Four more people have attempted to take their own life in relation to the loan charge scandal, which has left tens of thousands of contractors facing huge bills for tax their employers should have paid, Sky News has learnt.

HMRC has made 17 referrals to the police watchdog (Independent Office for Police Conduct) over the suicide attempts of 14 people, up from the 13 referrals of 10 people previously known about in October 2023.

The figures, revealed in response to a Freedom of Information request by Sky News, come on top of the 10 known suicides of people caught up in the controversial tax crackdown, which has alarmed MPs across the political spectrum.

The loan charge was announced in George Osborne’s 2016 budget and made freelancers liable for years of retrospective income and national insurance tax after being paid their salaries in loans.

HMRC has been accused of harassing ordinary people who were victims of mis-selling, as the arrangement was widely promoted by lawyers, accountants and tax professionals in the 2000s and 2010s.

Labour has launched an independent review into the policy but campaigners have branded it a “sham” and “cover-up” as it doesn’t look at the principle of the loan charge, only ways to make people settle.

‘Trapped in an endless nightmare’

Father-of-three Ray Newton is one thousands of people who paid an umbrella company to manage his fees while working as an IT contractor for Barclays Bank from 2009-2010.

They paid him in tax-free loans on the assurance it was “completely above board”, but in 2016 he was hit with an unexpected HMRC bill of £16,000.

Ray paid it off, but last year he suddenly faced demands for another £15,000 in income tax and £14,000 in interest that had been accruing the whole time without his knowledge. The “bombshell bill” also included £12,000 of inheritance tax on the loans despite them being classed as wages.

“Instead of going for the tax that was avoided they are going for the jugular,” said Ray, 70.

The bill arrived in the post after eight years of sporadic letters from HMRC saying Ray still needed to settle but not explaining why or by how much, often ignoring him when he inquired. It nearly destroyed him.

“I was literally begging – please tell me what it is I owe. It made me look as though I was a bad person… my wife actually left me and I got really in a state over this,” he said.

“I was having counselling, I was on antidepressant drugs, I was on sleeping pills. You know, my whole world was sort of falling apart. It was like being trapped in an endless nightmare.

“I did attempt suicide but I was stopped by a member of the public.”

Ray is now in a better place and is back with his wife, while HMRC has recently accepted the inheritance tax isn’t owed and giving him misleading or incorrect information.

But he is sceptical about the review.

“The government can’t afford or don’t want to afford the implications of a proper inquiry. This is going to be a whitewash.”

HMRC says it takes the wellbeing of all taxpayers seriously and is committed to identifying and supporting customers who need extra help with their tax affairs. It says it has made significant improvements to this service over the last few years.   

Sky News spoke to several loan charge victims who said while they didn’t dispute owing tax, HMRC’s chaotic communication was making it harder to settle and move on.

“The impact has been devastating”

For father-of-two Stephen Bishop, the long drawn-out battle contributed to the breakdown of his marriage and led him to express suicidal thoughts.

He was told to join a loan scheme by the company which hired him and has since faced demands in unpaid tax ranging from £80,000 – more than he’d earn in a year – to £20,000 while a payment plan set up in 2018 was randomly cancelled.

It took many more years to reach a new settlement and after £18,000 was finally agreed upon, he was whacked with a £10,000 interest bill for the late payment.

HMRC continued to contact him after he requested to go through his accountant due to his deteriorating mental health, with an inspector even showing up at his door.

“I can honestly understand why so many people have taken their own lives over this. The impact has been devastating on me,” he said.

What is being reviewed?

Since 2016, HMRC has agreed 25,000 settlements with employers and individuals over their use of loan schemes, which will raise around £4.2bn in revenue.

However, over 40,000 people and 5,000 employers are yet to settle.

Labour promised an “independent review” in opposition, with Treasury minister James Murray saying the loan charge had “become a nightmare for ordinary people… who are the victims of mis-selling and face financial ruin”.

After winning the election Mr Murray also attended a “harrowing meeting” where many loan charge victims “broke down in tears”, according to Greg Smith, Tory co-chairman of the Loan Charge and Taxpayer Fairness all-party parliamentary group (APPG), who suggested the “partial review” was down to “wilful ignorance or the bottom line” and warned it could lead to more suicides if people continue to face financial ruin.

Campaigners hoped the inquiry would look at the principle of retrospective tax legislation, the role of promoters who made profits from the schemes and HMRC’s conduct.

However, it will only examine the barriers facing those who have yet to settle and recommend ways for them to so do by the summer. And it is being run by former HMRC boss Ray McCann, leading some to question its independence.

‘Internal stitch-up’

Sir Iain Duncan Smith, former Tory leader and another long-term critic of the loan charge, called the review an “internal HMRC stitch-up… ran by an ex-HMRC honcho”.

He said the loan charge is a “disaster” made by the tax office for being slow to crack down on the loan schemes and the government should “draw a line under this and write the debt off”.

“It seems to me any MP that goes to be a minister of the Treasury gets taken prisoner by them. This should be a full-scale review where apportioning blame is part of this,” Mr Duncan Smith added.

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In a letter responding to concerns of the APPG, Mr Murray said it would have been “irresponsible for the government not to acknowledge the challenging fiscal circumstances that we inherited” and “that is the context in which this review takes place”.

He also defended Mr McCann’s independence, saying the former president of the Chartered Institute for Taxation is “a highly respected figure in the tax world whose name was suggested by one of the loan charge campaigners”.

The government declined to comment further while the review is ongoing.

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