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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.

‘Unjust campaign is targeting wrong people’

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.

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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.

Tens of thousands in fear of bankruptcy

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.

Warning of further suicides

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 than 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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At least 13 people may have taken their own lives linked to Post Office scandal, public inquiry finds

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At least 13 people may have taken their own lives linked to Post Office scandal, public inquiry finds

At least 13 people may have taken their own lives after being accused of wrongdoing based on evidence from the Horizon IT system that the Post Office and developers Fujitsu knew could be false, the public inquiry has found.

A further 59 people told the inquiry they considered ending their lives, 10 of whom tried on at least one occasion, while other postmasters and family members recount suffering from alcoholism and mental health disorders including anorexia and depression, family breakup, divorce, bankruptcy and personal abuse.

Follow latest on public inquiry into Post Office scandal

Writing in the first volume of the Post Office Horizon IT Inquiry report, chairman Sir Wyn Williams concludes that this enormous personal toll came despite senior employees at the Post Office knowing the Horizon IT system could produce accounts “which were illusory rather than real” even before it was rolled out to branches.

Sir Wyn said: “I am satisfied from the evidence that I have heard that a number of senior, and not so senior, employees of the Post Office knew or, at the very least, should have known that Legacy Horizon was capable of error… Yet, for all practical purposes, throughout the lifetime of Legacy Horizon, the Post Office maintained the fiction that its data was always accurate.”

Referring to the updated version of Horizon, known as Horizon Online, which also had “bugs errors and defects” that could create illusory accounts, he said: “I am satisfied that a number of employees of Fujitsu and the Post Office knew that this was so.”

The first volume of the report focuses on what Sir Wyn calls the “disastrous” impact of false accusations made against at least 1,000 postmasters, and the various redress schemes the Post Office and government has established since miscarriages of justice were identified and proven.

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‘It stole a lot from me’

Recommendations regarding the conduct of senior management of the Post Office, Fujitsu and ministers will come in a subsequent report, but Sir Wyn is clear that unjust and flawed prosecutions were knowingly pursued.

“All of these people are properly to be regarded as victims of wholly unacceptable behaviour perpetrated by a number of individuals employed by and/or associated with the Post Office and Fujitsu from time to time and by the Post Office and Fujitsu as institutions,” he says.

What are the inquiry’s recommendations?

Calling for urgent action from government and the Post Office to ensure “full and fair compensation”, he makes 19 recommendations including:

• Government and the Post Office to agree a definition of “full and fair” compensation to be used when agreeing payouts
• Ending “unnecessarily adversarial attitude” to initial offers that have depressed the value of payouts, ⁠and ensuring consistency across all four compensation schemes
• The creation of a standing body to administer financial redress to people wronged by public bodies
• Compensation to be extended to close family members of those affected who have suffered “serious negative consequences”
• The Post Office, Fujitsu and government agreeing a programme for “restorative justice”, a process that brings together those that have suffered harm with those that have caused it

Regarding the human impact of the Post Office’s pursuit of postmasters, including its use of unique powers of prosecution, Sir Wyn writes: “I do not think it is easy to exaggerate the trauma which persons are likely to suffer when they are the subject of criminal investigation, prosecution, conviction and sentence.”

He says that even the process of being interviewed under caution by Post Office investigators “will have been troubling at best and harrowing at worst”.

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‘Hostile and abusive behaviour’

The report finds that those wrongfully convicted were “subject to hostile and abusive behaviour” in their local communities, felt shame and embarrassment, with some feeling forced to move.

Detailing the impact on close family members of those prosecuted, Sir Wyn writes: “Wives, husbands, children and parents endured very significant suffering in the form of distress, worry and disruption to home life, in employment and education.

“In a number of cases, relationships with spouses broke down and ended in divorce or separation.

“In the most egregious cases, family members themselves suffered psychiatric illnesses or psychological problems and very significant financial losses… their suffering has been acute.”

The report includes 17 case studies of those affected by the scandal including some who have never spoken publicly before. They include Millie Castleton, daughter of Lee Castleton, one of the first postmasters prosecuted.

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Three things you need to know about Post Office report

She told the inquiry how her family being “branded thieves and liars” affected her mental health, and contributed to a diagnosis of anorexia that forced her to drop out of university.

Her account concludes: “Even now as I go into my career, I still find it so incredibly hard to trust anyone, even subconsciously. I sabotage myself by not asking for help with anything.

“I’m trying hard to break this cycle but I’m 26 and am very conscious that I may never be able to fully commit to natural trust. But my family is still fighting. I’m still fighting, as are many hundreds involved in the Post Office trial.”

Business Secretary Jonathan Reynolds said the inquiry’s report “marks an important milestone for sub-postmasters and their families”.

He added that he was “committed to ensuring wronged sub-postmasters are given full, fair, and prompt redress”.

“The recommendations contained in Sir Wyn’s report require careful reflection, including on further action to complete the redress schemes,” Mr Reynolds said.

“Government will promptly respond to the recommendations in full in parliament.”

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Post Office scandal inquiry lays bare a second injustice

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Post Office scandal inquiry lays bare a second injustice

The long-awaited first report from the Post Office Horizon scandal inquiry lays bare not just the devastating personal toll of one of the greatest miscarriages of justice in British legal history, but also the slow-motion failure of the government and the Post Office to deliver meaningful redress.

Sir Wyn Williams’s first report documents with stark clarity how hundreds of sub-postmasters, wrongly accused of theft and fraud due to the faulty Horizon IT system, lost their livelihoods, homes, reputations – and in some cases, their lives.

Follow Post Office inquiry latest

Thirteen people are believed to have taken their lives as a result of the scandal.

Fifty-nine contemplated it.

