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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
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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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Nigel Farage’s deportation plan relies on these conditions – legal expert explains if it could work

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Nigel Farage's deportation plan relies on these conditions - legal expert explains if it could work

Explaining how they plan to tackle what they described as illegal migration, Nigel Farage and his Reform UK colleague Zia Yusuf were happy to disclose some of the finer details – how much money migrants would be offered to leave and what punishments they would receive if they returned.

But the bigger picture was less clear.

How would Reform win a Commons majority, at least another 320 seats, in four years’ time – or sooner if, as Mr Farage implied, Labour was forced to call an early election?

How would his party win an election at all if, as its leader suggested, other parties began to adopt his policies?

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Highly detailed legislation would be needed – what Mr Farage calls his Illegal Migration (Mass Deportation) Bill.

But Reform would not have a majority in the House of Lords and, given the responsibilities of the upper house to scrutinise legislation in detail, it could take a year or more from the date of an election for his bill to become law.

Reform’s four-page policy document says the legislation would have to disapply:

The United Nations refugee convention of 1951, extended in 1967, which says people who have a well-founded fear of persecution must not be sent back to a country where they face serious threats to their life or freedom

The United Nations convention against torture, whose signatories agree not expel, return or extradite anyone to a country where there are substantial grounds to believe the returned person would be in danger of being tortured

The Council of Europe anti-trafficking convention, which requires states to provide assistance for victims

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Farage sets out migration plan

According to the policy document, derogation from these treaties is “justified under the Vienna Convention doctrine of state necessity”.

That’s odd, because there’s no mention of necessity in the Vienna Convention on the law of treaties – and because member states can already “denounce” (leave) the three treaties by giving notice.

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It would take up to a year – but so would the legislation. Only six months’ notice would be needed to leave the European Convention on Human Rights, another of Reform’s objectives.

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Mr Farage acknowledged that other European states were having to cope with an influx of migrants. Why weren’t those countries trying to give up their international obligations?

His answer was to blame UK judges for applying the law. Once his legislation had been passed, Mr Farage promised, there would be nothing the courts could do to stop people being deported to countries that would take them. His British Bill of Rights would make that clear.

Courts will certainly give effect to the will of parliament as expressed in legislation. But the meaning of that legislation is for the judiciary to decide. Did parliament really intend to send migrants back to countries where they are likely to face torture or death, the judges may be asking themselves in the years to come.

They will answer questions such as that by examining the common law that Mr Farage so much admires – the wisdom expressed in past decisions that have not been superseded by legislation. He cannot be confident that the courts will see the problem in quite the same way that he does.

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Six injured after Leicestershire dog attacks

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Six injured after Leicestershire dog attacks

Six people are believed to have been injured after dog attacks in Leicestershire, police have said.

Officers received two calls regarding dog attacks in the area of Beveridge Lane, Bardon Hill, on Thursday morning – one at 6.30am and the other at 7.44am.

Leicestershire Police said that in the first call to police, a person reported seeing a man being attacked by two dogs.

Upon arrival, no dogs were located, but a victim was identified.

Later, in the second call to the force, three people were reported to have been bitten in the same location.

Two dogs – confirmed to be Caucasian shepherds – were then discovered after firearms officers, a police dog and its handler were deployed.

The force added that both dogs were safely removed and are now being held in secure kennels.

In an update on Tuesday, officers said that two further people had come forward to report they were bitten by a dog in the same location at the time, bringing the total to six.

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Women and children will be detained under Farage deportation plans

Two people, a girl aged 17 and a man aged 47, were arrested on suspicion of being in charge of a dangerously out of control dog in a public place.

The man was also arrested for a further two offences under the Animal Welfare Act. Both have been released under investigation.

Leicestershire Police also said it made a referral to the Independent Office for Police Conduct because of a prior report made about the dogs.

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Farage’s small boats plan not about policy but putting Labour and Tories on the spot

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Farage's small boats plan not about policy but putting Labour and Tories on the spot

If you want a dissection of whether the £10bn cost of Reform UK’s new deportation policy is an underestimate, the analysis that follows is going to disappoint.

Likewise, if you are here to hear chapter and verse about the unacknowledged difficulties in striking international migrant returns agreements – which are at the heart of Nigel Farage’s latest plan – or a piece that dwells on how he seemed to hand over questions of substance and detail to a colleague, again, prepare to be let down.

