HMRC 'botched' crackdown leaves 50,000 taxpayers facing huge bills - 'A profound failure'

Temie Laleye
Wed, 22 Apr 2026 10:23:11 +0000

HMRC has expended £186million over six years attempting to recover a mere £44million in loan charge taxes, newly revealed figures demonstrate.

The tax authority's crackdown on so-called "disguised remuneration" schemes has been branded a "botched" operation by politicians and campaigners, with approximately 50,000 individuals caught up in the controversial initiative.

Annual compliance costs have reached £31million since the loan charge came into force in 2019, according to an independent review.

A Freedom of Information request disclosed that settlements had been reached with just 800 people, yielding the £44million recovered thus far.

The scheme was originally intended to recoup £3.4billion from those who participated in the remuneration arrangements, which were heavily promoted during the 2000s.

Thousands of contractors found themselves facing substantial retrospective tax demands after acting on advice from third parties, employers and accountants who promoted these arrangements.

Many of those affected maintain they believed the schemes were entirely legitimate at the time and had received tacit approval from HMRC.

The consequences have proved devastating for some. Over the past seven years, workers have been confronted with crushing bills running into tens of thousands of pounds.

The human toll has been severe, with the loan charge linked to 11 suicides among those targeted.

The Loan Charge and Taxpayer Fairness group, comprising 156 MPs and Lords, has described the tax office's approach as "a profound failure" and demanded a public inquiry into the handling of the matter.

Sir Jacob Rees-Mogg, the former Conservative cabinet minister, condemned the approach in stark terms: "Retrospective action is completely unconstitutional. HMRC didn't have any objections at the time, and it's extremely unfair that it's now deemed that [the schemes are] not allowed."

He added: "Innocent taxpayers killed themselves because of a disgraceful and unfair administration of tax, when they thought they'd done something perfectly legitimate. HMRC should have gone after the promoters of the schemes if they thought they were wrong."

Greg Smith, the MP for Mid Buckinghamshire, echoed these concerns: "All along, HMRC has been targeting the wrong people and yet even now, the Labour Government is still only pursuing people that are victims of mis-selling, while doing nothing to recover the millions made by those who mis-sold these schemes, which is shameful."

Steve Packham, co-founder of the Loan Charge Action Group, accused the Chancellor of abandoning her previous position: "In opposition, Rachel Reeves said HMRC should go after the perpetrators, yet in government has done a complete U-turn."

He drew a pointed comparison with other financial scandals: "Whilst those who mis-sold PPI are being forced to pay back millions, those who mis-sold contractor loan schemes are not being asked to pay a single penny – it's double standards."

Following the 2025 Loan Charge Review, HMRC announced revised settlement terms including reductions of up to £70,000, with late payment interest written off and promoter fees taken into account.

An HMRC spokesman stated: "Following the 2025 Loan Charge Review, the Government agreed a new settlement offer, and we are working with our customers to help bring this matter to a close."