Proposals to give HM Revenue & Customs (HMRC) sweeping powers to lump together a huge backlog tax avoidance cases queuing for the courts have come under fire.
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HMRC wants to take sample cases before tax tribunals as examples of ‘follower’ cases and then apply the results en masse.
However, the Chartered Institute of Taxation (CIOT) argues this ignore the principle of each case being decided on its own merits and deny taxpayers a voice in their defence.
HMRC says the power to deal with bulk cases is just temporary to whittle down thousands of cases waiting for tribunal hearings – but then that is what Pitt said when he introduced income tax in 1799 to finance a war against Napoleon. The tax has been in place ever since.
The linked cases involve tax payers exploiting the same tax avoidance schemes or a similar plan.
If HMRC wins the sample cases, every tax payer involved will have to pay tax, interest and penalties without having their case heard before an independent tribunal.
CIOT president Stephen Coleclough said: “We do need to look at how to stop jamming the courts with excessive numbers of cases, but tax payers should not lose their legal safeguards and rights to appeal lightly.
“Handing HMRC this executive power could make tax inspectors the judge and jury. Giving them this power should not be done lightly and should come with a lot of checks and balances to protect individuals.
“This should also be an emergency measure and in no way a permanent fixture.”
CIOT members have complained that the measure erodes the rights and freedoms of individual taxpayers to a fair and impartial hearing.
Not fair justice
Although taxpayers will have the right of appeal, CIOT suggests the government and HMRC are plotting to penalise taxpayers who take action in cases where they believe they are doomed to fail.
“Without exception, CIOT members have concerns about the lack of protection this measure gives tax payers and feel the proposals go against the principles of a fair justice system,” said Coleclough.
HMRC seems to be already pursuing the ‘follower’ policy unofficially.
Last week, former Radio 1 DJ and TV presenter Chris Moyles was one of three taxpayers before a tax tribunal involving a tax avoidance scheme.
The three lost the case and were ordered to pay tax and penalties, while HMRC is now pursuing around another 500 less high-profile investors in the scheme on the grounds that because the trio lost their case, they will too, so they should pay up.
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