We’re talking in Gary Tinker’s kitchen when the postman passes the window, followed a moment later by the soft clatter of post on the doormat. After a few minutes he goes to pick them up, and one stands out: a brown envelope on which the stamp of His Majesty’s Revenue and Customs is visible. He sets it carefully on a side table, unopened.
In Gary’s world these letters are called “brownies”. For some, their arrival feels as if it is part of a campaign against them. I was told of one person for whom the arrival of a brownie is often the trigger for a stress-induced seizure.
Gary, 64, is one of an estimated 67,000 people who are affected by the Loan Charge, a retroactive tax demand that HMRC imposed on workers who were paid through the “payroll loan” schemes that began to appear in the early 2000s. In many cases these were full-time employees – including NHS staff and social workers – who were told by the agencies that employed them that they had no choice in how they were paid. Others, like Gary, were told by their accountants to use such a scheme to stay on the right side of employment law.
HMRC knew that what these schemes were really doing was tricking an unsuspecting public into tax avoidance, but it allowed them to continue for years. When it began sending out demands – the dreaded brownies – for tens or hundreds of thousands of pounds, it was not the unscrupulous promoters of the loan schemes who were asked to pay, but the taxpayers who had been duped or forced into using them.
The Revenue’s pursuit of these tax demands has been aggressive and questionable in its methods, which include the use of “behavioural insights” to make taxpayers feel guilty or ashamed. At least ten of the people affected by the Loan Charge have killed themselves, and at least 13 more have attempted to take their own lives.
For others, there is a lifeline: a network of support and advice, made up of people like Gary, who has spent years filing freedom of information requests, collating information and helping them to understand the situation in which they find themselves.
Gary’s kitchen is spotlessly clean. His house, on a neat little cul-de-sac in the town of Stalybridge, near Manchester, is extremely well-Hoovered. The only scuff on the whole place is a patch of roughed-up lawn. “The badger’s been in,” he explains: the animal has developed a passion for the worms on offer in one part of the garden and has been gaining forceful access to the area, at the expense of Gary’s fence, on a nightly basis.
His enthusiasm for keeping things tidy extends to his work in IT, his finances – which have always been handled by the same accountant – and to the more than 17,000 pages of documents that he and a team of like-minded individuals have collected in their long battle against the Loan Charge.
You have almost certainly used some of Gary Tinker’s code. About a third of the payments in the UK economy are processed each day through a core banking system that he helped to design in 1979.
His father worked in a brick factory and his mother mended cloth in a textile mill. He remembers being 16 and going to see her at work in a “dim room” in which she and her fellow menders sat at tables sewing by lamplight. He didn’t want to do the kind of work his parents did, so he stayed in school, where alongside his A-levels he studied computers in order to avoid the other practical courses – accounting, typing or care work – that were required. No one else had much interest in computers; few people had ever used one.
But Gary took to computing; he and another student studied artificial intelligence, and wrote a programme that could determine for itself a winning strategy in noughts and crosses. He continued studying computer science at Bradford University, and during holidays worked at a yoghurt business called Longley Farm in Holmfirth, West Yorkshire. When he arrived at the company the milk still arrived in churns from nearby farms; he and the other delivery workers would remove the lids and give each one a sniff to check it was fresh.
As the dairy industry switched over to tankers, Gary offered to write a computer programme that would track the company’s deliveries to the litre. He continues to write software for the company, which now operates as far afield as Uruguay, 47 years later.
His degree at Bradford University included a year-long industrial placement at the TSB savings bank, and it was here that he met his first love: 13,000 square feet of computing hardware to program and test. He spent as much time with it as he could: “I’d work all through the night, and the following day. I was working seven days a week.” He was enjoying himself so much he didn’t want to go back for the final year of his degree, and as soon as he graduated he returned to the bank to work on its core systems. Those systems were adopted into Lloyds when it merged with TSB in 1995, and again when Lloyds acquired HBOS in 2009. The system Gary helped design as a graduate trainee in 1979 has now evolved to process the accounts of 30 million customers.
By 2007, Gary had worked for banks and other companies in several different countries. Like many IT workers – who are often hired on temporary contracts to work on one project at a time – he was self-employed. He could write the code for a payroll system but he didn’t know much about tax: “I left my accountant to sort out the money.” The same accountant had “looked after” Gary’s father’s finances, and those of his brother. Gary has been using his services since 1986; incredibly, given what was to happen, he still does.
