The Professional Contractors Group (PCG) are set to request immediate clarification from HMRC regarding a recent article which appeared in the Daily Telegraph. The piece in question suggested that tax inspectors could be set to get tougher on individuals before they have actually broken the law.
The specific section of the Daily Telegraph article about the definition of tax avoidance, read: “Avoidance is not defined in the Taxation Acts…One definition is ‘a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question’. At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this”.
Chairman of PCG, Chris Bryce, responded: “Clearly if this is a new departure for HMRC we are very concerned. HMRC must act within the law of the land. Our legal advice is that if HMRC ever did take anything to court on these grounds it would be thrown out and fined heavily. The suggestion that tax inspectors should pursue people who have arranged their financial affairs in perfectly legal ways based on a retrospective analysis of Parliament’s collective thinking is outrageous. Minimising one’s tax bill is a perfectly legal and proper course of action. These new guidelines, if true, strike one as Orwellian in the extreme.”
Bryce confirmed that the Group would be seeking further explanation from HMRC.