see a crypto-friendly regulatory environment 

The victories for Patronis and Fine likely mean that crypto legislation will continue to see support in the US capital.

The Republican Party would have maintained its House majority even if it lost both seats in Florida, but it would have made it more difficult for some of the recently introduced Republican-backed crypto bills to pass through the House and Senate.

Related: Florida bill proposes strict rules against online gambling

At the Digital Assets Summit on March 18, Democratic Congressman Ro Khanna said he believes Congress “should be able to get” both a stablecoin and crypto market structure bill done this year.

Bills that could eventually make their way to the House include the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which passed the Senate Banking Committee in an 18-6 vote on March 13.

Senator Cynthia Lummis also reintroduced a Bitcoin reserve bill about a week after the Trump administration announced the establishment of a Strategic Bitcoin Reserve on March 6, with the legislation referred to the Senate Banking Committee on March 11.

Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions

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UK trade bodies ask government to make crypto a ‘strategic priority’

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UK trade bodies ask government to make crypto a ‘strategic priority’

UK trade bodies ask government to make crypto a ‘strategic priority’

Several British trade associations have asked Prime Minister Keir Starmer’s office to appoint a special envoy dedicated to crypto and for a dedicated action plan for digital assets and blockchain technology.

In a March 31 letter, the coalition of six UK digital economy trade bodies urged Starmer’s special adviser on business and investment, Varun Chandra, for a “greater strategic focus and alignment to deliver investment, growth and jobs” for the crypto industry. 

The group, which consisted of the UK Cryptoasset Business Council, Global Digital Finance, The Payments Association, Digital Currencies Governance Group, the Crypto Council for Innovation and techUK, noted the US policy shift on crypto under President Donald Trump and his appointment of a crypto czar.

Britain’s commitment to an economic trade deal focused on technological cooperation with the US “presents a significant opportunity to mirror the United States’ ambition in fostering leadership in blockchain, digital assets, and other emerging financial technologies,” the letter stated. 

The group recommended that the UK appoint a blockchain special envoy, similar to the US, to coordinate policy, foster innovation, and position the country competitively in global markets.

The trade bodies also called for the development of a dedicated government action plan for crypto and blockchain technology, including a concierge service to attract high-potential firms.

They added that the government should acknowledge and leverage the commonalities between blockchain, quantum computing and artificial intelligence technologies, including potential applications for government services.

Another recommendation was to create a high-level industry-government-regulator engagement forum to ensure informed decision-making and cross-sector collaboration.

UK trade bodies ask government to make crypto a ‘strategic priority’

The UK crypto and tech associations lobbying the government for a policy shift. Source: LinkedIn

“With deep pools of talent, access to capital, world-class academic institutions, and sophisticated regulators, the UK provides an environment where digital assets and blockchain innovation can thrive,” they stated. 

Related: UK should tax crypto buyers to boost stock investing, economy, says banker

The coalition argues that crypto and blockchain technology could boost the UK economy by 57 billion British pounds ($73.6 billion) over the next decade, with the sector potentially increasing global gross domestic product by 1.39 trillion pounds ($1.8 trillion) by 2030.

Tom Griffiths, the co-founder and managing partner of crypto compliance advisory firm BitCompli, said in response to the letter on LinkedIn that the Financial Conduct Authority “has a lot of talent and a good sight of future plans, but the UK is definitely losing pace with Dubai, Singapore, and other EU jurisdictions.”

“Now is the time for the FCA to act, or the UK will lose out on this huge opportunity, which is digital assets and all the benefits this sector can bring, not only now but over the next 20 years,” he added.

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