Tax inspectors to clamp down on people 'before they break law' - Telegraph.
There's lots of fury amongst accountants today. The Telegraph says:
New guidance from HM Revenue and Customs now defines tax avoiders as those seeking to pay less tax than "if Parliament turned its mind to the specific issue in question".
The rules are likely to lead to tens of thousands of people who arrange their financial affairs in perfectly legal ways being investigated by tax inspectors.
This is all the result of a new HMRC code of practice for tax inspectors. It says
Avoidance is not defined in the Taxation Acts…One definition is 'a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question'. At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this.
Inspectors need to have in simple terms a working concept of 'avoidance' in order to properly identify cases which can be worked…The starting point should be that one would normally expect taxpayers to pay tax on their income or profits…It is reasonable to assume that where a commercial transaction is carried out in a particularly convoluted way, then avoidance is afoot.
Which seems so obvious how could anyone disagree? Well, accountants are.
Last night, accountants and lawyers described the rules as a "wholly unwarranted extension" of HMRC's powers which threatened to undermine the democratic right of Parliament to set the law.
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Defining “tax avoiders as those seeking to pay less tax than “if Parliament turned its mind to the specific issue in question”” is very broad, and includes everybody with a profit motive, including tax “mitigators” (i.e. those who faced with a choice of ways of structuring a perfectly normal transaction choose the lowest cost option), but the principle remains that whatever label HMRC choose to slap on a taxpayer they are only ever liable for the amounts due under the law and as possibly decided by the courts.
how lovely – either you pay what we say, or you pay lawyers to sort us out? How fair is that!
.. and here’s me thinking that I voted to elect a man/woman who would represent my views and if the consensus was against that view, vote in a way that balanced the facts and the results. Having made that vote, I suspect that the MP would not have expected a Civil Servant acting on behalf of a Government that has frittered away money (just like all those before them) to “interpret” my views in applying their judgement and opinions ahead of the elected Parliament of the UK.
Bring on the thought police 😥
👿 Yes, thoughtcrime should be severely punished. But ultimately this is just another little nail in the coffin of this evil system.
I’d like to draw a parallel here and see what people think.
Let’s say you were driving along a suburban road, with a speed limit of 30mph, last month at 29 mph. You receive a letter today fining you for speeding because the relevant authority had decided that they didn’t like what the old rules said and had retrospectively reset the speed limit to 20mph.
To give an executive arm of government the power to vary the law “as they think fit” or “to interpret it as they think it should be interpreted” is very dangerous. What is important is that the law is the law and that principle should be sacrosanct. If one party disagrees with what the law says then they have the ability to have this settled through the judicical system.
At it’s worst end, this idea could be used to challenge the syetem of judicial review – a process that is used to ensure that executive power is exercised appropriately.
HMRC have in the past 4/5 years deliberately and with malice aforethought delayed, obfuscated and used every tactic in the book to deny taxpayers reliefs to which they are entitled. This latest attempt at making this underhand and unpublished policy acceptable – with the announcement that they know better than our elected leaders – is almost certain to fail.
However if you had a legitimate claim and was faced with this wall of delay and confusion, how much would you pay your lawyers to sort it out?
This heavy handed and unworkable approach is a nail in the coffin, not of an unfair system (they’re all unfair) but in the coffin of natural justice and expecting our civil servants to be exactly that.