A review in 2008 listed the practice among a number of concessions scheduled to be abolished from April 2010. This followed a court ruling in 2005 that HMRC had no power to alter tax demands unless there was specific legislative power.
However, following strong representations from the CIOT, led by the Institute’s President, Andrew Hubbard, and others, the Government have told the CIOT that they will be legislating “at the earliest opportunity” to retain the practice.
Welcoming the news, Andrew Hubbard said:
“This is very good news indeed.
“The most vulnerable in society need protection when things have gone badly wrong, even when they themselves may have caused the problems by their own action – or more often inaction – and the equitable liability practice was an important safety valve of last resort. So I am delighted to have received confirmation directly from the Minister that a decision has been taken to introduce legislation to put this on a proper, permanent footing.
“It is clear that the Government were caught by surprise by the strength of the reaction to their proposal to abolish this practice. To their great credit they immediately agreed to sit down with us and other tax professionals and listen to our concerns.
“We presented a careful analysis of the legal background to the practice and suggested ways in which the practice could be given legislative effect, and we coupled this with a number of real examples of cases where equitable liability had been used to prevent what would otherwise have been a wholly inequitable result. We were considerably helped by the examples sent to us by our members.
“Following last week’s HMRC Charter, this is another example of how constructive working between HMRC and tax professionals is leading to beneficial results and a fairer tax system – and that is in the interests of tax collectors, advisers and payers alike.”
Notes to editors
1) In his letter to CIOT President Andrew Hubbard, Rt. Hon. Stephen Timms MP, Financial Secretary to the Treasury, said:
“I appreciate the work you have undertaken with my officials at HM Revenue & Customs (HMRC) over the summer in helping to progress this matter. This support was especially valuable in helping us to better understand how withdrawing this concession without replacement would impact on vulnerable taxpayers. In the light of that work you will be pleased to learn that we have decided to legislate for this concession at the earliest opportunity. This will ensure that those taxpayers who have difficulty coping with the tax system and fail to meet their legal obligations will be protected formally in future.”
2) The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.
The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, Government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.
The CIOT’s 14,900 members have the practising title of ‘Chartered Tax Adviser’.
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