Like a magician’s prestige, if you laser focus on the policy specifics of Tuesday’s Farage small boat plan – outlined in a vast hangar outside Oxford, striking for its scale and echo – you risk misunderstanding the real trick, and Reform’s objective for the day.

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For Farage has been around long enough in British politics that we should acknowledge upfront how he pulls the wool over his opponents’ eyes, and hence why he seems to wrongfoot them so regularly.

The intent was not to present proposals that will turn into policy reality in 2029.

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Nor was it about converting voters in any great number to Reform – if you warmed to Farage before, you might like him a bit more after this, in your view, straight-talking press conference.

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Farage’s deportation plan: Analysed

If you detested him, you will likely feel that more strongly and draw comparisons with Enoch Powell. I suspect he will be unbothered by either.

Instead, his announcement was about two things: seizing the agenda (ensuring more coverage of an issue redolent of the failure of the two biggest parties in British politics); and then putting both those other parties on the spot.

Success or failure for Farage, in other words, will come in how the Labour and Tory parties respectively respond in the coming days. Look what he’s done to the Tories.

The real policy meat of his speech comes in the Farage promise to rip up the post-Second World War settlement for refugees, drawn up with fresh memories of persecuted hordes fleeing the Nazis.

Along with an exit from the European Convention on Human Rights, the Reform UK leader would pause Britain’s membership of the 1951 Refugee Convention, the UN Convention Against Torture, and the Council of Europe Anti-Trafficking Convention.

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The pause of British membership of these treaties and conventions may even turn out to be temporary, he said.

“We do think there is hope that the 1951 Refugee Convention of the UN can be revisited and redefined for the modern world,” he said.

But action, he argues, is needed now because the 1951 UN Refugee Convention obliges signatories to settle anyone with a “well-founded fear” of persecution.

That, critics say, has become the “founding charter” of today’s people-smuggling industry and allows traffickers the right to offer a legal guarantee that if their clients make it to shore they’re covered – and boast this works in 98% of cases for the Sudanese and Syrians, and 87% for Eritreans – the recently updated approval rates. A big moment for a major party.

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Farage questioned over deportation plans

Yet this is almost – but not quite – the Conservative position. On 6 June this year, Kemi Badenoch gave a speech saying she was minded to pull out of the European Convention of Human Rights, and had commissioned a review led by Lord Woolfson to examine whether and how ECHR withdrawal, and pulling out of the the Refugee Convention and the European Convention Against Trafficking, might help.

So she added: “I won’t commit my party to leaving the ECHR or other treaties without a clear plan to do so and without a full understanding of all the consequences.

“We saw that holding a referendum without a plan to get Brexit done, led to years of wrangling and endless arguments until we got it sorted in 2019. We cannot go through that again.

“I want us to fully understand and debate what the unintended consequences of that decision might be and understand what issues will still remain unresolved even if we leave.

“It is very important for our country that we get this right. We must look before we leap.”

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In other words, what Reform UK did was steal a march on a likely Tory decision at conference.

Farage has eaten Badenoch’s homework. And she has been left accusing him of being a copycat of a policy she hadn’t quite adopted.

Then there is Labour. They accept the ends of Farage’s argument, but not, it seems, the means.

Home Secretary Yvette Cooper is reviewing parts of the European Convention on Human Rights – Article 3 (which prohibits torture, inhuman, or degrading treatment or punishment) and Article 8 (which protects the right to a family life).

But that hasn’t emerged yet, and will not, at its maximalist outcome, recommend the UK withdrawal from the convention.

And will Labour strategists really want the spectre of ministers having to repeatedly argue in favour of ECHR membership in interviews, given that is likely to be the position of two of their biggest opponents? Another conundrum for Labour, which has Farage as the author.

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From Saturday: Police clash with protesters

Then there is the question of language for both Labour and the Tories. Dare they go as far as Reform UK and adopt a tone more aggressive than anything seen in recent years – one which talks of “invasions” and “fighting age males” and sending people back to “where they came from”?

Will both political parties hold that line that this language, in their view, goes too far?

Tuesday’s speech was less about voters, more about Westminster politics as we enter political season. All done at an hour-long press conference that gave Farage a platform. Can the other party leaders now look like they’re ignoring him and wrestle back the microphone? Or can they not help themselves and respond in kind?

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