“A ‘disturbing pattern’ is emerging where legislation is introduced with ‘minimal or ineffective’ consultation.
Concerns are raised that tax policymakers are ‘insufficiently conscious’ of the importance of the rule of law and over-reliant on guidance. The current government, it adds, has legislated retrospectively against certain types of stamp duty land tax avoidance schemes even though they had been known to HMRC for some time.
‘We do not consider that this is acceptable. Businesses must know that the law in place when transactions take place will be the law that applies to them’.
‘This principle is either absolute or it is nothing – once it has been broken once, further breaches are only questions of degree,‘ the committee says.“
The vindictive legislation termed S.58, passed in the Finance Bill 2008, retrospectively changed the tax law on the use of a DTA and backdated it to 1987 (21 years).
The legislation was passed through the House of Commons by outright and blatant lies, despite that same House standing over the loopholes in 1987.
No one was given a chance to fight their battle in court under the tax law as it stood at the time. The current Government have continued to peddle false, inaccurate and misleading information on this subject.
The people who joined such schemes were contractors simply seeking some certainty in their lives when faced with the total uncertainty of IR35.
Someone has already committed suicide because of this, several others have already gone bankrupt.
Sadly, it is because of S.58 that the Government thinks they can take it one stage further with retrospection, believing their spin on tax avoidance can allow them to ride roughshod over democracy.
There have been 11 cases of retro tax legislation post-war but only one so far (S.58) deliberately targeted individual taxpayers. DOTAS looks like being the second , although it is not law yet
If you have been following Finance Bill 2014, you certainly know that the “Retrospective Upfront Payments” legislation is the brainchild of Exchequer Secretary to the Treasury, David Gauke.
It is most interesting to note that when he was in the opposition, Mr. Gauke once said the following to the Parliament:
“It is not acceptable that the Government permit something that they consider unacceptable to exist for some years, and then seek to introduce retrospective legislation to address it. That is what we see here.
The comments from the professional bodies are universally critical. The Chartered Institute of Taxation described the retrospective nature as “extreme” and “unjustified”, the Law Society described it as “wrong in principle”, and the Institute of Chartered Accountants in England and Wales said that “it sends out a very damaging signal about the stability of the UK tax system”.
Rather than allowing the courts to interpret [the] law, they will rewrite it retrospectively so that it says what they wanted it to say in the first place. Such an approach gives individuals and businesses no reassurance that the law is what they think it is, as it is written down and what has been passed by Parliament.
The impression is that it is something that can be changed if not at a whim, at the discretion of the Government retrospectively“
– David Gauke, Public Bill Committee debate, May 2008
The above (which be can be referred to on the Parliament’s website – the entire tirade is worth a read…) refers to the vindictive legislation termed S.58 passed in the Finance Bill 2008, which retrospectively changed the tax law on the use of a DTA and backdated it to 1987 (21 years!!). The people who joined this scheme were contractors simply seeking some certainty in their lives when faced with the total uncertainty of IR35 (more information can be found at notoretrotax.org.uk)
“Retrospective tax legislation conflicts with the principles of tax policy recommended by this Committee. In our Budget 2012 Report we recommended that the Government restrict the use of retrospection to wholly exceptional circumstances. Witnesses told us that the Government was not abiding by this recommendation. Furthermore, the Red Book announced an additional retrospective taxation policy: an extension of the requirement for taxpayers to pay upfront any disputed tax associated with anti-avoidance schemes. This policy will retrospectively apply to some of the 65,000 outstanding tax avoidance cases. There may be a case for this policy but the Government has yet to explain what is wholly exceptional about these cases that justifies this retrospective measure. It should do so in response to this Report.”