The UK government stands accused of “betraying” thousands of contractors who have settled their Loan Charge liabilities in full by agreeing to cut the amount still owed by those who are yet to do so by “at least 50%”.
The government committed to wiping thousands of pounds off the outstanding liabilities of the 32,000 people who remain in-scope of the Loan Charge in November 2025, and are yet to reach a settlement agreement with HMRC over the matter.
This commitment was in response to the publication of the latest independent review into the Loan Charge in November 2025, authored by former HM Revenue and Customs (HMRC) assistant director Ray McCann.
As previously detailed by Computer Weekly, the review was commissioned by HM Treasury to resolve the fallout from the Loan Charge policy, which has seen tens of thousands of contractors saddled with life-changing tax bills.
According to the government, in its response to the McCann review, individuals that choose to engage with its revised approach to settlements could see a reduction of up to £70,000 in their outstanding Loan Charge liabilities.
“Most individuals could see reductions of at least 50% in their outstanding loan charge liabilities and an estimated 30% of individuals could be able to settle without paying anything,” the government response stated.
According to the McCann review, around 12,000 contractors have already reached a settlement agreement with HMRC over the Loan Charge.
Loan Charge liabilities
However, it has since emerged that many of these individuals will be precluded from financially benefiting from the government’s proposed interventions, because only those who have delayed settling with HMRC will see the size of their Loan Charge liabilities cut.
The situation has been described as “manifestly unfair” by a cross-party group of MPs, who are all members of the Loan Charge and Taxpayer Fairness All Party Parliamentary Group (APPG), in a letter dated 16 December 2025 and addressed to McCann.
“Those who settled with HMRC to avoid the Loan Charge, with the threat of much higher HMRC demands, now face having done so on worse terms than those who did not,” the letter states.
“It is a matter of natural justice that all those who settled have their settlements readjusted so that they are subject to the same terms as those who did not. This is something we believe the government must address, and as a matter of priority.”
One contractor affected by the situation, who spoke to Computer Weekly on condition of anonymity, said they signed a settlement agreement with HMRC in late 2020, which has concluded in the repayment of a six-figure sum to HMRC over a five-year period.
“Having paid a six-figure sum to HMRC to conclude settlement, I feel betrayed and sickened that those, like me, who have settled are not being retrospectively offered the same terms as those who sat back and did nothing,” the contractor said. “It, quite frankly, beggars belief that those who obfuscated and sat on their hands now get preferential treatment.”
If the contractor had decided to ignore HMRC’s settlement requests and delayed settling, they could have had their total Loan Charge liabilities cut by tens of thousands of pounds, they claimed.
“It is gutting that I have spent the past five years paying back a large sum of money to HMRC that has put myself and my family under huge financial stress … only to find that if I had done nothing and not complied, I would have been better off as a result.
“The government’s own concessions demonstrate that the original settlement terms were excessive [and] unaffordable … [but] the new approach benefits only those who did not settle … leaving the most compliant taxpayers, such as myself, substantially worse off.”
Computer Weekly contacted HMRC to see if there would be any financial recourse for contractors that have already settled their Loan Charge liabilities, but was told to contact the Treasury for a response.
Computer Weekly put the complaints of the contractor and the APPG to the Treasury, whose response did not directly address any of the questions raised about whether the government has any plans to reassess the amounts paid by contractors that have already settled their Loan Charge liabilities.
“We accept the review’s finding that the loan charge was an extraordinary piece of legislation,” said a Treasury spokesperson, in its statement to Computer Weekly.
“Through implementing these recommendations, we aim to draw this matter to a close in a manner that balances the real concerns of those in scope with its broader responsibilities for fiscal responsibility and the wider public.”
“Those in scope must still engage with HMRC and settle under revised terms. At the same time, we are strengthening anti-avoidance enforcement to prevent non-compliance.”
Anti-Loan Charge campaign groups speak out
Speaking to Computer Weekly, Loan Charge Action Group (LCAG) spokesperson Steve Packham, whose organisation campaigns against the policy, said many of its members were “pushed into settling on unfair terms”.
He also pointed out that the McCann review acknowledged that the previous settlement terms the government offered those in-scope of the policy were “unfair and unreasonable”, and “unduly harsh”.
“[And] yet, disgracefully, the review was designed to ignore those who settled on these terms … so it is completely wrong that the McCann review excluded all these people,” said Packham.
As a result, he said LCAG is now intent on securing a “just resolution” for these individuals and everyone else affected by the Loan Charge. “Many of those who settled previously did so under duress and because they believed they would otherwise face far higher bills,” said Packham.
“There are also thousands of people who were engaged in settlement discussions with HMRC, for many months and even a couple of years, who were prevented from settling due to HMRC delays and incompetence, or because HMRC’s demands were simply unaffordable. All [those] affected should be offered the same terms, regardless of settlement status or the years affected.”
In a statement to Computer Weekly, Loan Charge and Taxpayer Fairness APPG co-chair Greg Smith echoed Packham’s dismay at how the McCann report criticises the previous set of Loan Charge settlement terms, yet does nothing to help those who had to abide by them.
“It is simply inconceivable, as well as immoral, that the government can stick to a position of most harshly punishing those who did what HMRC and ministers told them they should do,” said Smith. “There must be a U-turn on this, and the Loan Charge and Taxpayer Fairness APPG will keep pushing to right this clear injustice.”
