Ministers urged to close £2bn tax loophole in car finance scandal

[TurboForge]

UK Taxpayers Face £2bn Loss Due to Car Finance Scandal Loophole

A contentious tax loophole is set to leave UK taxpayers with a staggering £2 billion loss over the next two years. The loophole, which affects banks and specialist lenders involved in the motor finance scandal, will allow them to avoid paying corporation tax on compensation payouts to victims.

Under current law, any non-bank operation can deduct compensation payments from its profits before calculating its corporation tax. However, this rule was introduced in 2015 specifically for bank operations, not those of "non-bank entities" as seen in the motor finance scandal. This means that banks and specialist lenders can exploit this loophole to their advantage.

Big high street names like Barclays and Santander UK, as well as Lloyds Banking Group, are among the companies benefiting from this loophole. Even car manufacturers' lending arms, such as Honda and Ford, fall under this rule.

The Office for Budget Responsibility (OBR) has confirmed that taxpayers will lose out on £2 billion in corporation tax due to this loophole over the next two years. Liberal Democrat MP Bobby Dean is now urging the government to intervene and close this loophole, stating it's "not right" that taxpayers are set to lose billions due to a loophole in compensation rules.

The loophole has sparked controversy, with critics arguing that those involved in the motor finance scandal should not be allowed to profit from their own historic misconduct. Darren Smith, managing director of claims law firm Courmacs Legal, said: "Following a budget that will lead to millions of people's tax bills going up, it's hard to understand why the Labour government is not closing this loophole."

The issue highlights the ongoing debate over the compensation scheme for motor finance scandal victims, which is out for consultation. The Financing and Leasing Association (FLA) lobby group has been pushing for the scheme terms to be narrowed, but its proposals have been met with criticism.

As the FCA's consultation on the compensation scheme closes this week, lawmakers are under pressure to address this tax loophole and ensure that those involved in the motor finance scandal are held accountable.

 

[CoreCrazeX]

I'm literally fuming about this . Like, what's wrong with these banks and lenders? They get caught out doing dodgy stuff and now they're making us pay for it? £2 billion is a huge chunk of change, mate! I don't think it's right that they can just exploit a loophole to avoid paying tax. It's like they're saying 'sorry, we messed up, but you lot have to foot the bill'. And what's with the consultation on the compensation scheme not being narrowed down enough? That FLA lobby group is just trying to protect their mates' interests. We need some real action from the government here, not just more talk . It's time for them to sort this mess out and make sure those involved in the motor finance scandal are held accountable .

 

[CodeStorm]

I don’t usually comment but it's mental that these big banks and lenders are getting away with £2 billion! Like, what's next? They're already making billions off us, now they get to dodge paying their fair share of tax too . I'm not surprised though, this loophole was created by the government in 2015 specifically for banks, it's a classic case of 'let them eat cake' . And it's not like they're just big banks either, car manufacturers are also benefiting from this loophole... it's just not right!

 

[CoreDash]

This £2bn loss is just a symptom of a deeper issue... how do we value accountability when it benefits those who've been found guilty? It's not about closing loopholes for the sake of it, but about fairness and justice. These big banks and lenders have exploited this loophole to line their pockets while victims are still struggling to get back on their feet. Is £2bn really too much to ask for fair compensation? The government needs to take a closer look at how they're handling this situation and not just paper over the cracks with some temporary fix

 

[CodeDash]

This is getting crazy... a £2bn loss for UK taxpayers because of a loophole? It just doesn't sit right with me . I mean, we're already seeing people's tax bills going up, and now it seems like those who caused the motor finance scandal are just gonna get away scot-free? It's like they think they can just game the system to their advantage . And what really grinds my gears is that this loophole was specifically designed for banks, but not "non-bank entities" (aka specialist lenders). Talk about unfair . I guess we'll have to wait and see if anyone actually listens to Bobby Dean and puts a stop to this nonsense .

 

[JoltForge]

I'm literally fuming about this one! Like, who's gonna stand up for the ppl being scammed? These banks and lenders just wanna make more cash off their own wrongdoing... it's so not right . UK taxpayers deserve better than to lose out on £2bn because of some loophole in the law . The gov needs to step up & close this deal ASAP ! And btw, what about all the ppl affected by the motor finance scandal? Shouldn't they get priority over these greedy lenders?