The banks and other companies that employed contractors like Gary didn’t want to risk them claiming full employee rights, so they insisted contractors work through a limited company. This created a problem for contractors: if they set up their own companies they could be investigated by HMRC under the “IR35” rules. That could involve six months of stress and expense (two years, if it went to tribunal). In the early 2000s, scores of “umbrella” companies appeared, offering a simple way to remain self-employed without incurring the wrath of IR35. Contractors flocked to them, and many, like Gary, were encouraged by accountants who were quietly taking a commission for referring their clients to the schemes. The contractors didn’t realise they were running into a trap.
What Gary didn’t know was that his pay was being routed through a loan scheme that did not pay a sufficient amount of income tax, even though he was paying the provider to do just that. HMRC itself was aware how these schemes operated – many had filled out forms notifying the Revenue of their activities – but it took no action beyond sending a letter, once a year, to their members, notifying them that they were looking at the schemes and would be in touch if they needed to take action.
Over ten years later, HMRC wrote to Gary again. After a decade in which it had done nothing to prevent the promotion of loan schemes, the letter stated that Gary owed the Revenue £300,000.
In 2018, not long after Gary received his first demand for payment of the Loan Charge, Keith Gordon was preparing to speak to a parliamentary committee about tax when he received a phone call, “out of the blue”, suggesting he raise the new Loan Charge with MPs. Gordon is both a chartered accountant and a barrister, but even he hadn’t heard much about it. He began reading: “I was shocked by what had gone on to the statute book,” he tells me, “and even more shocked when I realised that the main targets were the individuals who were forced to work through unscrupulous umbrella companies.”
Gordon realised that most of the people who were receiving Loan Charge demands thought they had been paying tax, in some cases for a decade or more. The companies that had processed their pay had made deductions from their wages, as happens on a standard pay-as-you-earn payroll. They were only now beginning to understand that this “wasn’t a tax deduction. It was simply a fee, pocketed by these promoters.”
Gordon could also see how far back HMRC’s knowledge of these arrangements went. In 2004, the law had changed to allow anyone running an employment scheme to give the Revenue early notice of how it would work. The idea was that HMRC could block the new schemes if it thought they weren’t legitimate, or open investigations into the people that used them. Many of the schemes did notify the Revenue: at the time, says Gordon, there was “no real downside” for the promoters who did so.
HMRC may have been aware, then, of the schemes through which Gary was being paid as much as three years before he started using them, and 13 years before he received his first demand for payment. Similar schemes had been used since the 1980s by company directors to reduce the tax on their bonuses; the first scheme used to pay contractors began operating around 2000.
To a regular person, this might sound a bit like the police agreeing that people should be allowed to sell highly addictive drugs, as long as they filed the correct form and agreed that their crimes could be investigated ten years later. Such an arrangement would probably lead the public to conclude that such drugs were now legal, and that’s what happened: contractors like Gary saw that the schemes had HMRC reference numbers, they saw their gross pay reduced by about a fifth – in some cases the reductions were marked “tax and expenses” on people’s payslips – and they concluded that they were paying tax in a legitimate manner.
Many were also reassured by the letters they received from HMRC which told them that “routine inquiries” were being conducted into their tax arrangements: if anything was wrong, HMRC would tell them. “That is a standard letter,” explains Gordon, “but not everyone knows it’s a standard letter. So they assume that if they hear nothing from the Revenue, for ten years, the Revenue has no problem.”
What they didn’t realise was that these letters served another purpose. Typically, the Revenue has four years in which to query a taxpayer’s affairs. HMRC had spent years trying and failing to win tribunals against the original users of loan schemes. “By 2015, the Revenue had missed the boat,” explains Gordon; companies that had sold loan schemes in the 2000s were now safely beyond reach.
But the same was not true of all the workers who had used the schemes. By sending Gary (and tens of thousands of other employees) a letter, HMRC had given their cases a new legal status: they were open inquiries, for which there is no time limit. “Because they had these zombie inquiries open,” explains Gordon, “they had a foot in the door. The employees were still fair game.”
