AN MP has written to the Prime Minister to ask him to review tax changes that have landed some people with bills of more than £100,000.

The Loan Charge 2019 is a charge that the Government is introducing on loans that some contractors received instead of payment.

In these 'disguised remuneration' schemes, a consultant was not paid directly for their work, the money is paid into an 'employee benefit trust' set up by a company and then paid to the worker in the form of a loan, with the understanding they would not have to pay it back.

The HMRC calls this 'disguised remuneration; and the charge is a way for the Treasury to recoup what it sees as unpaid National Insurance and income tax from such schemes stretching back as far as 1999.

However, the charge has been accused of being unfair and generating huge bills that people cannot pay.

Mr Johnson has said the charge “seems superficially unjust”, as people are being “retrospectively pursued” for using schemes that, at the time of use, were entirely legal

In a letter to Mr Johnson and Chancellor Sajid Javid, Chingford and Woodford Green MP Sir Iain Duncan-Smith said: “You may recall during the leadership campaign that we discussed the matter of the 2019 Loan Charge and the urgent need for the new government to rethink this highly unfair and damaging policy which affects an estimated 50,000 people in the country and 140 of my constituents.

“Thus far the retrospective loan charge has caused numerous businesses to close, forced some to lose their jobs and livelihoods and has also pushed several into bankruptcy. Many have faced tax bills of well over £100,000, leading to some risking homelessness.

“Additionally, most of those who employed these schemes are the more vulnerable in society and not the wealthiest.”

The issue started in the 1990s and 2000s. A number of self-employed contractors were paid in loans, to lower their tax burden – a practice which was legal at the time.

HMRC has only started clamping down on these schemes since 2010. A 45 per cent charge for those loans from up to 20 years ago was added on April 5, unless contractors have come to a settlement arrangement with HMRC, with all outstanding loans added together and taxed as income in one year.

It is in effect a ‘back tax’ and HMRC have demanded that all those affected must pay the charge in the 2019-2020 tax year.

Sir Iain's letter went on: “The Loan Charge All Party Parliamentary Group has reported that of those affected, more than 40 per cent have contemplated committing suicide. I understand some suicides have already been confirmed.

“It has always been a governing principle that we should not apply legislation retrospectively. This position is a breach of natural justice and is harming for too many people who did what they believed was correct at the time.”