Much focus has been placed on the key themes of the Chancellor’s Pre-Budget Report, however, there have been many more low-key messages within the speech including the confirmation that HMRC would be keeping their ‘equitable liability’ powers. These powers award HMRC the discretion to write off tax when it would be ‘unconscionable’ for them to pursue it.

Back in 2008, a review of tax concessions listed equitable liability as a practice which should be abolished from 2010. The Chartered Institute of Taxation then campaigned against this.

Responding to the news that equitable liability would remain, CIOT’s Andrew Hubbard said: “This is very good news indeed. The most vulnerable in society need protection when things have gone badly wrong, even when they themselves may have caused the problems by their own action – or more often inaction – and the equitable liability practice was an important safety valve of last resort. So I am delighted that a decision has been taken to introduce legislation to put this on a proper, permanent footing.

He continued: “It is clear that the Government were caught by surprise by the strength of the reaction to their proposal to abolish this practice. To their great credit they immediately agreed to sit down with us and other tax professionals and listen to our concerns. We presented a careful analysis of the legal background to the practice and suggested ways in which the practice could be given legislative effect, and we coupled this with a number of real examples of cases where equitable liability had been used to prevent what would otherwise have been a wholly inequitable result.”

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