The so-called “2019 charge” is simply the Treasury’s latest plot to cover up a decade of mismanagement and failure to simplify the tax system, by introducing a wholesale retrospective tax on the self-employed going back 20 years (that’s right).
Originally devised by uber cynic chancellor George Osborne before his fall from grace, it has been quietly endorsed by “Spreadsheet” Phil Hammond, who no doubt saw in it a quick and easy way to improve the bottom line at the expense of a group with relatively little lobbying power: middle-class contractors and their families.
The legislation has been the subject of a “technical consultation” at HMRC, and here is what the highly respected and usually moderate ICAEW (Institute of Chartered Accountants of England and Wales) had to say about this unprecedentedly cynical (even by Tory standards) stunt:
“We are very concerned about the proposals in the consultation document as they contravene
generally accepted notions of fairness and break the constitutional convention against
retrospective legislation, imposing tax charges in cases where taxpayers already had legal
certainty that none were due.
It is not acceptable for HMRC to create a retrospective tax liability where none currently exists,
especially as HMRC has been aware of loans to employees (referred to in the consultation
document – and adopted here for convenience only – as disguised remuneration (DR)
schemes) since at least 1999.(…)
To introduce legislation which affects transactions which were entered into up to 17 years ago (measured from the current year) where HMRC
has taken no timeous action despite knowledge of the alleged avoidance is likely to lay the proposed legislation open to challenges under the Human Rights Act (…)
HMRC should apply existing legislation rather than giving the impression of
being unable to take action by proposing new legislation duplicating what is already there.
On the international scene these proposals when considered in the light of other recent and
proposed changes to employer taxes and payroll, benefits-in-kind and expenses reporting
processes are making the UK appear a more ‘difficult’ country in which to locate staff, which
may not be desirable in today’s fragile economic climate.“
As you reflect on the above hard words, please ask yourself the following: once the retrospective genie is out of the bottle, what certainty is there left in anything?
The answer is “none“, for the Government can at any moment go back in time, change the rules retrospectively, and present you with an arbitrary bill, with no right of appeal.
NO ONE IS SAFE FROM RETROSPECTIVE LEGISLATION, as it is simply too tempting for the Government to use heavy-handed tactics on a “the end justify the means” basis, rather than resolve the real structural issues and face their own past failures.
It is even more so in situation where a ruling party is in crisis and desperate to cling to power by any means necessary.
This is the very reason why most civilized countries have retrospective legislation forbidden by their constitution.
Sadly, British exceptionalism sets us apart once more – again, for all the wrong reasons.