In his 2016 Budget speech, George Osborne told the Commons he was going to “repair our public finances” using, among other things, “action against tax avoidance”. Part of these measures was the Loan Charge, which had been proposed to Treasury ministers by HMRC the previous year and would lead, as the Liberal Democrat MP Tim Farron told the Commons this February, to “countless divorces, family break-ups, mental health breakdowns and bankruptcies, and at least ten suicides”. In 2016, Osborne presented his measures as “proof that we are all in this together”. Later in the same speech he announced a plan to cut corporation tax to 17 per cent, the second-lowest level in the developed world.
The impact of the Loan Charge has been horrific for several reasons. The first of these is that it asks people to pay very large sums of money, immediately. This had worked for HMRC in the past: accelerated payment notices, or APNs, had been used to prevent unscrupulous business owners from dissolving their companies before the Revenue could take them to court. Under an APN, the company had to pay a sum up front. When the revenue began turning this power on individuals, the effects were devastating: one APN I was shown demanded a contractor pay more than £186,000 within 28 days.
The Loan Charge went further still: someone who made an average of £35,000 a year for ten years would, in a normal tax arrangement, have paid 20 per cent income tax, after their taxable allowance. The Loan Charge swept all those years together, meaning the same person could be billed as if they’d earned £350,000 in a single year – most of which would therefore be taxed at 45 per cent.
These bills were chased aggressively. At one point, HMRC inspectors wrote to Gary – who has paid £70,000 in APNs, and is scrupulous in ensuring that all of his tax affairs aside from the Loan Charge are in order – and told him they would be “measuring how long it takes you to respond to us”. After he complained, an internal investigation concluded that this was unnecessarily aggressive, and Gary was awarded £100 in compensation.
Other people affected by the Loan Charge told me they felt manipulated by the Revenue’s use of behavioural insights. HMRC sent different versions of the same letter to 1,200 people to see which “created the greatest impact”, as one freedom of information response read. Some of these letters approached the subject carefully: “We understand that you may be in a difficult situation, which you did not expect and which was not explained properly to you.” In others, the language seems chosen to create a sense of shame and culpability: “You are in the small minority of people who have made the deliberate choice to avoid tax,” one read, while another explained that “we all lose out on essential public services such as roads, the NHS and schools” when people used “aggressive tax avoidance schemes”. Thousands of people were now faced with a toxic combination: a very large and unexpected debt coupled with the shame of having incurred it.
In 2019, the impact of the Loan Charge was explored in an independent review conducted by Amyas Morse, the former head of the National Audit Office. Morse wrote that he had received “a large volume of evidence that individuals did not understand at the time that the schemes would be considered tax avoidance and would have not used them if they did. Many people affected by the Loan Charge clearly feel a real stigma through being associated with tax avoidance, which is exacerbated through not having understood the nature of loan schemes.” This stigma was illustrated in the testimonies of more than 700 people: “The majority of the impact statements said that the author, or a family member, had experienced a decline in their mental health as a result of their experiences with the Loan Charge… A lower, but still considerable, number referenced suicidal thoughts.”
Behind the scenes, officials were discussing how to manage the fallout. Before the review began, according to one message revealed by a freedom of information request, a senior Treasury official wrote to colleagues: “We do need to make a fist of restricting the scope of any review.” A further email instructed a civil servant to “delete any reference” to repealing the Loan Charge from the review’s terms of reference.
In July 2019, Jim Harra, then the second permanent secretary at HMRC, emailed senior officials at HMRC and the Treasury warning that Loan Charge campaigners would push for a repeal of the policy, and asking: “Can we do anything to peel away the support they have gained from MPs and peers?” Other emails show that officials maintained lists of MPs who had written to the government about the Loan Charge, and tracked social media posts by MPs critical of the policy.
Harra’s emails to colleagues show that HMRC had discussed an “exclusion for people who were duped or forced” into using the schemes, but that Harra himself rejected this on principle. He warned against “accepting a narrative that tax avoiders are innocent or naive victims”. In another email, Harra wrote: “The LC [Loan Charge] campaigners have a canny knack for giving misleading accounts of cases.”
Meanwhile, the desperation of those affected by the Loan Charge made them vulnerable to being exploited still further.
The very people who had promoted the schemes in the first place now offered ways to reduce the Loan Charge – if the victims paid up. A former HMRC tax inspector began campaigning against the Loan Charge and twice accompanied Gary to meet his MP. Another source told me the man had also been to see Ed Davey, and had even arranged for a consignment of manure to be delivered to an HMRC office as Jim Harra was visiting.
