This week's opinion: 18 November 2021

Clause 95 of the Finance Bill greatly bothers me. This is the provision which reverses the decision in the Wilkes case which, as I am sure readers will remember, decided that the discovery provisions could not be used to assess the high income child benefit charge because the charge was not income. I have no problem with the law being changed to correct what seems to have been a drafting oversight, but I believe that it is fundamentally wrong for the change to have retrospective effect. This is not the case of an avoidance scheme being closed down retrospectively after HMRC had given a warning: it is a case of trying to close the stable door after the horse has bolted in a situation where many people genuinely were not aware that they were riding a horse.

HMRC’s explanation for the need for retrospection – to provide certainty to taxpayers and prevent unnecessary litigation costs – is disingenuous to say the least. People are being deprived of their normal right to litigate a tax dispute. Fairness works both ways. If the Court of Appeal and or Supreme Court upholds the Wilkes decision then new unfairnesses will be created between those who made an appeal before the grandfathering date of 30 June and those who did not. How can this be justified? 

Something is not right here. I am not so concerned whether an individual ends up paying the charge: what is important is that this retrospective change damages the rule of law. Taxpayers need to know where they stand. There is probably a case for retrospection in extreme cases – on any analysis this is not one of them.

It is not too late for a government rethink.