It talks of alcohol addiction, serious mental illness, and bankruptcy – all tearing families apart and leaving behind a heartbreaking legacy.

But if the scandal was a failure of justice, the response to it has become a second injustice.

More on Post Office Scandal

Critical on a technical level

The report is critical, on a fairly technical level, about the complexity, delays, and bureaucracy of redress schemes that have left victims still waiting years for full compensation.

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‘It stole a lot from me’

Hundreds of whom have died before seeing “full and fair redress”.

While Sir Wyn is fair to the government and the Post Office in stating that he believes their commitment to delivering the above has been in “good faith”, he concludes this has not been achieved for every victim, describing “formidable” difficulties.

There are 19 recommendations – including a push to ensure consistency across all four redress schemes, with an agreed and public definition of “full and fair redress”.

Compensation

Among them, that family members of victims should be compensated, and a permanent public body established to manage future redress schemes in future.

Additionally, Fujitsu, the Post Office, and the government should engage in formal restorative justice programmes.

There was also a flavour of what is to come in the final report later this year or next.

The report has found that both Fujitsu and Post Office staff knew Horizon could produce false data but concealed this, maintaining a false narrative of accuracy.

One of the most important things now, though, is how and when the government, Post Office, and Fujitsu respond officially.

Sir Wyn has also set a deadline of 10 October 2025 for that.

The victims of this scandal have waited long enough.

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‘Wholesale failure’ to address risks posed by Southport attacker before murders, says public inquiry chairman

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'Wholesale failure' to address risks posed by Southport attacker before murders, says public inquiry chairman

There was a “wholesale and general failure” to address the risks posed by Axel Rudakubana before the Southport attack, the chairman of the public inquiry into the murders has said.

In his opening statement at Liverpool Town Hall, Sir Adrian Fulford said the teenager’s “known predilection for knife crime” suggests it was “far from an unforeseeable catastrophic event”.

The former vice president of the Court of Appeal said Rudakubana’s actions “impose the heaviest of burdens” to investigate how it was possible for him to cause “such devastation”.

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‘We need to understand what went wrong’

The 18-year-old murdered Elsie Dot Stancomb, seven, Bebe King, six, and Alice da Silva Aguiar, nine, at a Taylor Swift-themed class on 29 July last year.

He also injured eight other children and two adults at the Hart Space in the Merseyside seaside town, with Sir Adrian describing the attack as “one of the most egregious crimes in our country’s history”.

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‘We don’t want Elsie forgotten’

The public inquiry, announced by Home Secretary Yvette Cooper in January, will look into whether the attack could or should have been prevented, given what was known about the killer.

Rudakubana, who was born in Cardiff, had been referred to the government’s anti-extremism Prevent scheme three times before the murders, including over research into school shootings and the London Bridge terror attack.

He had also accessed online material about explosives, warfare, knives, assassination and an al Qaeda training manual.

A rapid review into his contact with Prevent found his case should have been kept open and that he should have been referred to Channel, another anti-terror scheme.

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Rudakubana was twice caught with a knife and managed to hoard other blades, as well as a bow and arrow, machetes, a sledgehammer and the deadly toxin ricin at his home.

He bought the 20cm chef’s knife used to carry out the attack using a Virtual Private Network (VPN).

Sir Adrian said he did not want to pre-judge the outcome of the inquiry.

But he added: “These factors, if correct and when taken together, tend to suggest that far from being an unforeseeable catastrophic event, the perpetrator posed a very serious and significant risk of violent harm, over a number of years, with a particular and known predilection for knife crime.

“Furthermore, his ability, unhindered, to access gravely violent material on the internet, to order knives online when underage, and then to leave home unsupervised to commit the present attack, speaks to a wholesale and general failure to intervene effectively, or indeed at all, to address the risks that he posed.”

Sir Adrian said the inquiry will examine decisions taken in light of Rudakubana’s “deteriorating and deeply troubling behaviour” to identify “without fear or favour” all of the relevant failings.

He said he aims to make recommendations to ensure the best chance of stopping others “who may be drawn to treating their fellow human beings in such a cruel and inhuman way”.

Rudakubana, 18, was jailed for a minimum of 52 years in January and is being investigated over an alleged attack on a prison officer at Belmarsh prison in May.

Sir Adrian said he would be referred to by his initials or as “the perpetrator” during the inquiry and asked the media not to show his “terrifying and singularly distressing” police mugshot to avoid causing distress to the survivors and their families, who have been granted anonymity.

The surviving children, many whom were under the age of 10, are “bravely trying to cope with school life in the face of what they have suffered,” he added.

Sir Adrian asked those in the room to stand for a minute’s silence for the victims.

Some of those whose children were injured will speak at a hearing on Wednesday before the inquiry is adjourned to 8 September, with the first phase expected to last until November.

It will then move on to a second phase next year to “consider the wider issues of children and young people being drawn into extreme violence”.

Rachael Wong, director at law firm Bond Turner, representing the three bereaved families, said: “We know that nothing the inquiry reveals or subsequently recommends will change the unimaginable loss felt by the families of Elsie, Alice and Bebe, but we all now have a responsibility to ensure that something like this never happens again.

“We will be doing all we can to assist the chair through the inquiry and uncover the truth.

“It is only through intense public scrutiny that real change can be effected.”

Sefton Council is asking people not to leave flowers near schools or the scene of the attack to mark the anniversary later this month, but to donate to local charitable causes instead.

There will be a three-minute silence and flags will be lowered to half-mast on public buildings around the Liverpool city region.

“We fully understand that many of us still need to grieve and to mark the day,” the council said in an open letter.

“Our colleagues have been working with faith and community leaders to identify local spaces where you can go, within your neighbourhood, to pay tribute, whether this be to say a prayer, light a candle, speak to someone or quietly reflect in a way that feels right for you.”

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