Gary Tinker was one of hundreds of people who paid this man thousands of pounds for representation and advice in reaching a settlement with HMRC. But the video meetings became more unusual after the man moved to Cyprus. His behaviour became erratic, and he eventually disappeared, a day before his clients were hoping to reach settlements with HMRC. He appeared again only to send mocking messages to the people who had trusted him. One source told me the last he had heard of the former inspector was when he heard from his bank: the man had attempted to impersonate him, in order to take out a £20,000 loan.
On 2 January 2019 Jon Thompson, then the permanent secretary and chief executive of HMRC, emailed colleagues: “I know that the primary responsibility lies with the taxpayer, but have we taken any action against the seller/promoters of DR [disguised remuneration] schemes?”
The answer was that not one of the promoters who mis-sold these schemes to tens of thousands of people has been prosecuted for doing so.
The largest and best-known of the loan schemes was AML, which was linked to the Isle of Man-based Knox Group, which is chaired by Douglas Barrowman, husband of the formerly Conservative life peer Michelle Mone. HMRC in 2023 identified AML as a promoter of tax avoidance schemes. Earlier this year, an investigation by the think tank Tax Policy Associates suggested that companies linked to Barrowman may have made more than £100m from contractor loan schemes. Barrowman’s lawyers told the Tax Policy Associates that the allegations of “dishonesty, wrongdoing and misconduct are denied by our clients in their entirety”.
HMRC has been able to use tougher anti-promoter measures since 2021, and its “Don’t get caught out” advertising campaign has raised awareness of the risk of being pushed into a scheme. But the onus remains on the taxpayer to avoid such traps, which appear to be multiplying. They remain so widespread that a small number of people were found to have been paid through loan schemes while working (as contractors) for the Revenue itself.
Gary Tinker didn’t approach me or ask me to write about him. I noticed that his name appeared repeatedly among the hundreds of freedom of information requests that have been submitted to HMRC and the Treasury relating to the Loan Charge. In the notes from a first-tier tribunal I read an HMRC lawyer’s opinion that “Mr Tinker has been unreasonably persistent” in seeking the truth. He tells me he took that as a compliment.
When I mention Alan Bates, the sub-postmaster who helped bring the Post Office to justice after hundreds of workers were wrongfully convicted of theft and fraud, he is uncomfortable with the comparison. “I wouldn’t want to take anybody else’s credit,” he tells me; he is just one of a large group of people trying to help the tens of thousands affected by HMRC’s actions. These include Steve Packham and Andrew Earnshaw, the founders of the Loan Charge Action Group, Gary’s fellow freedom of information experts across the UK, and the 267 MPs in the Loan Charge all-party parliamentary group.
He admits, however, that he has “spent thousands of hours on this, now”; in the time his battle has taken up, he could have earned enough to pay off the amounts HMRC says he owes. But this would bring no guarantee of resolution, because the costs to those affected keep going up. The original loans used by the schemes are now being sold on to new companies that see an opportunity in calling them in, while HMRC is exploring another piece of arcane legislation (Section 684 of the Income Tax (Earnings and Pensions) Act 2003) to make those affected liable for tax against income further in the past. Even for those that settle, HMRC’s terms leave open the possibility that the Revenue could ask for more in the future.
For Gary, however, this has become about more than money. On the messaging channels used by people affected he has seen the panic and misery that the Loan Charge has caused, again and again: people suffering in silence because they don’t want to tell their families, people whose marriages have been broken by the sudden collapse of their finances. While it’s true the suicides are the most disturbing result of the policy, they are “the tip of the iceberg”, he tells me.
HMRC told me it was concerned by the impact of tax liabilities on people. “We appreciate there’s a human story behind every unpaid tax bill and we take the well-being of all taxpayers very seriously”, a spokesperson told me. “We are committed to identifying and supporting customers who need extra help with their tax liabilities, and we have made significant improvements to this service over the last few years.” The spokesperson cited Time to Pay arrangements, which allow for payments to be spread out over an indefinite period. “Our message to anyone who is worried about paying what they owe is: please contact us as soon as possible to talk about your options.”
As far as Gary Tinker is concerned, however, he plans to continue helping people to question the Revenue. “Even if I sort mine out, I’m going after them. I want the people that carried on doing this [in HMRC] to spend a bit of time in the dock, answering for what they’ve done here. They didn’t need to do it this way.”
[See also: A very British scandal]
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