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Equitable liability is to become part of law, the Treasury has revealed, in a welcome about-turn in the department’s treatment of the concession.
HMRC’s practice of not pursuing tax in cases in which doing so would be ‘unconscionable’ was to be one of ten concessions to be withdrawn on 1 April 2010.
However, objections from throughout the tax sector have led to the Government rethinking its plan and choosing to legislate for equitable liability ‘at the earliest opportunity’.
‘This will ensure that those taxpayers who have difficulty coping with tax system and fail to meet their legal obligations will be protected formally in future,’ Stephen Timms, the financial secretary to the Treasury, told Tenon’s Andrew Hubbard, who co-ordinated a campaign on behalf of tax experts and their professional bodies to retain the concession.
‘It is clear that the Government were caught by surprise by the strength of the reaction to their proposal to abolish this practice. To its great credit that it immediately agreed to sit down with… tax professionals and listen to our concerns,’ said Mr Hubbard, who is president of the Chartered Institute of Taxation.
‘Following last week’s [launch of the] HMRC charter, this is another example of how constructive working between the Revenue 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.’
Barrister Keith Gordon of Atlas Chambers commented: ‘I'm delighted and relieved that common sense has prevailed. I particularly commend those within HMRC and the Treasury who have listened to the many representations from the tax community and acted upon them.
I would also like to thank those many tax practitioners who contributed to the change of heart by signing up to my e-petition on the Downing Street website.’
Francesca Lagerberg, Grant Thornton’s head of tax, remarked: ‘The decision to keep and enact the concept of equitable liability is an excellent result for common sense. It will provide taxpayers – many of whom will be unadvised – with another mechanism to help ensure that they are treated fairly and reasonably.'
Taxation paid a significant part in the drive to retain equitable liability, calling the plan to abolish the practice ‘plain wrong’.
Editor Mike Truman said: ‘The news that equitable liability is to become law is surprising and extremely pleasing – as pleasing as learning that a concerted campaign by a unified tax industry can have a positive influence on UK tax policy.’
