HMRC Concessions to become law
In running the tax system HMRC exercise certain general management powers (‘collection and management’) alongside the strict law. This enables them to grant concessionary treatment in some cases where applying the law strictly would have an unduly harsh or unfair result. HMRC have now announced that some of these concessions will be formalised in legislation.
Following on from a case heard in the House of Lords in 2005, HMRC have been concerned that some of the concessionary treatment they allow in operating the tax system falls outside of their ‘collection and management’ powers. HMRC are custodians of the tax system and are therefore generally obliged to apply the law as it is written.
The 2008 Finance Act therefore paved the way for some of the ‘Extra-Statutory Concessions’ (ESCs) HMRC presently use to be written into the law. HMRC issued a consultation in November 2008 including draft legislation for the first group of concessions they have reviewed.
In addition to commenting on the draft legislation, LITRG’s response focuses on the following key points:
- We are, of course, in favour of having clear law that is followed by HMRC and taxpayer so are in principle in favour of putting ESCs onto the statute book.
- However, concessions given through HMRC exercising their care and management powers are a necessary part of the tax system where unfair treatment or excessive costs would otherwise result from a strict application of the law.
- With any concessionary treatment, issues of fairness can arise so HMRC must ensure consistent application of those concessions which remain.
- The impact of any changes through legislating ESCs should be fully assessed prior to implementation.
- HMRC guidance to taxpayers should be adequate for them to claim all reliefs to which they are entitled, including any treatment which may be allowed by concession.
To read the full response, follow the link below.
Contact: Kelly Sizer (Tel: 0844 579 6700 Fax 0844 579 6701)
Relevant Link: Extra-Statutory Concessions - Technical Consultation on draft legislation