Many of you will know of my six-year battle to see fair treatment of historical pension scam victims. In 2018 I wrote a briefing paper setting out an easy legal way to respond to the developing scandal of how unfairly scam victims were treated. My paper was rejected and successive government ministers turned their backs. “We don’t want to open the floodgates to others” was a common answer to finding a way to double down on punishing the already victimised. In my paper, I estimated that the tax that Treasury would have given up was around £20 million. £20 million to prevent financial hardship, mental health damage, family suffering and for government to be on the right side of history. You’d have thought I was asking for the moon. I have written paper after paper, have marched on Downing Street, have spoken in Parliament and have been featured in main stream media, but have been thwarted each time.
Fast forward 6 years and there is a bit of chink opening up. I don’t want to say “told you so” but I was right all along.
In January 2025, Ray McCann was tasked with examining the impact of the Loan Charge, a tax measure introduced by HMRC to tackle disguised remuneration schemes. These were schemes sold to people to reduce their tax charges by being paid as loans rather than income (thereby avoiding income tax and National Insurance). As with pension scams sold by professional advisers, the promoters of these schemes are the ones with the knowledge, mislead the customer, walk away with the fees and money and the little guy gets the blame. You know the story – I’ve told it often enough.
The McCann review came about because of intense lobbying of politicians by victims and supporters and it looked into the fairness, effectiveness, and cost of the government’s loan charge policy.
No big surprise, but the review found that HMRC’s policy of punishing the users of loan charge schemes deterred a lot of others from trying it, but unfortunately had a huge impact on ordinary people who acted on professional advice without understanding the risks. Most of the victims (for they are) were not high earners and could not afford to pay the penal tax charges that resulted.
The big issues were that:
- The tax charges apply to events that happened years before HMRC identified the dodgy schemes and that HMRC’s actions were unfair and disproportionate.
- The tax demands coming years later had severe consequences for ordinary taxpayers’ welfare.
- HMRC communications with victims and dispute resolution procedures left a lot to be desired and did nothing to support vulnerable individuals.
The government has accepted the findings and will give concessions to the loan charge contractors. They can act quickly when they want to.
To be honest, I could have written the same report and just changed the name to reflect the pension scams tax scandal. I would have had a lot more to say of course because I believe that historical pensions scams, like the Ark scheme, are much more deserving of help than those of people who were after all paid and kept their salaries. The historical pension scams victims lost most of their savings, lost out on years of investment returns and still have to pay significant tax charges to HMRC.
Another significant injustice is that HMRC charges tax on the individual for the pensions money accessed too early and also on the interest on that money, oh and it also levies scheme sanctions charges on those same monies – in other words HMRC takes three big bites out of the same pot. On top of that it also charges interest at 8% per annum compound on the tax charges that are still outstanding after more that 10 years. The late payment interest alone adds another 50% to the tax bills.
The cost of this policy is huge on human terms, but it is also a huge drain on the public purse. Not only have we as taxpayers had to pay for the resources and legal costs of pursuing victims for 15 years, we also have to pay for the NHS to treat victims suffering mental and physical harm as a result of the tax policy. This is unsupportable.
I was hopeful that a change in government would lead to a more empathetic outlook, but my entreaties to various government ministers remain unanswered.
I am now hopeful that the McCann report will resonate and be a light bulb moment. I hope that Treasury, Dept of Health, the Home Office and DWP will realise that the UK’s future needs to be built on a solid foundation of fairness and equity and that focusing on scheme promoters instead of throwing victims to the wolves is a more progressive and lucrative approach.
I stand ready to write the Snowdon Report!
Margaret Snowdon, Chair – PSIG