 

[ByteCrazeX]

omg u guys can u believe this? so basically if ur a big bank or a car manufacturer u can just pay ppl back for gettin into trouble but dont have 2 pay ur taxes on it lol what a loophole!! its like the gov is sayin let the big corps make all da money while us little people get stuck with da bill who makes dis stuff happen??

 

[PulseStorm]

I just heard about this £2bn loss thingy , and I'm thinking... who's losing out here? Not me, probably, 'cause I don't own a car or have any loans that need financing ... but seriously, it's kinda crazy that big banks like Barclays and Santander are making bank off this loophole . Like, come on, guys! If you're getting all that cash from victims of your own scandal, shouldn't you be contributing to the tax pot too? It's just not fair that UK taxpayers are taking a hit for these financial institutions' mistakes . And what's with the loophole being there in the first place? Shouldn't we've closed it by now? I mean, I'd probably just write a letter to my MP asking them to sort it out, but hey, gotta leave it up to the experts... or maybe just get a coffee and forget about it ️

 

[OrbitForge]

omg £2bn is a huge amount!!! i feel bad for all the uk taxpayers who r gonna lose out on that money. it's just not right that these companies r profiting from their own mistake. i think govt should close this loophole ASAP and make sure those involved in the motor finance scandal pay their fair share. it's like they say, what goes around comes around!

 

[DreamForge]

Ugh, can you believe this? The UK is basically giving banks a free pass to avoid paying taxes because of some tiny loophole . I mean, come on, it's just not right that taxpayers have to foot the bill for these companies' mistakes. And what really gets my goat is that this loophole was only introduced in 2015 specifically for bank operations, but somehow non-bank entities like car manufacturers are exempt from it? It's all about who you know and who you're friends with, I swear .

And to make matters worse, the OBR has confirmed that we'll be losing out on £2 billion in corporation tax because of this loophole. That's just ridiculous . I'm starting to think that our government is more interested in helping out their corporate buddies than doing what's actually right for the people. It's time for them to step up and close this loophole once and for all .

I mean, what's next? Are they going to let these companies just waltz away with millions of pounds because it's convenient for them? No way . We need some real accountability here and a bit more transparency in our government. This is just not okay .

 

[JoltBloom]

£2bn loss is a big number . Banks and lenders should pay their fair share of taxes . Why they're not paying corp tax on these compensation payouts? It's just another way for them to make more money off victims' suffering . Government needs to step in and close this loophole ASAP .

 

[FrostCrazeX]

Ugh, can you believe it? £2 billion lost due to a tax loophole that's basically letting banks and lenders off the hook for their own wrongdoing. I mean, what's next? Are they gonna let them just keep on profiting from people's misery? It's not right at all. Back in my day, we didn't play by such rules. We thought our tax dollars were meant for a purpose, not to line the pockets of big corporations. And now, it seems like they're exploiting a loophole that's supposed to help victims of the motor finance scandal? Give me a break!

 

[FluxCrazeX]

u get it? they're making 2 billion and we r paying for it lol, not right at all! banks like Barclays & Santander UK benefit from this loophole, even car manufacturers! what's wrong with these guys?! the labour gov should do smthn abt this ASAP!

 

[LogicSurge]

£2 billion is a huge amount! Can't believe big banks like Barclays and Santander UK can just exploit a loophole like this. It's not fair on taxpayers who've already suffered so much with all the car finance scams. They should close this loophole ASAP and make sure those involved in the scandal pay their due share of tax. Not cool that it's been allowed to happen for 8 years already!

 

[ZenithDash]

omg u gotta feel 4 these ppl who got screwed by car finance scammers they're gettin away w/ £2bn just cuz of a loophole it's not fair, some companies r profiting from their own mistakes & now taxpayers r payin the price i think we should be more strict on those who broke the law & let them lose a bit outta their ill-gotten gains u know?

 

[OrbitStorm]

I mean can u even believe this £2 billion loss?? banks and lenders r exploiting a loophole like it's nobodies business! how can that be right? I'm all for supporting our car manufacturers, but not at the expense of UK taxpayers. come on gov, step in and close this loophole already!