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CIOT attacks 'absurd' wrongdoing rules

06 April 2010
Categories: News , Budget 2010 , Finance Bill 2010 , Working with Tax Agents
Professional body also critical of lengthy Finance Bill

The Chartered Institute of Taxation (CIOT) has launched a double-pronged attack on the Government’s tax policies, condemning legislation aimed at tax agents and criticising the length of the new Finance Bill.

The professional body has called on ministers to abandon the proposed new rules on ‘deliberate wrongdoing’ – part of HMRC’s Working with Tax Agents programme – and rewrite them from scratch.

In its response to the Revenue’s consultation, the CIOT warned that the legislation as drafted would lead to ‘absurd outcomes with innocent advisers’, while Revenue employees could be held guilty of deliberate wrongdoing and 'potentially subject to a £5,000 fine'.

'The CIOT fully recognises the need for HMRC to have appropriate powers to take action against the tiny minority of agents who are involved in deliberate wrongdoing, but these proposals go way beyond that,’ said the institute’s tax policy director, John Whiting.
‘HMRC powers must be proportionate, properly targeted and potentially effective. The Government’s draft legislation fails all three of these criteria and needs to be completely rewritten.

‘As it stands, the legislation applies not just to illegal actions but to any advice that could lead to a tax loss to the Treasury, such as suggesting someone take out an ISA… This is patently absurd,’ said Mr Whiting, who also expressed the CIOT’s concern that a 167-page Finance Bill was published on 1 April, less than two weeks ahead of the dissolution of Parliament prior to the 6 May general election.

There is a real risk of much legislation being passed without due consideration, he claimed.

‘We are worried that many of these clauses, including three new taxes, will be rushed into law with no meaningful debate. This is not a recipe for good tax law. I hope the Government will hold back a majority of their proposals for a post-election Finance Bill.’

In the run-up to last month’s Budget, CIOT president Andrew Hubbard wrote to the Chancellor to urge him not to rush through substantial tax changes without substantial parliamentary scrutiny. The Finance Bill should only include measures essential to maintaining the Government’s revenue-raising capacity, said Mr Hubbard.

John Whiting said the CIOT was ‘particularly disappointed that the restrictions on pensions tax relief for higher earners are going forward in such an over-complex way.

‘The Bill’s proposals show no signs of there having been any listening to the views of most respondents, which were that there were much simpler ways of achieving the aim of curtailing tax relief for the wealthy.’

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